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Law Society President Robert Bourns speaks at seminar on fixed recoverable costs

On 13 March Robert Bourns delivered the following speech at a seminar on fixed recoverable costs with Lord Justice Jackson.

Introduction

On behalf of the Law Society of England and Wales I would like to welcome Lord Justice Jackson and all of you.

I begin by thanking Lord Jackson for the comprehensive engagement programme that he has led. The meetings he has conducted in Leeds and Manchester have been well received and the reports have been positive.

We welcome Lord Jackson's recent remarks in the Costs Conference on 7 March indicating that he will 'keep an open mind for the time being about what types and levels of cases should fall within such regime and what the costs figures should be.'

The Society is delighted to be hosting the London seminar today to explore the issues and conflicting considerations which are in play. The focus of today's meeting is public law costs and we are able to hear the full arguments on these matters and from all angles - as requested by Lord Jackson. I am delighted that in the audience we have representation of the views of claimants, pressure groups and others involved in such litigation.

We welcome Lord Jackson's remarks indicating that the ultimate aim of this exercise is to 'put forward a package of proposals which will promote access to justice and control costs, as well as being fair and workable'. We fully support this approach and welcome indications from Lord Justice Jackson that the proposals will recognise the differences of complexity and value of each case.

We have been pleased to engage in the fixed recoverable costs review and, as previously mentioned, we have not opposed its introduction in principle.

Following the earlier discussion I want to briefly emphasise a few points on:

  • Proportionality
  • The application of a fixed recoverable costs regime to judicial review cases
  • Impact of the proposals on parties' behaviour

Proportionality

Unless fixed recoverable costs are proportionate and reflect the work necessarily to be undertaken, they will have fallen short of reasonable expectations. We do not believe that the issue of the proportionality can be dealt with by controlling what solicitors can charge for or recover, without changing the amount of work that is necessary and reasonable on a case. A point we make in this as in other discussion - for example insurer-defended PI claims.

The system must be changed to reduce the amount of work a lawyer must properly do. I say this having read the chapter concerning disclosure in Lord Jacksons' 2016 book. This is what the HMCTS reform programme, and Lord Justice Briggs, is endeavouring to do and we are working closely with officials and engagement groups to help them understand the impact on clients and solicitors of the proposed changes to try to find solutions that will work for everyone in the interests of justice.

We accept that parties do not have a 'blank cheque' when it comes to their costs budgets. On the contrary, proportionality is already written into the civil procedure rules, reinforced by case law. Even if costs are necessarily and reasonably incurred, they will not be recoverable if they are disproportionate to the issues at stake.

Judicial review

On public law cases, some of the concerns expressed today about fixed recoverable costs apply equally to judicial review - in particular the high risk of loosing equality of arms.

This is an area in which the risk of facing an order to pay the other party's costs can be a major deterrent. Indeed, it is something to which the Law Society itself has regard when deciding whether to bring and engage with judicial review, as it does when undertaking some of its public interest work.

The scheme that applies to environmental judicial reviews brought under the Aarhus convention works because those cases are subject to very clear procedural rules which help to ensure that the costs involved in bringing them are constrained. However, this is not the case for other judicial review cases.

For other cases the question remains whether it practical to devise a scheme that would apply generically? The different stages of a judicial review case have very different characteristics.

  • The three month deadline for launching a challenge serves to limit the amount of pre-issue work that can be undertaken, although the amount can still vary significantly.
  • The process for applying for permission on the papers is clearly defined, and there is a limit on how far a defendant can cause costs to escalate in this part of the process beyond the key question of whether permission is opposed or not. However, where there is a rolled-up hearing for permission and on the substantive issues, it is not possible or not possible easily to separate out what work relates to which stage.
  • The costs of the full application can vary enormously. The number and length of statements, the volumes of case precedents to be cited, and the extent of the legal argument entirely contribute reasonably to the final bill. The claimant may need to file statements in response to defendants' statements. These factors will impact on the length of the hearing, which adds a further variable dimension to the likely costs.

For these reasons, a single fixed fee is unlikely to be viable. It is not usually possible to put a monetary value on a judicial review, so attempting to link recoverable costs with value is not an option for these cases.

I note that the risk of an adverse costs order can in some cases be mitigated by the granting of a cost capping order. This works as a case-specific cap on the level of recoverable costs. This begs the question whether the introduction of a fixed recoverable costs regime can deliver additional benefits that the cost capping order provisions do not, without also causing disadvantages that may outweigh those benefits.

The Law Society has no concluded view on this issue and our discussion today helps to inform our thinking. I am looking forward to hearing views in the next discussion as to whether there is a means by which some scheme of fixed or predictable recoverable costs could be devised.

Defendant behaviour

In addition, it is important to reiterate the unintended consequences that a fixed recoverable costs scheme could have on defendant behaviour.

If the more powerful party believes that there is significant doubt that the other party will pursue a good claim or defence, that party may decide not to settle it and put as many legal obstacles in the way of resolving the matter as possible. If one party does choose to run up costs to a level significantly beyond the fixed cap, this could render valid claims or defences uneconomic to proceed with, thus frustrating the ends of justice. Any system for fixed recoverable costs that does not address this issue adequately will thwart justice, not promote it.

Access to justice strategy

Furthermore it is essential to consider how a FRC regime will fit in with other proposals or measures that are currently being developed as part of civil justice reform, such as the digital justice clauses which are part of the Prisons and Courts Bill, policy initiatives to amend the small claims limit on top of increases to issue fees and court closures.

If fixed costs are introduced based on current processes and procedures, and these processes are then fundamentally changed very shortly afterwards as a result of the HMCTS reforms or the Bill, the conclusions of this review may be rendered obsolete before they have even been introduced. Lord Justice Jackson will report by 31 July- the Ministry of Justice will pick up those recommendations, but it may be reasonable to say that fixed recoverable costs should not be introduced ahead of the implementation of other reforms but they should be considered alongside them.

Notwithstanding, we are grateful to Lord Justice Jackson and to you. More broadly, we believe that the introduction of fixed recoverable costs needs to be considered as part of an overarching strategy for reform on access to justice which considers all elements such as: court reform, court fees, costs regimes procedures, connection of the centres of digitisation, public funding, public legal education and pro bono. There is a need for consistency of policy across the justice system. Too often, changes in one part of the system conflict with or undermine changes elsewhere. We are delighted to be working with the senior judiciary on this initiative and will continue to support it broadly- including with subject matter experts in the room.