Extending fixed recoverable costs in civil cases – Law Society response
Fixed recoverable costs (FRC) prescribe the amount of recoverable legal costs that can be claimed back from a losing party in civil litigation.
FRC currently operate in most low value personal injury cases. The government and senior judiciary announced their support for extending FRC in November 2016, and Sir Rupert Jackson, then a judge of the Court of Appeal, was commissioned by the senior judiciary to develop proposals.
The government is consulting on extending FRC in civil cases in England and Wales, following the release of Sir Rupert Jackson’s report in July 2017.
Specifically, the government is consulting on:
- extending FRC to all other civil cases valued up to £25,000 in damages in the fast track
- expanding the fast track to include simple ‘intermediate’ cases valued between £25,000 and £100,000 in damages
- a new process and FRC for noise-induced hearing loss claims
Our long established position is that we are not opposed to the principle of FRCs provided that:
- the recoverable fixed costs should usually only apply to 'low value' and non-complex claims where the issues are straightforward
- the costs must be fixed at a reasonable rate for the work done and to allow for the work to be carried out effectively, efficiently and competently by properly regulated professionals, such as solicitors
- there must be scope for complex or unusual cases to be exempt
- there must be strong empirical evidence and research undertaken to justify the initial setting of the rates as well as the level of thresholds
- the rates and thresholds must be regularly reviewed and adjusted by reference to appropriate indices and to take account of changing processes and developments in technology
- court procedures and rules should be properly aligned with their introduction
- appropriate and efficient IT in the court system should be introduced to support the fair and effective delivery of any new fixed costs regime
We applied the above conditions to the proposals set out in the consultation and found that they do not align. For this reason, we do not support the extension of FRCs in civil litigation at this time, either horizontally across the existing fast track, or vertically to intermediate cases.
We may be willing to support the extension of FRCs at a future date, if steps are first put in place that address our fundamental concerns. These concerns can be summarised as follows:
- the proposals do not have due regard to the fundamental transformation in process that is occurring, such as through the HM Courts and Tribunals Service (HMCTS) reform programme
- the data on which the proposals are based is not of a sufficient quantity and quality to assure the appropriateness of the FRCs to be applied across almost the entire spectrum of civil litigation
- the assumptions made in the consultation, and the resulting justifications for the proposals, are flawed, and the conclusions about the likely consequences of making these changes do not stand up to scrutiny
- the risk of unscrupulous litigants using the FRC regime as a tool to deny their opponents a just remedy has not been adequately addressed
As a result, we consider that the proposals pose a substantial risk to access to justice and therefore we cannot support them.
What this means for solicitors
Practitioners working on civil litigation cases worth up to £100,000 are likely to be impacted by these proposals. The amount of costs that can be recovered will be set at a fixed figure which may affect which cases solicitors are able to take on.
The reforms will eventually be introduced through changes to the Civil Procedure Rules.
The consultation closed on 6 June 2019. Subject to responses to the consultation, the government intends to implement the proposed changes.