Fixed Recoverable Costs regime is not delivering the certainty government promised

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The extension of Fixed Recoverable Costs (FRCs) to most civil cases has not provided the costs certainty it promised, the Law Society of England and Wales said today.

FRCs set the amount of legal costs that the winning party can claim back from the losing party in civil litigation. In 2023, this was extended from most low-value personal injury cases to most civil cases valued up to £100,000.

The Civil Procedure Rules Committee and the Ministry of Justice are now taking stock of how the FRC extension is working in practice and plan to consult in detail later this year. In response, the Law Society’s view is:

• given the extension was introduced just over two years ago, it is too soon to know the full impact, as only a few cases have used all elements of the regime
• a full and thorough consultation is welcomed to examine the impact of the FRC extension. We have highlighted particular areas – such as the current regime appearing to unfairly penalise the successful party and the impact on early settlement of cases and costs remaining unclear for parties – where data and evidence should be sought
• the UK government can make changes to the regime in the meantime, which will go towards ensuring access to justice is not impacted by FRCs

“The FRC regime is currently failing to deliver what it promised,” said Law Society vice president Brett Dixon.

“Our members represent both claimants and defendants and they have told us that changes must be made to the current process to help mitigate the issues with the regime.

“These include concerns about access to justice. The FRC regime is appearing to unfairly penalise the successful party, who could now be responsible for paying the difference between lawyers’ reasonable costs and the amount of FRCs, rather than this cost falling on the unsuccessful party. This disparity should be looked at as a priority.

“We are also concerned that the FRC regime has the potential to negatively impact vulnerable parties. It is important that the regime properly protects the most vulnerable in our legal system and ensures everyone can access justice.

“Further, detailed evidence must be sought to fully assess the impact of the regime on vulnerable parties.”

Brett Dixon concluded: “We welcome the further consultation by the government and it must properly evaluate the impact of the new FRC regime.

“Housing cases should continue to be excluded from the extended scheme. We suggest this exclusion should be made permanent, given our concerns about how the regime is operating and the catastrophic impact FRCs could have on housing legal aid providers.”

Notes to editors

• Read the UK government’s Fixed Recoverable Costs Interim Implementation Stocktake
• The Law Society’s 2024 Frontier Economics research found 100% of housing legal providers are loss-making. The average fee earner is only able to recover around half of the full costs of providing housing legal aid
• Read the Civil Procedure Rules
• The Law Society’s full consultation response is available upon request