Fixed recoverable costs (FRCs) set the amount of legal costs that the winning party can claim back from the losing party in civil litigation. They already apply in most low-value personal injury cases. The government is now planning to extend them to more areas.
FRCs give certainty in advance about the maximum amount that the losing party will have to pay. However, they mean that the amount that can be reclaimed may not cover the actual costs of the case, which can be hard to predict.
In March 2019 the government issued a consultation on extending FRCs in civil cases in England and Wales. This followed the publication of Sir Rupert Jackson’s review of civil litigation costs in July 2017.
The proposals are to:
- extend FRCs to all civil cases in the fast track (those cases valued up to £25,000 in damages that will last no longer than a day)
- expand the fast track to include simple ‘intermediate’ cases valued between £25,000 and £100,000 in damages
- introduce a new process and FRCs for noise-induced hearing loss claims
The consultation closed on 6 June 2019 and the government is considering the responses.
FRCs for clinical negligence claims are being considered separately – see Clinical negligence.
The current proposals
We do not support the extension of FRCs in civil litigation under the current proposals, either across the existing fast track, or to intermediate cases. The proposals pose a substantial risk to access to justice.
We’re concerned that:
- the actual costs of civil litigation must be reduced by streamlining processes before FRCs are extended, but the proposals do not take into account major changes in processes such as the HM Courts and Tribunals Service (HMCTS) reform programme
- the data used is not of high enough quality or recent enough to make sure that FRCs are set at appropriate levels
- flawed assumptions were used in the consultation to justify the proposals, such as that solicitors would set fees equal to FRCs, and that FRCs would reflect the amount of work
- conclusions about the likely consequences of making these changes do not stand up to scrutiny
- the government has not addressed the risk of denying people access to justice if legitimate claims are no longer economically viable
We may be willing to support extending FRCs in future, if the government addresses our concerns.
Our principles for FRCs
Our long-established position is that we are not opposed to the principle of FRCs provided that:
- they only apply to ‘low value’ and non-complex claims where the issues are straightforward
- the costs are fixed at a reasonable rate to allow for the work to be carried out effectively by properly regulated professionals, such as solicitors
- there is scope for complex or unusual cases to be exempt
- there is strong empirical evidence and research to justify the rates and thresholds that are set initially
- the rates and thresholds are reviewed and adjusted regularly to take account of changing processes and developments in technology
- court procedures and rules are properly aligned with FRCs’ introduction
- appropriate and efficient IT is introduced in the court system to support the fair and effective delivery of any new fixed costs regime
What this means for solicitors
These proposals are likely to affect practitioners working on civil litigation cases worth up to £100,000. 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.
What we’re doing
- June 2019 – we responded to the MoJ’s consultation on extending FRCs in civil cases. We argued that the proposals do not meet our conditions, and that the government should give court reforms time to bed in before considering extending FRCs
- March 2019 – the MoJ issued its consultation on extending FRCs in civil cases. We urged the government to set costs at a reasonable rate for the legal work done
- July 2017 – the Jackson review of civil litigation costs was published, recommending that FRCs should apply to all claims valued up to £25,000. We welcomed the scaling back of the original plans. We engaged with members to review the new proposals
- January 2017 – we responded to the call for evidence for the review of FRCs. We argued that fixing costs for all claims up to £250,000 would risk making many cases economically unviable, undermining the principle of access to justice for all
- November 2016 – the government and senior judiciary announced their support for extending FRCs, and Sir Rupert Jackson was commissioned to develop proposals. We raised concerns about the government’s plans
We continue to lobby government about FRCs for civil litigation.