What is the current status in the fixed recoverable costs review?
What are 'costs' in civil litigation?
During the lifetime of a civil case – where, for example, one party sues another for damage done or failure of duty of care - a number of costs are inevitably incurred. These include the costs of the solicitors' time and administration of the case, the charges made by barristers in the case, the charges made by expert witnesses in the case and the costs of the court where appropriate. Legal cases can frequently take several years to complete and costs can become high. At present, when a case settles, the successful party may be entitled to claim their costs from the losing side.
What is the current status on Fixed RC?
It is felt by some parties that costs, in some fields of litigation, are disproportionate to the value of the claim and that limits should be introduced on how much can be claimed for costs against the losing side. These are called 'Fixed Recoverable Costs.'
Fixed Recoverable Costs in claims with a value up to £25,000 have existed in Employers' Liability, Public Liability and Road Traffic Accident Personal Injury cases since July 2013.
In practice, this means that, depending on the value of the claim and the stage that it has reached in proceedings, the amount that can be claimed for costs from the losing side is set at fixed amounts. Where the value of a claim is greater than £25,000, existing practice regarding the recovery of costs would continue to apply.
Currently, costs are expected to be 'proportional' to the value of the claim, and have to be agreed, either with the opposing side or by a court.
What are the new proposals for FRC?
However, in January 2016, Lord Justice Jackson argued that fixed costs should be introduced across all civil cases up to a value of £250,000. He proposed a structure of fixed costs according to the value of the claim. So recoverable costs for a claim with a value between £50,000 and £100,000 would be significantly less (e.g. a total of £30,000 is proposed) than the costs recoverable in a case with a value of between £175,000 and £250,000 where a total of £70,250 has been proposed.
An alternative approach has been the suggestion of fixed fees in combination with a percentage of the damages awarded, again depending on the stage in proceedings.
Lord Justice Jackson is currently meeting with lawyers nationwide to discuss his proposals with regards to introducing fixed recoverable costs in the following areas:
- Property
- Chancery (e.g. the governance of trusts and probate)
- Clinical negligence
- Personal injury
- Mercantile and business
Discussions will focus on the issues of how fixed costs could be introduced, what types of cases it would or would not be appropriate for, levels of costs/claims etc.
This review is due to be completed by the end of July 2017.
What is the aim of the proposals?
The intention behind the proposals is:
- to provide clarity around costs and thereby ease the management of costs
- to provide certainty as to how much a claim will cost to pursue
- to increase access to justice because costs will be limited
Lord Justice Jackson has commented that “Although I hold the view that fixed recoverable costs would be beneficial for lower value cases, I will keep an open mind for the time being about what types and levels of cases should fall wi thin such a regime and what the cost figures should be.”
What are the arguments put forward against the proposals?
- Fixed costs would be detrimental to the pursuance of complex cases
- Fixed costs may deter lawyers from taking on cases where they fear their costs may not be recoverable
- A rigid system of fixed costs would not allow for unpredictable cases
Jonathan Smithers, president of the Law Society, has commented that “the application of fixed costs for highly complex cases is likely to be inappropriate and would raise significant questions about the ability of many people to access justice.”
Clinical Negligence
Alongside this process, the Department of Health has recently issued a consultation document around its proposal that fixed recoverable costs should be introduced in clinical negligence cases with a value of up to £25,000.
The government hopes that this will save the NHS approximately £45 million per year.
There have been considerable arguments put forward against this proposal on the basis that the elderly and the disabled might suffer from this approach as their cases can be complex but might not be high-value claims. A low-value claim may be of great significance to the victim but, where it is clearly complex and, therefore, likely to be costly to pursue, lawyers may not be willing to take on the case if it is clear from the outset that they will not be able to recover their costs.
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