Posts Tagged ‘fixed costs’
Consultation on extending Fixed Recoverable Costs
Historically the civil justice system in England and Wales has operated under a ‘loser pays’ model, whereby the unsuccessful party to litigation covers the costs of the successful party. This can lead to high costs for the unsuccessful party.
In recent years, increasing consideration has been given to the idea that the costs paid by the loser should be fixed. Fixed Recoverable Costs (FRC) prescribe the amount that the winner can claim back from a losing party in civil litigation. These legal costs are set in advance by reference to grids of costs. Thus FRC have the advantage of giving both parties certainty as to the maximum amount they may have to pay if they are unsuccessful in their case. FRC can also ensure that the costs of cases are proportionate to the sum in issue.
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. Sir Rupert’s report, which was published in July 2017, follows on from his major report of 2010 looking at civil costs more widely, which led to significant reforms to controlling costs, including ‘no win, no fee’ reforms in the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO).
Sir Rupert’s July 2017 supplementary report which focuses on the extension of FRC, completes his recommendations. (See this blog, 29 September 2017) The Government has now decided that the time is now right to consider the extension of FRC to more cases, on the lines recommended by Sir Rupert.
The Government is not planning to take forward all Sir Rupert’s recommendations. This Consultation focusses on three specific matters:
- Extending FRC to cases valued up to £25,000 in damages in the fast track. (This principle has already been adopted for Clinical Negligence claims);
- A new process and FRC for Noise Induced Hearing Loss;
- Expanding the fast track to include the simple ‘intermediate’ cases valued £25,000–£100,000 in damages.
The Consultation runs until 28 June 2019.
For details go to https://consult.justice.gov.uk/digital-communications/fixed-recoverable-costs-consultation/
Post-implementation review of Legal Aid, Sentencing and Punishment of Offenders Act 2012, Part 2 (The ‘Jackson’ reforms on costs)
Part 2 of LASPO introduced changes recommended by Lord Justice Jackson on the rules relating to the costs of civil litigation. The Post-Implementation Review (PIR) report, also published in February 2019, covers the following five changes made by the Act:
- non-recoverability of conditional fee agreement (CFA) success fees;
- non-recoverability of after the event insurance (ATE) premiums;
- the introduction of Damages-Based Agreements (DBAs);
- section 55 changes to Part 36 offers; and
- banning referral fees in personal injury (PI) cases.
These changes came into effect in April 2013. Other changes – dealing with different issues, and which came into effect at different times – were not within the scope of the PIR
According to the PIR review, the changes had five objectives:
- reducing the costs of civil litigation (Objective 1);
- rebalancing costs liabilities between claimants and defendants (Objective 2);
- promoting access to justice at proportionate cost (Objective 3);
- encouraging early settlement (Objective 4); and
- reducing unmeritorious claims (Objective 5).
The review drew on evidence presented to the review team by a range of stakeholders involved in civil litigation. Data were also subject to empirical analysis by Professors Fenn and Rickman – two researchers with a long track record of empirical analysis of court and process data.
The overall conclusion of the Review was that, in general, the objectives of the legislation had been met.
There was concern that the regulations relating to Damages Based Agreements were not as clear as they might be; the Government will consider whether to amend them in due course.
The Review did not consider other reforms made by Lord Justice Jackson, in particular relating to much greater use of fixed recoverable costs. The Report states that the Government is not currently minded to introduce these further changes.
Practitioners had expressed the view, during review, that a period of regulatory stability would be welcome. It seems that the Government has largely accepted this.
The Press Release and Report can be accessed at https://www.gov.uk/government/publications/post-implementation-review-of-part-2-of-laspo
Review of fixed recoverable costs
One of the central recommendations of Lord Justice Jackson’s 2010 Review of civil litigation procedures and costs was greater use of fixed recoverable fees. The principle of fixed costs had been advanced by the Civil Justice Council for a number of years; indeed they helped to negotiate an agreement that this was the way forward for certain low vale Road Accident claims. Jackson wanted to go further and apply the principle of fixed costs to a wider range of types of case and to cases of higher value. He has continued to advocate the need for many more cases to come within the fixed costs regime – in his view, cases up to £250,000.
Now the senior judiciary (The Lord Chief Justice and the Master of the Rolls) have commissioned Lord Justice Jackson to undertake a further exercise to test the practicability and wisdom of his ideas. His review has been given the following terms of reference:
- To develop proposals for extending the present civil fixed recoverable costs regime in England and Wales so as to make the costs of going to court more certain, transparent and proportionate for litigants.
- To consider the types and areas of litigation in which such costs should be extended, and the value of claims to which such a regime should apply.
- To report to the Lord Chief Justice and the Master of the Rolls by the 31st July 2017
It seems highly likely that this exercise will lead to an extension of the existing fixed costs regime.
For details of the announcement see https://www.judiciary.gov.uk/announcements/senior-judiciary-announces-review-of-fixed-recoverable-costs/
Martin Partington: Introduction to the English Legal System 15th ed 2021
Oxford University Press Learning Link Resources
Martin Partington: Spotlight on the Justice System 