Litigation costs update – Fixed Costs for Civil Claims to be Extended?

Lord Justice Jackson has recommended that fixed fees be introduced for all civil claims with a value of up to £250,000. This would be an extension of the fixed fees already applicable in low value personal injury claims.

Jackson’s Recommendations

These far-reaching, and somewhat surprising, recommendations were made in his speech at the Insolvency Practitioners Association Annual Lecture on 28 January 2016. Following on from this report in to civil litigation costs, which mooted the idea of fixed costs outside of low value personal injury claims, Jackson identified the following problem;

“High litigation costs inhibit access to justice. They are a problem not only for individual litigants, but also for public justice generally. If people cannot afford to use the courts, they may go elsewhere with possibly dubious results. If costs prevent access to justice, this undermines the rule of law.”

His solution is for non-personal injury cases on the fast track is simple; “In relation to non-personal injury cases, we must now move to a fixed costs regime”.

This is likely to be broadly the same as the current fixed fees in low value personal injury claimsAs for the multi-track, Jackson has set out a matrix of prosed fixed fees, which vary depending on the value of the claim (up to £250,0000), and the stage at which a case settles.

The full grid can be downloaded here.

As far as implementation is concerned, Jackson has boldly stated that whole project could be completed within 12 months. However, whether this is the case remains to be seen as there has as yet not been any official comment from the Government on these proposals.

The Fallout

Needless to say, these recommendations have been met with a fair amount of scepticism and trepidation by practitioners and commentators alike.

Some of the concerns that have been raised include:

  • Access to Justice  – With the proposed increase of the small claims limit for personal injury claims to £5,000, Claimants’ access to legal representation, and therefore appropriate justice, is already being curtailed. If fixed costs proved to be uneconomic for firms to operate under, this could potentially limit a prospective Claimant’s options in respect of legal representation.
  • Costs Management – If fixed costs are implemented in the mulit-track, then will this negate the need to prepare costs budgets? This is something that Jackson has confirmed will be the case. The question that arises, is Jackson conceding that costs management has failed? Therefore, if costs management was doomed from the start, as appears to be the case, why should such wide-reaching fixed costs be any different?
  • Satellite Litigation – Jackson has stated that these fixed costs will not apply where costs have been awarded on the indemnity basis. This is likely to lead to tactical jostling and one-upmanship between parties, particularly in respect of Part 36 offers given the costs consequences that follow when a party beats one. Inevitably this will lead to significant satellite litigation as parties attempt to escape or impose indemnity costs.

The Future?

To what extent Jackson’s proposals are implemented remains to be seen given that there has been no official word on this issue other than Lord Faulks, who stated; “the Government remains supportive of the principle of extending fixed recoverable costs and we continue to consider areas in which implementation might be appropriate and workable.”

We will be keeping a close eye on these developments so if you are concerned by any of these issues, please contact us to discuss.

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