Fixed Costs in Civil Litigation

In July 2017, Lord Justice Jackson announced his long-awaited proposals for evolving the fixed costs regime within civil litigation. The proposals are to be put before government and change will undoubtedly be on the horizon for 2018. This could see a significantly different approach to the way costs incurred throughout litigation can be recovered, and to what extent these costs can be fixed from the start.

Lord Justice Jackson intends for the proposals to change the costs involved in certain cases within the different tracks of civil claims.

What are the Tracks?

Claims are allocated to a track to ensure they are heard in the most suitable place. Judges allocate defended claims to one of three tracks:

Small Claims Track- usually used for claims of £10,000 or less.

Fast Track- for small and straightforward cases with a financial value of between £10,000 and £25,000.

Multi-Track- usually used for cases over £25,000 and those which are not straightforward.

Lord Justice Jackson proposed that fixed recoverable costs should apply to claims valued up to £25,000. He also suggested that this could apply to some cases of modest complexity up to £100,000. This proposition would have greater focus on the individual circumstances of the case itself, rather than adopting a blanket approach across all the tracks.

What are Lord Justice Jackson’s Proposals?

Fixed costs on all Fast Track Cases

The proposals seek to create a structured regime for fixed costs in claims up to £25,000 on the fast track, which are further separated into 4 bands based on complexity. These costs will be reviewed every 3 years to have regard to inflation.

Intermediate Track for claims up to £100,000

A proposal to create a new streamlined track was suggested for certain claims up to £100,000. It was suggested that claims for monetary relief which can be tried in 3 days or less, with no more than 2 expert witnesses giving oral evidence for each side, would fall into this new track. This creates a more streamlined approach to the current rules which are that any claim with a value of over £25,000 is allocated to the multi-track. This leaves a vast range of cases to be dealt with all under this same track. A separate track would create its own procedures and a regime of fixed costs could prevent costs from escalating.

Given the potential scope of this new track, Lord Justice Jackson intends to review its effectiveness after 4 years to see if the track can be expanded to monetary claims with a value over £100,000.

Costs fixed by Contract

Where contractual clauses expressly stipulate the recovery of reasonable costs in the event of litigation, these remain unaffected by Lord Justice Jackson’s proposals. Until primary legislation in introduced, fixed costs will not override any previous contractual agreement.

Ring-Fencing & Additional Awards

It has been suggested that counsel and other lawyers’ fees in more complex Fast Track and intermediate track cases could be fixed to prevent them from escalating beyond a fair and reasonable scope.

There have been fears that if there were a fixed costs regime in place, this would encourage people to pursue fruitless claims without the fear of large costs being incurred. Lord Justice Jackson has suggested that, to counteract this concern, the court should have additional powers to deal with unreasonable litigation conduct. Where a groundless or unreasonable claim is sought, it can of course incur unnecessary costs for the innocent party. Under Lord Justice Jackson’s reforms, the Court would therefore be able to award either a percentage uplift on costs or make an award against the unreasonable party for indemnity costs.

Impact on Clients

Access to justice is essential for any prospective litigant. It could be argued that it is extremely important that they be able to recover reasonable legal costs as opposed to a set fee which may make their case economically unviable. However, it can be argued that Lord Justice Jackson’s proposals balance this with the need to provide assurance for both parties in litigation and will avoid lengthy discussions regarding costs, which can often lead to the parties becoming entrenched.

This could have a positive effect in the future for many clients as it may see a greater degree of certainty for costs incurred in cases. If the proposals are successful this could increase access to justice and ensure that litigants have some information as to their potential costs from an early stage. It could also give a guarantee to a prospective litigant that a certain amount will be recoverable in a successful claim, rather than leaving this to further discussion later down the line. This can have great bearing on whether they proceed with their case, and ensures they have the necessary information to make this decision.

However, there is some uncertainty as to what cases Lord Justice Jackson intends for fixed costs to apply to. It can be argued that there are some brackets of cases which will not be appropriate for these proposals, such as personal injury, where claims may not be an extremely high value, but will still require considerable work and produce considerable costs.

Whilst the reforms show potential to improve the costs for litigants, there are still details which need to be worked out before the regime can be successfully implemented across the tracks.

Our civil litigation team at Curzon Green Solicitors offer high-quality advice, whilst working to minimise fees and keep you informed at all stages of the costs incurred and those that might lie ahead.