REUTERS | Eddie Keogh

Fixed recoverable costs for everything: bring it on!

The horizontal and vertical extension of fixed recoverable costs is being considered by Jackson LJ, whose report is due by 31 July 2017.

The government will then respond and consult, but is on record as supporting the spread of fixed recoverable costs. The key issues will therefore be the extent of the vertical extension, that is what value of claims will be covered, and the detail and amount of fixed costs for any given piece of work.

Horizontal extension refers to other types of legal work. At present only personal injury work (and not all of that) is covered.

There is no significant judicial or political opposition to the revolution in the delivery of legal services, of which fixed costs are a part.

The Prisons and Courts Bill, which introduces massive changes, including online courts and severe curtailments of general damages in personal injury cases, received an unopposed second reading in the House of Commons on 20 March 2017.

Thus not a single Member of Parliament from any party voted against these proposals. The same will almost certainly be true in relation to fixed costs.

Civil litigators need to recognise the reality that the issue is how and to what extent fixed costs come in, not whether they will come in.

We can already be fairly sure of the date. In its response to the consultation paper on raising the small claims limit in personal injury matters, the government indicated that it intended to bring in all of the reforms together on 1 October 2018. It is virtually certain that that will be the date when fixed costs come in for all types of civil litigation.

The maximum damages cap being considered by Jackson LJ is £250,000, but it may be that initially, on 1 October 2018, there will be a lower maximum figure, perhaps £100,000.

The current personal injury fixed costs scheme has the same upper limit as the fast track, that is, £25,000.

Jackson LJ has previously referred to spreading fixed costs to “the lower reaches of the multi-track”, but is now considering having an Intermediate Track, possibly covering claims between £25,000 and £100,000.

It is anticipated that any such track will have some of the features of the fast track and some of the features of the multi-track.

Following the decision in Qader and others v Esure Ltd and Khan v McGee and rule 8(1) of the Civil Procedure (Amendment) Rules 2017 (effective 6 April 2017), any claim allocated to the multi-track ceases to be subject to fixed costs, both in relation to costs already incurred, and future costs.

In future posts I will look in much greater detail at specific areas, such as advocacy fees, the role of counsel, Part 36, indemnity costs, children’s cases and much more.

The reaction of lawyers to the concept of fixed costs in civil proceedings has been overwhelmingly negative. In particular, the Law Society and the Bar Council have essentially refused to engage with the idea. In my view that is a mistake.

It should be self-evident that the purpose of the legal system is to serve litigants and potential litigants, and therefore society as a whole, and the rule of law, and not lawyers.

Any lawyer who does not realise that legal costs are often ludicrously expensive to the extent of excluding virtually the entire population, including small and medium sized businesses, is living in Fantasy Land.

A system whereby the potential adverse consequences for a client are fixed and certain, and where the client knows exactly what they will recover in the event of success, allows clients, and indeed lawyers, to budget and plan accordingly.

Also, once the tyranny of the hourly rate is escaped then lawyers are rewarded for their skill, expertise, speed and judgment and not for ploughing through hundreds of thousands of pages of meaningless documents.

Good lawyers will benefit; the plodders will lose out. So what?

Fixed recoverable costs remove the need for budgets, costs draftsmen and time recording, and judgments about which level of fee earner is appropriate for the work.

In employment and family work, there are generally no recoverable costs in any event. In most personal injury cases, over 90% of costs are already fixed.

In the personal injury field, fixed recoverable costs work and they have changed the behaviour of lawyers for the better. The same will happen with general civil litigation.

The main issue will be the extent to which the process of litigation is changed to make it more efficient and to allow lawyers to both reduce and quantify costs in advance, and still make a profit. The Prisons and Courts Bill, currently before Parliament, is a key measure in this regard.

An idea of how far we have to go can be shown by the case of Thompson v Reeve.

The claimant had by email withdrawn a Part 36 offer. The defendants argued that that was an invalid withdrawal as they had not consented to service by email and therefore they were free to accept the apparently withdrawn offer.

The court accepted that that was the position but granted the claimant relief from sanctions, thus curing the bad service.

That a court needs to do that in 2017 is madness. Any lawyer, business or organisation not accepting service by email should not be allowed to participate in the litigation process.

There are a whole load of legal dinosaurs and the sooner they are extinct the better.

Underwoods Solicitors Kerry Underwood

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