REUTERS | Laszlo Balogh

Fixed recoverable costs – The Big Debate: Jackson LJ’s Leeds Seminar

Jackson LJ is touring the country collating information from legal practitioners to assist him with his proposed extension of fixed costs. He stated, in the introduction, that he was considering:

  • Areas of litigation to which the fixed costs regime should be extended.
  • The value of the claims.
  • The appropriate regime.

When he visited Leeds, one of the five seminars arranged (with a video link so Newcastle practitioners could join the debate), Jackson LJ requested feedback through the Leeds Law Society: in particular (but not solely) from property and Chancery litigators.

It was an interesting session. Jackson LJ posed many questions and stated that his initial proposed grid of fixed costs (from his lecture in January 2016, Fixed Costs – The Time Has Come) was published to create debate in this area. Its intention was never as a “starting point”.

This was a great opportunity for the 50 plus audience, from different areas of the legal profession, to obtain an insight into Jackson LJ’s intentions. As expected, Jackson LJ remained neutral. However, it was possible to discern some trends in the comments that he made and the questions that he posed.

The speakers

Sara Ashby, an intellectual property (IP) litigator, explained the benefits of the Intellectual Property Enterprise Court (IPEC) scale caps (which cap the costs for certain stages). However, she pointed out that the streamlined procedure, developed by IP judges and practitioners, needs robust case management, and specialist judges, to allow cases to be dealt with more quickly, and to keep costs down. She also emphasised other important issues: one size does not fit all, and the financial element of the claim should not necessarily be the determining factor.

Richard Lander, a barrister from Kings Chambers, spoke about the features of Chancery and property litigation that might make it hard to accommodate a fixed costs regime. He acknowledged that the cases are hugely varied in terms of type and complexity, and can be hard to value in monetary terms. They are often “one off” cases for clients and lawyers, and have a degree of complexity that means that they require more senior lawyers, which increases costs. There are also often a number of interim applications needed at various stages of the litigation. He posed the question of whether the benefit of certainty of fixed costs would be useful, and whether suitable cases should be allocated to a fixed costs scheme at (the later) allocation stage. This would assist in cases where it may be difficult to assess, initially, whether fixed costs should be applied. Another point for consideration was whether cases that started in the fixed costs regime could be removed at a later date, if things changed.

Gordon Exall and Kerry Underwood shared their views on how, and whether, a fixed recoverable costs scheme could work. Gordon Exall expressed concern that fixed costs could be a step backwards and lead to cases being badly prepared. He was also concerned by the suggestion that the regime might apply to cases worth up to £250,000, which is a lot of money to a lot of people. He worried that the regime could result in solicitors not taking on cases. There was also a risk that those with deep pockets would be unaffected, but others would not be so lucky.

Kerry Underwood was more supportive, as he saw fixed costs as increasing access to justice for those who cannot afford a lawyer. He also proposed that there be a portal system for all types of cases and a percentage increase of the fixed costs after any Part 36 offers are made and accepted out of time, or beaten at trial. He summed up by saying that he agreed with a fixed costs system, but case management is crucial and judges need to recognise the “big spenders” who exceed their budgeted costs.

Audience views

The audience was invited to express its views on the scheme, and a variety of issues were raised.

One concern was that, in inheritance claims where maintenance was being claimed, claimants would not be in a position to pay a large shortfall in unrecovered costs. There was a discussion about the advantages of certainty in relation to possible adverse costs but, against that, the risk of injustice.

A new “intermediate track” for lower-value multi-track cases, to which fixed costs may apply, was suggested. Should parties be able to choose whether the claim is heard in a specialist list, where fixed costs apply, or the general list, where costs budgeting would apply? This seemed to be a popular idea.

There seemed to be acceptance that costs should either be managed through costs budgeting or fixed costs.

Although Jackson LJ is being told by the judiciary that costs management is working, the view in the room from some was that it was not working for various reasons, including:

  • Parties were agreeing generous budgets between themselves, because the court does not have adequate time to determine budgets.
  • Judges have different views on the approach to budgets.

Another point for consideration, if a “grid” is introduced, is whether parties should agree where the claim “sits” in the grid beforehand.

Another issue was whether there should be bands (an X and Y axis along with boxes A-D) that take into account the character and complexity of a case, together with the value. It was pointed out that there are currently only four bands being discussed, but this could be increased by the additional axis and boxes (so that there are 16 different combinations). This would have the added advantage of the parties addressing, early on, the clear points in issue and any common issues. Judicial input for allocation was suggested.

Some stressed that there is not always a correlation between the value of a claim and its complexity. The example given was that of a high value debt claim, which involved no experts and was straightforward.

There was concern about the disproportionate amount of costs that have to be incurred pre-issue in some cases, for example, Technology and Construction Court (TCC) cases, and how those would be dealt with in a fixed costs regime.

A “one size fits all” approach will not work, in the view of many of the audience.

Other questions included:

  • Should character and complexity weigh more heavily than value?
  • Should there be a single scale, or separate scales, for character and complexity?
  • How are disbursements to be dealt with?
  • Should mediation be provided for in the fixed costs grid?
  • Should fixed costs be an opt-in scheme, whether by judicial assessment or otherwise?

LJ Jackson is due to report to the government on the proposed extension of fixed recoverable costs by 31 July 2017.

Clarion Walker Morris Sue Harris Sue Fox

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