New Practice Direction 51W: two-year voluntary capped costs list pilot scheme

In November 2016, the then Jackson LJ was commissioned by the Lord Chief Justice and Master of the Rolls to explore the possibility of extending the fixed recoverable costs regime with the aim of promoting transparency in civil litigation and access to justice for litigants. This was not a task undertaken lightly, with Jackson LJ having the benefit of other professionals from legal and other backgrounds helping him as assessors.

Fast-forward to 14 January 2019 and implementation of a two-year voluntary capped costs list (CCL) pilot scheme, in the Leeds and Manchester Business and Property Courts and London Circuit Commercial Court, for cases valued up to £250,000, pursuant to new Practice Direction 51W.

There will be occasions where a matter will not be appropriate for the CCL pilot. These will include the requirement of more than a day’s trial, extensive disclosure and reliance on expert evidence, and the involvement of multiple parties.

The costs, which are capped, not fixed, are recoverable at £80,000 across 12 phases of work. These phases exclude VAT, court fees, wasted costs and costs of enforcement.

Along with the general principles of promoting access to justice and transparency, the purpose of this exercise (and costs reforms in general) is to reduce the costs of litigation and to speed up the resolution of claims. These should ultimately remove the need for lengthy detailed assessment proceedings. In an era of the increase of court centralisation and judicial burden, this will be welcome to some.

However, many question the impact that this will have on legal/costs firms if this approach were to become mandatory. Initial reactions might be to say that this will inevitably lead to a loss of jobs in larger firms and the viability of many smaller businesses or sole practitioners, who rely on the steady flow of lower value matters to ensure a constant level of cash flow.

The reality could, of course, be somewhat different. For law firms, whilst the work will attract lower costs recoverability, it will inevitably be undertaken at a quick pace to ensure a speedy recovery and costs appropriate time scale. This will, on the balance of probability, also lead to an increase in workload capability. This, in itself, will only work with a good team of highly skilled staff, from paralegals through to experienced solicitors.

As Birss J commented at the Legal Futures Civil Litigation Conference in March:

“… more junior staff can do cases, which they really like doing and gives them fantastic experience. Litigants like it because they get really good lawyers and it’s not costing them as much. Everybody wins”.

With regards to costs firms, there will always be a need for people to “costs manage” cases effectively, so as to ensure that applications are being made at their earliest opportunity, and to deal with issues of wasted costs and enforcement. This may require an element of diversification for some firms, but it may be no more onerous than the adjustments made during the implementation of costs budgeting, which ultimately resulted in lengthy payment delays from clients.

What the scheme will identify, however, is whether there is a demand for capped costs. For the willing participants, it will inevitably identify whether or not the costs will have an impact on the viability of running a successful claim or defence.

The next two years will certainly prove interesting. The results will determine whether a broad implementation of possibly one of the biggest elements of the Jackson reforms will be implemented.

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