Can He Fix It? Yes He Can: Government’s plans for fixed recoverable costs
July 25, 2019
3 min read
What's going on here?
Following the recommendations of Sir Rupert Jackson, a former judge of the Court of Appeal, fixed recoverable costs (FRC) will now be extended to the majority of civil cases that are worth up to £100,000.
What does this mean?
FRC are the amount of damages that the losing party can claim back in civil litigation. In other words, they allow those involved in the civil litigation to know the legal costs in advance.
In 2010 Sir Rupert Jackson was first commissioned to carry out a report on the costs of civil cases and how reform should appropriately control these costs. This was very influential in the reforms made in the Legal Aid, Sentencing and Punishment of Offenders Act in 2012 that established ‘no win, no fee’. With FRC only being applied in the lowest value personal injury cases, Sir Rupert was commissioned to produce a report on whether FRC should be extended. In agreement with the government and the senior judiciary, Sir Rupert concluded in his report “Jackson 2” published in 2017 that FRC must be extended.
The recommendations divide up FRC into two categories: 1) the fast track (for cases with claims up to £25,000) and 2) the intermediate track (for claims between £25,000 and £100,000). Within these tracks there are four levels of complexity that increase the fixed legal fee with the complexity of the claim.
These recommendations were expected to be implemented in April 2020, but they caused such a great debate amongst legal experts, lawyers and judges that the progress of these reforms remains uncertain.
Why should law firms care?
Although a welcome change by many, numerous firms have been critical of the proposed changes to the law. The likes of the international law firm Kennedy’s, multiples Bars, the Birmingham Law Society and even the Association of Personal Injury lawyers have critiqued the practicality of Sir Rupert’s recommended extensions.
Many fear that the new system will be easily open to abuse. Kennedys have argued that the reforms will make lawyers search for ways to move cases into higher complexity bands than they should be. This can be due to the defendant’s common desire to request a disproportionate amount of information from the claimant, or a litigation tactic to unnecessarily escalate the fees to force opponents to settle.
The proposed system also assumes that there is always a correlation between the gathering of sufficient evidence and the value of the damages. As Justice Coulson mentioned in CIP Properties (AIPT) Ltd v Galliford Try Infrastructure Ltd: “The value of the claim… is not as important as complexity… it might cost £300,000 or £30 million to rectify drainage defects, but the expert evidence necessary to prove those defects… will be broadly the same”.
This is particularly true regarding personal injury claims, evaluating quantum (the measure of damages) so early in a case is difficult. This means that a personal injury litigation could easily fall into the wrong bracket and either be overcharged or under investigated, thus reducing access to effective justice.
Another common fear is that FRC undermine the element of deterrence that underpin civil litigation. Removing the uncertainty of a penalty could encourage some to more confidently access the justice system, or on the other hand provides an opportunity for parties to commit civil wrongs at a fixed price.
Nevertheless, Sir Rupert’s reforms thus far have radically changed civil litigation for the better. Acknowledging the need for the law to mirror other sectors of society with fixed costs seems logical and fair. Further, these reforms, if passed, may well save people money and time. But it needs to reconcile the truth that some cases are too complex to bracket. What parliament feels about these changes, however, remains to be seen.
Report written by Will Holmes
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