Senior judge recommends fixed costs in claims less than £250,000

Posted on March 1, 2016

A senior judge has recommended that a regime of fixed costs be introduced for all civil claims under £250,000, including personal injury claims. If implemented, this would mean that claimants who are successful at trial, would only be able to recover a fixed amount of their costs – regardless of their actual legal costs.

Lord Justice Jackson has proposed ⁽¹⁾ that the costs be fixed depending on which of four bands the claim falls within (as set out in the table below) - regardless of the complexity of each individual case.

Band Sum in issue (and proposed maximum fixed costs recoverable)

1 £25,000 – £50,000 (£18,750)

2 £50,001- £100,000 (£30,000)

3 £100,001 - £175,000 (£47,500)

4 £175,001 - £250,000 (£70,250)

Under current rules, parties who pursue or defend a claim all the way to trial will incur legal expenses such as solicitors’ and barristers’ fees. The current court rules provide for a system of costs budgeting and management to keep the parties’ costs expenditure proportionate to the sums in dispute. The successful party will, very generally speaking and subject to the court’s discretion, recover such proportionate costs as have been reasonably incurred and/or are within the costs budget.

However, Lord Justice Jackson believes that fixing the amount of recoverable costs depending on the amount in dispute, would: make legal costs more predictable; be easier for solicitors to explain to clients; give disputing parties more certainty about the potential expense; and, ensure that the costs do in fact remain proportionate to the claim value. In addition, a fixed costs regime would dispense both with the need for the parties to prepare costs budgets and with costs assessment proceedings - which in turn would reduce the demands made on the court system.

Various concerns about the proposals have been voiced. For example:

Large companies would still be able to afford legal fees over and above the level of fixed recoverable costs. This would enable them to pursue claims against individuals and smaller businesses whose available resources are much smaller thereby making them less able to defend themselves.
The value of a claim is not always the best indicator of what costs should be recoverable: some small claims can be immensely complex and might require far more preparation before being ready for trial. Less well-off parties might not be able to afford to pay for the cost of extra legal services over the value of fixed costs. Access to justice could therefore be restricted.
Solicitors might refuse to accept complex cases in which the cost of the work needed will not be covered by the fixed costs – on the basis that such cases would be economically unviable. Again, this consequence of fixed costs would restrict access to justice.

The Law Society, which represents the interests of solicitors, supports the principle of fixed costs but only in limited circumstances and certainly not as a single approach for all cases. Jonathan Smithers, the Law Society President, has said that fixed costs for complex cases would be inappropriate in that it would restrict access to justice for many.

Further consultation on the recommendations is expected.

In a dispute and concerned about legal costs?

If you have a dispute and are concerned about the potential costs of going to court, get in touch with:

Christopher Burke on 0161 684 6941 or email christopher.burke@pearsonlegal.co.uk

Christopher and Aaron have many years experience of pursuing and defending claims in courts. They can explain what is involved and give you a better idea of what it will cost as well as the dispute resolution alternatives to going to court.

(1) 'Fixed Costs - the time has come" IPA annual lecture by Lord Justice Jackson, 28 January 2016.

Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers Ltd or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.

This blog was posted some time ago and its contents may now be out of date. For the latest legal position relating to these issues, get in touch with the author - or make an enquiry now.