What is the fixed costs extension?

In regard to civil litigation, Fixed Recoverable Costs (FRC) refer to the amount of legal costs that the winning party can claim back from the losing party. Following the publication of Sir Rupert Jackson’s review of civil litigation costs, the government has now announced that the FRC regime is set to be extended to all fast track claims for cases valued over £25,000.

The implementation will see the reforms introduced to include intermediate track cases( those valued between £25,000 and £100,000).

This has led to some disagreements because it could lead to more intermediate cases falling out of the fast track and into the multi track instead.

Responses to the FRC extension

The Law Society has urged the government to reconsider their plans to extend the use of Fixed Recoverable Costs in civil cases as it would reduce access to justice for many vulnerable people.

Responses to the consultation received by the government, working with the civil procedure rules committee, indicated a strong deviation of opinions between claimant and defendant representatives on their proposals.

An extension of fixed costs may be suitable for cases such as contract disputes between small to medium businesses. However, in personal injury cases, there is already an unequal balance between the claimant and the defendant, and further fixed costs for the claimant will reinforce this inequality.

While the Association of Personal Injury Lawyers (APIL) are not opposed to the control of costs in the personal injury claims process, the rules around costs are clear. It should act as a leveller between the two parties, helping to put them on an equal scale. Instead, APIL believe the best approach is creating a system whereby costs above the current fast track level are carefully managed, rather than fixed, which would be much more preferrable.

Although this regime is problematic, Sir Rupert Jackson explains: “If the costs are too high, people cannot afford lawyers. If the costs are too low, there will not be any lawyers doing the work.”

Therefore, there is a risk that some law firms may withdraw from providing their services.

President of APIL, Neil McKinley, said the approach adopted by the Ministry of Justice ignores the simple fact “that most personal injury cases really are complex and cannot simply be shoe-horned into a simpler system with which they are just not compatible.

“Employers’ liability disease claims, for example, can be incredibly complex, as can product liability claims, yet both categories of claim are to be included in this new system.”

He continued: “The Ministry of Justice has also provided little detail about how this will work, leaving it to ‘the parties and judges’ to work that out. That will take time and, until we get clarity on these matters, injured people will be subjected to a great deal of uncertainty at a time when they are very vulnerable.”

Brett Dixon, another APIL president, quotes:

“Fixing recoverable costs does not mean fixing actual costs. Claimants already have significant liability for court fees and just introducing fixed costs without consideration of the necessary process will add to this burden. Attention must be on helping to control costs, including any recoverable costs of those representing the wrongdoer based on the work they do, rather than limiting what is recoverable from those responsible for putting the injured person back on track.” 

Since the 2017 report from Lord Justice Jackson from which the reforms are based, Stephanie Boyce (president of the Law Society) believes that the justice system has been reshaped by the pandemic, the court reform programme, and several changes in other areas of civil justice.

She also considered the adverse consequences it has on the less well off because they “would too often be unable to seek redress if fixed recoverable costs were extended to cover cases valued up to £100,000.

“This could seriously damage the justice system, leaving claimants unable to obtain effective remedy or vindicated defendants out of pocket through no fault of their own.”

Ms Boyce also criticised the data supporting the proposals and suggested that the government “rethink” their decision because their plans were “both out of date and drawn from to narrow a pool of cases, given changes would apply across almost the entire spectrum of civil litigation”. 

Executive Director of the Association of Consumer Support Organisations (ASCO), Matthew Maxwell Scott, was not taken aback by the government implementing most of Sir Rupert’s recommendations.  

As a measure specific to the professional service sector, he embraced the decision to review the figures based on the services producer price index. However, he raised his concerns because a formal review period did not appear on the regime. 

He continued: “We would like to see more clarity on how the government will measure success for FRC reform, and a formal review mechanism, of, for example, every five years, like the Ogden rates for serious injuries.

“Finally, we urge the government to clarify how the regime will take proper account of vulnerable claimants, ensuring there is no risk of consumer detriment.”

A client briefing from defendant firm BLM believed that the reforms were highly likely to produce satellite litigation, but “experience also suggests that paying parties will be better able to predict the costs of litigation within the FRC schemes and therefore to resolve claims more efficiently”.

Although it still needs a significant amount of work to execute these changes, it is realistic to plan for implementation in Autumn 2022.