Fixed Recoverable Costs Reforms
Civil litigators should be aware that a regime of fixed recoverable costs is going to be rolled out in October 2023 and will affect most civil cases valued up to £100,000. These reforms have been in the pipeline for quite some time, but we now have sight of what the draft Civil Procedure Rules underpinning these changes look like. Based on the information available, practitioners are strongly encouraged to familiarise themselves with the rules and start preparing for these changes now.
Fixed recoverable costs set the amount that can be recovered by the successful side, from the unsuccessful side, in litigation. They already exist in many lower value personal injury cases but they are now being extended across the fast track (generally cases up to £25,000) and also into a new ‘intermediate track’ (generally cases up to £100,000). The fast track and the intermediate track will each consist of four complexity bands which correspond with a table of costs setting out the amount that can be recovered for the stage at which the case concludes. When allocating a case to a track and band, certain rules will apply such as taking into account the length of the trial and the number of expert witnesses needed.
There are some notable exemptions to the fixed recoverable costs, including, among others, cases related to mesothelioma, actions against the police, and damages claims related to abuse of children or vulnerable adults. A recent welcome development is the exemption for housing cases, albeit only for two years at this point.
The intent of the expanded regime to is to bring a level of certainty to the costs involved in litigation at the outset – moving away from the traditional method of applying a solicitor’s hourly rate would, in theory, allow both parties to understand the costs consequences of taking the case to court. However, the Law Society is concerned that there are currently too many unknowns. There is a risk of satellite litigation being needed to provide clarity to issues such as banding allocation, and, of course, if there is a shortfall in the costs recovered from the costs incurred, it may be the clients who have to reach into their pockets to ensure their solicitor is paid for the work carried out.
No doubt we will be seeing an increase in commentary on the issue as the October implementation date nears, both in terms of the policy rationale behind the changes, but also around the practical implications for practitioners and their clients. Furthermore, we know that other fixed recoverable costs regimes are being considered, including for lower value clinical negligence claims. Collectively these reforms may pave the way for similar changes in higher value or more complex litigation further down the line.
Solicitors who have an interest in these reforms are welcome to send feedback to CivilJusticePolicy@lawsociety.org.uk to assist with lobbying and influencing efforts.
Furthermore, the Law Society is running an event on 6 June to raise awareness of the changes and encourage discussion about what the impact may be on solicitors and their clients.