31 January 2013Print This Post

CJC urges delay in cutting fixed costs, saying £500 “may be unrealistic”

Cutting costs: CJC urges patience

The proposed £500 fee for handling RTA portal work may be “unrealistic” and the government should wait until at least next year before setting new fixed recoverable costs (FRC), the Civil Justice Council (CJC) has told the government.

The CJC said that in the meantime fee levels should instead be uprated by inflation.

Its newly released response to the Ministry of Justice’s consultation, the CJC welcomed the Lord Chancellor’s decision to reconsider the implementation date of the extended portal, and recommended a “cautious approach” to the figures set out in the Jackson report.

It said: “In particular the CJC suggests that at the present time the most appropriate revision of those figures should be to update them in the light of any inflationary change since they were formulated.

“Given the nature and extent of the various civil justice reforms which have been and are in the process of being implemented, a full-scale revision of the figures should perhaps best take place when the reforms have had time to work. In that way a proper revision to the figures can take place in, for instance, 2014 which could be based on evidence derived from, and a properly researched impact assessment of, costs from actual work done under the reformed regime.

“Such a revision could then properly take account of the costs of both simple, straightforward cases as well as more complex cases and as a consequence be reflective of more realistic levels of fixed recoverable costs. Adopting this approach is in the CJC’s view more likely to avoid, as far as possible, the prospect of limiting effective access to justice for accident victims due to the introduction of limiting the amount recoverable to the presently proposed figures.”

The CJC argued that the FRC regime should reflect the varying nature of the costs of managing a personal injury claim, rather than the lowest possible cost. “The CJC is conscious that solicitors must comply with a number of regulatory guidelines when opening a file, and that it may be regarded as unrealistic to expect all the necessary work and negotiations to be carried out against a fixed fee limited to £500.”

On referral fees, it said that while the ban meant there was “potential” to reduce costs, “it does not automatically follow that a solicitors’ firm’s marketing costs will consequently be significantly reduced”.

The CJC continued: “In order to maintain their profile in the market place, which is becoming increasingly competitive not least due to the changes effected by the Legal Services Act 2007, firms are likely to have to increase their marketing costs. This is likely to have an impact on their cost base and ought properly to be reflected in the sums recoverable.”

Meanwhile, Post magazine reported yesterday that Steve Maddock, managing director of claims at Direct Line Group, told the All Party Parliamentary Group for Insurance and Financial Services that every day the extended portal is delayed will cost the insurance industry £1m.

By Neil Rose

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