Fixed costs: The time is now?

Posted by Gary Knight, a partner at Litigation Futures sponsor Harmans Costs

Knight: only paying parties like fixed costs

Knight: only paying parties like fixed costs

So sayeth the Lord – well, Lord Justice Jackson in his lecture last month to the Insolvency Practitioners Association.

It has appeared inevitable in recent months that some form of fixed costs scheme will be introduced if the powers that be have their way although it was anticipated smaller claims would be targeted. However, Jackson LJ dropped the hand grenade that all costs involving claims up to £250,000 should be fixed.

The Lord Justice suggests that high litigation costs inhibit access to justice, without referring to the fact that court fees recently increased by up to 620%, a point made in an article in the Guardian,  Staggering price of civil court fees comes with a human cost. Jackson LJ also suggested that hourly rates reward inefficiency.

His speech refers to a “growing acceptance of fixed costs by practitioners and litigants”. This statement appears contrary to views expressed in the legal press and various blogs unless he meant to add “who pay costs”.

Support is found, we are advised, from the Lord Chief Justice, the Master of the Rolls, Flaux J (then the judge in charge of the Commercial Court) and Lord Faulks (minister for Civil Justice). One wonders how many clinical negligence cases/catastrophic personal injury claims have been conducted by this learned group.

Also in support, he refers to the systems in place in Germany and New Zealand. One wonders if their health service makes as many life altering errors.

To be fair, Jackson LJ admits that “reform is best done incrementally” and that switching to a totally fixed-costs regime for all claims would be “too great a change for the profession to accept”. However, he goes on, when suggesting what should happen next, to concede that it will be necessary for the government to consult and then – in the event it takes the axial decision to have a totally fixed costs regime – draw up details of the same or appoint a judge to consult widely.

He then displays an optimistic (unrealistic) view of the pace at which such consultations would take place when he states: “If the political will is there, this whole project could be accomplished during the course of this year.”

Many will have read the notes and will have seen the grid that sets out proposed allowances for fixed costs dependent on the damages involved – see below.

How these fees have been calculated has not been explained in any great detail but reality appears to have been excluded from the calculations.

Given the government’s impending consultation on fixed fees in clinical negligence cases, Lord Justice Jackson makes it clear that any fixed costs scheme must, in his view, include such claims to avoid what he describes as the Balkanisation route (many schemes for different types of claims).

The allowances proposed include counsel’s fees but exclude other disbursements and VAT.

It has frequently been commented that Jackson LJ is often stung by the criticism levelled at his reforms and he was certainly miffed that his proposals were introduced in a piecemeal fashion, so one wonders if this is his way of saying to the profession: “You don’t like the reforms, you don’t like budgets. See how fixed fees suit you!”

I am sure that this is not the case but when one considers the detail that went into his original report it is clear that most of the reforms will fall by the wayside with the introduction of fixed fees in most cases.

And why £250,000? Is this to soften the profession to accept a lower proposal by way of concession – £100,000? £150,000?

It cannot have gone unnoticed that the speed at which changes are proposed is unnecessarily reckless when the impact of the removal of the recoverability of additional liabilities from losing parties is yet to be felt.

Rather than invest in the NHS to prevent life-altering negligence from happening on such a regular basis, there appears to be an approach that suggests there is little to be done about the underfunded, understaffed NHS and that ‘accidents will happen’, so let’s make sure that for every cock-up made, we at least keep costs down.

Let us remember that the loudest voices in support of fixed costs are the same voices that will be heard if (when) consultation takes place with regard to the appropriate level of fixed fee allowances. How realistic do you suppose their proposals will be?

The views expressed are the author’s own and do not necessarily reflect the views of Harmans.

Jackson grid for fixed costs


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