Lord Justice Jackson has sought to calm fears raised by the “grid of fixed costs” he proposed in January this year for all civil claims worth up to £250,000.
He described the grid, which drew an angry reaction from litigators, as “a good starting point for debate” and said it was never intended to be a “final blueprint”.
In a speech to yesterday’s Westminster Legal Policy Forum event on civil justice, Jackson LJ said that in a civil litigation regime where costs shifted between the parties, the “only effective way to control costs” was to do so in advance, removing the incentive to “spend as much as you possibly can”.
He said the only two ways of setting costs in advance were a “complex grid of fixed costs” or a “budget tailored to each case”.
Jackson LJ went on: “The grid I set out is a good starting point for debate. Unless someone takes the plunge, the debate won’t get anywhere. What I did not was not to set out a final blueprint of what should go into the rules, but give an illustration of how you could move to a grid of fixed costs.
“I suggested a series of facilitative meetings organised by the Civil Justice Council, at which the rules could be thrashed out”.
In what he referred as the “skeleton argument” for his speech, Jackson LJ described how his lecture in January was a “first attempt” at converting the factors set out in CPR 44.5(3) into a fixed costs grid.
He said there may be a need for an “escape clause or some other provision to deal with exceptional circumstances”.
Jackson LJ said there was a “great demand” among clients for fixed fees, and a gulf between what lawyers wanted and what their clients wanted.
As an example, he gave a survey by the Federation of Small Businesses carried out during his costs review, which showed that a majority backed fixed costs for disputes worth up to £500,000.
Responding to a question after his speech, Lord Justice Jackson said that although they needed “special consideration”, the number of personal injury cases had gone up since fixed costs were introduced.
He added that three years of costs management in the courts provided enough evidence to introduce fixed costs to the “lower reaches of the multi-track”.
At a panel session afterwards, Duncan Rutter, president of the Forum of Insurance Lawyers, said there was “no magic” to the figure of £250,000, and “no reason” why it could not be higher.
He described costs budgeting as artificial, because of the need to build in a “whole raft of contingencies”.
Mr Rutter went on: “We believe fixed recoverable costs are a more certain, less cumbersome and more realistic way of trying to reduce costs.”
He said there was now a “consensus for fixed costs”, including Lord Justice Jackson, the Department of Health, which is planning to introduce them for medical negligence cases worth up to £250,000, and civil justice minister Lord Faulks.
Mr Rutter added that FOIL was disappointed there had been “so little activity” on the issue since January. “We believe it is time to press ahead.”
Neil Sugarman, president of the Association of Personal Lawyers, said there were now a “whole round of different problems” with conditional fee agreements, regarding assignability, while damages-based agreements remained “unworkable”.
He said fixed-cost portals at the lower end of the personal injury market had been successful because liability was admitted “quickly and easily”.
Mr Sugarman said any extension of fixed costs would have to take into account the fact that claimant lawyers did not want to “put forward bad claims that waste everyone’s time”.
He added: “The public should have access to a skilled, accredited lawyer to assess their claim.”