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Lawyers unite in opposition to massive extension of fixed costs

Tucker: serious inequality of arms

Lawyers have united against the potential threat of a huge extension of fixed recoverable costs to all civil claims worth up to £250,000.

The Bar Council warned that the move could starve young barristers of work, while the Association of Costs Lawyers (ACL) argued that the existing system of costs budgeting was succeeding in reducing costs and penalising unreasonable claims.

Lord Justice Jackson was asked by the senior judiciary last November to investigate options, having himself already proposed a £250,000 limit.

In its response to Jackson LJ’s call for evidence, the Bar Council said it was “extremely concerned” about the potential impact on the junior Bar, saying personal injury barristers had already seen a reduction in workload from fixed costs in cases worth up to £25,000.

“Junior members of the Bar who used to undertake pleadings and drafting work now tend only to get instructed at a late stage of a fixed-costs case, primarily for trial, and then often only in cases where there is an allegation of fraud or dishonesty or some issues of complexity.

“The lack of an independent adviser in the guise of a junior barrister early on in a case may also result in unnecessary cases going to trial and/or under settlements of cases.”

The Bar Council warned that if the fixed costs regime was extended either horizontally, beyond personal injury, or vertically, above £25,000, it was “inevitable” that there would be less work for counsel.

“Consumers who lose the benefit of an independent specialist referral service will suffer. It is not in the interests of the courts either.”

The Law Society, however, said it was not against extending fixed costs in principle, but they should apply only to “low value” cases, and must be fixed at reasonable rates, based on “strong empirical evidence and research”.

Robert Bourns, the society’s president, said “fixing costs for all claims up to £250,000 – a tenfold increase on the current limit – would risk making many cases economically unviable”.

Mr Bourns went on: “At its worst this regime could seriously impact the ability of solicitors to investigate and prosecute significant claims for their clients.

“In due course valuable expertise could be lost, undermining the ability of those suffering serious loss to obtain the remedy they deserve and the common law provides.”

The ACL argued that it was too soon for a “radical extension” of fixed costs, coming only three years after the current regime was put in place.

“Active case and costs management is proving successful in prospectively restricting many of the excesses of litigation that lead to high legal costs and the post-LASPO test of proportionality, with its increased stringency, is retrospectively penalising parties who present unreasonable costs claims.”

Costs firm Kain Knight said budgeting was having its “intended effect” of reducing the number of claims that proceeded to detailed assessment, with clients settling cases on the basis of on approved budgets.

Kain Knight said the proportionality test, despite being used as a “very blunt tool” by some judges, had also led to a reduction in recoverable costs.

The firm noted that Jackson LJ had, in his civil costs report, recommended the extension of fast-track personal injury costs to all civil cases, and this was the “logical” first step to be taken.

Agreeing that the current regime was working “effectively”, the Personal Injury Bar Association (PIBA) said that extending fixed costs beyond the fast-track would be “positively damaging” to claimants, defendants and the courts.

PIBA said there was “nothing approaching a linear relationship” between damages recovered and costs incurred, and, where claimant solicitors were unwilling to take cases on, the “representation vacuum” would be filled by claims management companies or claimants becoming litigants in person.

Agreeing that fixed costs could price claimants out of the market, the Association of Personal Injury Lawyers (APIL) said fixing recoverable costs did not mean fixing actual costs, and claimants already had to pay increased court fees.

“Fixing costs does not reduce fees, it transfers them to another party, in this case the claimant. They will end up contributing significantly to fees out of their damages to cover any shortfall in legal fees.

“This automatically means that poorer clients are disadvantaged and cannot be guaranteed access to justice.”

Andrew Tucker, chief executive of Irwin Mitchell, said imposing a fixed fee regime on claimants could have “the major unintended consequence of creating a serious inequality of arms”.

Mr Tucker went on: “Forcing claimants to accept an arbitrary and insufficient legal budget would have serious implications for access to justice, especially when the defendant they are facing would, in most cases, not be subject to the same financial straitjacket.”

The Association of British Travel Agents (ABTA) called for overseas holiday claims up to £25,000 to be brought under the same fixed costs regime that currently applies to other personal injury claims.

It said the change was necessary “to close an existing loophole that has enabled claims for overseas holiday sickness to fall outside of the existing fixed costs regime, even though consumers who have booked a package holiday have a clear line of legal redress against their UK-based travel company”.