Costs News

13 June 2019
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Fixed costs extension must come with procedural and technological reform, says ACL

The ACL is “generally supportive” of fixed recoverable costs (FRC) in appropriate cases, but this must be supported by significant procedural and technological reforms, it has told the government.

But it expressed a “profound frustration” that the proposals to extend FRC – “in some specific instances based upon a small data sample” – represented a fundamental break from a budgeting regime that has now had time to bed in and was working satisfactorily.

Responding to the Ministry of Justice’s (MoJ) consultation on extending FRC, the ACL continued: “This frustration is felt together with a fear that the extension of FRC to inappropriate cases will have profound effects on access to justice. Should the costs recoverable be too low, litigants will not be able to access the level of legal expertise needed without bearing much of the costs themselves (raising concerns regarding equality of arms) or, to echo the most pessimistic scenario of Sir Rupert’s report, be faced with no representation at all.”

The association also worried that, given recent increases in court fees and various new initiatives – such as the disclosure pilot and electronic bill – adding to lawyers’ workload while potentially reducing what they were paid, plus the “intense political uncertainty” of the times, making a further fundamental change to how costs were awarded would make England and Wales “a less attractive jurisdiction to litigants all over the world who choose our legal system”.

The consultation response predicted that the division of cases into different bands depending on complexity would lead to a “surge in satellite litigation”. It said: “At a time when our members are seeing a reduction in the number of costs disputes proceeding to detailed assessment, the ACL is surprised that proposals are being put forward which result in more judicial time and resources being taken, rather than less.”

Noting the lack of data Sir Rupert Jackson was able to obtain in respect of the costs of non-personal injury fast-track cases in his underlying report, the ACL said the wide variety of such work “suggests to our members that these cases do not lend themselves to a rigid matrix of recoverable costs”.

Cases worth more than £25,000, meanwhile, were “inherently unsuited to a rigid fixed costs matrix”. The ACL explained: “The variety of cases covered in this definition of ‘intermediate cases’ [of up to £100,000]… is huge, both in value and type. The introduction of a fixed costs regime would, the ACL fears, create a disincentive for lawyers to act for litigants whose cases are of the complexity to require work the cost of which would be in excess of the fixed award.”

Instead, the ACL said the costs budgeting regime should be improved “to ensure consistency and to address any concerns in respect of incurred costs”.

The response also said multi-party actions were not suitable for an FRC regime – there is “considerably more potential in these cases for a wider amount of work needed than a fixed regime could accurately predict” – and opposed removing indemnity costs for unreasonable conduct, saying a fixed uplift would not reimburse a client for their actual spend.

The ACL argued that it was “almost inevitable” that, as costs recovery between the parties reduced, litigants themselves would be asked to pick up the shortfall, “hampering rather than aiding access to justice”.

Further, it was “surprised, concerned and frustrated that even by the government’s own analysis, the costs and benefits of the proposals are ‘unknown’”.



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