Costs News

04 April 2019
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ACL calls for more data to underpin government’s extended fixed costs plan

The ACL has urged the legal profession to provide the government with more data to inform the level of fixed recoverable costs (FRC) that it plans to introduce across the rest of the fast-track and for many claims worth up to £100,000.

The Ministry of Justice (MoJ) announced last week that it planned to implement Sir Rupert Jackson’s 2017 report on FRC, including the specific figures he recommended for ‘intermediate’ cases worth between £25,000 and £100,000.

These were devised by Sir Rupert (pictured) based on data submitted by defendant firm Taylor Rose and analysed by Professor Paul Fenn. The MoJ said: “Sir Rupert consulted with his team of 14 assessors, drawing on a breadth of views and experience, and brought his own expertise to bear in finalising the figures. As such, we consider that the figures have been devised with appropriate rigour and intend to implement them as he recommends.”

In its response to the announcement, the ACL said: “The question of fixed costs ultimately comes down to the figures. Do they provide genuine access to justice and allow a party to conduct litigation effectively, or do they only work for the privileged few who can afford to pay for litigation irrespective of what they recover from an opponent?

“The proposed figures for the fixed costs adopted by the Ministry of Justice in the consultation are nearly two years out of date and were based on just one law firm’s sample of cases, where it acted for the defendants.

“The government needs a much more rigorous statistical base if it is to widen the use of fixed costs, and also needs to commit to regularly reviewing and updating them. This is absent from the consultation and, indeed, history shows that it does not happen, to the detriment of clients, their lawyers and access to justice.

“The fact is that nobody else supplied figures to Sir Rupert Jackson. This shows that, unless there is engagement, apathy may play a part in determining the future of funding within litigation generally.

“All interested parties need to recognise the importance of engaging meaningfully with this consultation, including providing data, absent which they will have to accept the outcome without complaint.”

The Law Society expressed similar concerns. President Christina Blacklaws said: “Crucially, justice must be attainable for all… Fixed recoverable costs should usually only apply to ‘low value’ and non-complex claims – exemptions should be available for complex or unusual cases. Rates and thresholds should be regularly reviewed and adjusted by reference to appropriate indices and to take account of changing processes and developments in technology.”

Ms Blacklaws stressed the importance of underpinning the rates and thresholds with “strong empirical evidence and research to protect people’s ability to uphold their rights, whatever their status or wealth”.

Meanwhile, the impact assessment published by the MoJ alongside its consultation said the reforms “should mean less time is spent arguing over costs, resulting in cases being settled quicker”.

An “overall net reduction in legal fees” was likely, it added. “This is therefore likely to represent a cost to lawyers from reduced income per case. It may result in lawyers reducing the resource they spend on each case, as any increase in expenditure would reduce their profit margins.”

On the other hand, the MoJ said the reforms might generate “business process efficiencies in the form of reduced management costs or overheads, in order for solicitors to maintain their profit margins, and cases may be settled more quickly which means they can take on more cases”.

A further benefit would be that solicitors would no longer have to “maintain documentation required for costs assessment or spend time arguing about costs”.

It did acknowledge that the proposals “could make small legal firms less able to compete with larger firms that have greater economies of scale and can provide services on mass [sic] as cheaply as possible”.

The assessment said that, while some claimant lawyers might not be willing to take on some cases, others may enter or existing providers may expand to meet demand. “This is because the proposed FRC are considered to reflect the amount of work which an efficient and effective provider would undertake.”

The MoJ also assumed that claimant settlements would remain the same, but said there was a risk they could fall. “This risk might materialise if claimant lawyers reduce the time and resource they spend on cases in response to FRC, and if as a result settlement negotiations lead to worse outcomes for claimants.

“Whether this risk materialises would depend upon the behaviour of defendants in such settlement negotiations.”

This led to another risk that there could be an increase in the number of professional negligence claims “if claimant lawyers reduce the amount of work they are able to complete on each case, as a result of FRC, and claimants are unhappy with the outcome of the case”.

 

Comments

Dragon 2   04/04/2019 at 12:32

It is rather worrying that input was sought from a Defendant firm, namely Taylor Rose. Does this provide a balanced reflection of reasonable cost of litigation in order to achieve access to justice? Or does it, as suggested, impact on true justice for the lay client in cases which have potentially life-changing implications? Of further concern is the supposed "low" and "intermediate" value of claims now up to £100,000. To the majority of lay clients a claim up to such a sum is neither low nor intermediate. But capping the costs for such recovery will inevitably lead to more unqualified staff running litigation which has complex issues and ultimately settlements below value will be obtained to the detriment of the lay clients. That cannot be right and plays solely into the hands of Defendants' insurers. Genuine claims must be litigated properly, thoroughly and professionally to try and place clients in the position they were in prior to the index incident occurring - they should not be short-changed due to unrealistic constraints on expenditure.

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