It was anticipated that more radical thoughts would emerge from Lord Justice Jackson’s latest speech last night to the Insolvency Practitioners’ Association on the subject of rolling out more fixed costs, and so it proved.

In an effective acknowledgement that the Jackson-inspired reforms introduced so far had not done enough to control the high levels of costs being claimed between the parties in some civil claims, the proposal put forward last night was to fix costs in all claims up to a quantum level of as high as £250,000. Jackson’s new proposal is that the same fixed costs matrix should apply to claims of every type, with there being no distinction in the level of fixed costs allowed between different classes of claim.

He went as far as suggesting what the fixed fees should be, more details on that below, with what he called a proposed fixed costs grid expected to be published on the judiciary website later today after he has tinkered with the figures. The table he presented yesterday is at the end of this message.

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Timing

Sir Rupert was not of course speaking for government last night; rather he was using his continuing influence on the subject of reform by encouraging government down a particular path, when he is no doubt aware of the MoJ’s existing enthusiasm to move towards greater use of fixed costs. The Jackson idea is to carry out a judge-led review of the fixed costs arena during this year, with a view to having a detailed proposal with specific fixed costs figures included, by the end of the year, for implementation in 2017.

One single FRC matrix

Jackson advocates no differentiation or as he calls it “Balkanisation” between different classes of claim: the same costs figures would apply to all. This is a rough and ready approach and he thinks would have the advantage of simplicity, but it would be a change to the current approach.

At present there are of course fixed costs for RTA, EL and PL claims both in the portal, and for when they drop out, but there are some differences between the types of claim. For a claim proceeding all the way to trial and obtaining a judgment of precisely £25,000, the recoverable costs in an RTA claim would be £9,360, for a PL claim they would be £12,370 and for EL £14,318. The figures are exclusive of VAT and disbursements.

The new fixed costs proposals

Jackson proposes 4 value bands that would no doubt be used by reference to the damages recovered. Where the defendants succeed with a defence it may be that the amount claimed would be the reference point. The bands would be £25-50k, £50-100k, £100-175k and £175-250k.

Then the other criterion would be the stage at which the claim reached. He proposes the same 10 stages are used that are already found in what is called Precedent H, the court form used for costs budgeting currently. The first of these is the pre-litigation stage, the second is statements of case or pleadings, the third is the case management conference, and so on, through to the ninth which is trial, and the tenth – ADR.

The actual figures

For the first stage, pre-litigation costs, the proposed fixed costs outlined by Jackson yesterday would be:

  • Claims £25-50k - £3,250
  • Claims £50-100k - £5,250
  • Claims £100-175k - £8,750
  • Claims £175-250k - £12,000

And the highest costs levels for those claims proceeding the whole way to trial would be:

  • Claims £25-50k - £18,750
  • Claims £50-100k - £30,000
  • Claims £100-175k - £47,500
  •  Claims £175-250k - £70,260

The figures do not include VAT and disbursements. The full table is at the end of this article.

Comparison with existing FRCs

Looking at the currently fixed costs level for RTA, EL and PL claims worth up to £25k, a claim settling at exactly £25k pre-litigation would lead to fixed costs being payable for a RTA claim of £3,430, for a PL claim of £3,870 and for an EL claim of £4,000. So the £3,250 proposed by Jackson for £25-50k claims is actually lower than each of those.

As we have seen, for a claim proceeding all the way to trial and obtaining a judgment of precisely £25,000, the recoverable costs in an RTA claim would be £9,360, for a PL claim they would be £12,370 and for EL £14,318. Jackson’s £18,750 which he suggests for £25-50k claims is higher than each of those, but not by much.

The need for fixed costs as proposed

Certainty, predictability and proportionality” are the advantages seen by Jackson from his new approach. Clients will have certainty of outcome. The pressures on the costs budgeting of claims will be reduced. There will he accepts be winners and losers. Clients would potentially still have a liability for their lawyer’s costs on whatever basis has been agreed, but the amount recoverable from the other party would be what had been fixed.

Jackson believes lawyers will adjust their processes to fit the new fixed costs structures. He thinks they would be able to do so in claims of up to the £250k level, and while if the idea is successful he sees the regime as one that could be expanded to claims above £250k, it would be going too far to do so at this stage.

The impact of fixed costs in clinical negligence claims

As we know, the Department of Health has been moving forward with their idea to fix costs in that type of claim to reduce the cost to the public purse. They had initially planned to include claims worth up to £100k in value but later on suggested that they might aim at claims worth up to £250k. Their consultation was due to have taken place before Christmas with a view to implementation by this October. Earlier this month, the health minister Ben Gummer answered a question in parliament by saying that the intention remained to have these fixed costs in place by 1 October, though the consultation is still delayed till “early 2016”. He seems to us to be over-optimistic on timescales in view of the limited progress to date.

It is clear that as was anticipated, the DoH’s fixed costs ideas have been influential outside of clinical negligence itself. While government now needs to make a decision as to whether to heed Jackson’s advice to delay their processes in favour of a universal approach, the existence of the DoH idea for fixed costs in claims worth up to £250k has given support for Jackson’s own message. We have not of course seen the DoH’s proposed matrix as yet and do not know therefore how it would fit with Jackson’s.

The government’s current position

We knew already that they see the fees incurred by some lawyers in some cases as an issue. The latest view from the MoJ was seen from the justice minister Lord Faulks last week, when in answering a parliamentary question he responded that the government was supportive of the principle of extending fixed costs, and was continuing to consider areas where that might be “appropriate and workable”.

What happens next?

It is expected that the tweaked table of proposed fixed costs will be available here perhaps later today. The table presented yesterday evening is below.

It is likely that Sir Rupert’s views will find favour with certain other members of the senior judiciary and with government. Their response is awaited. The move towards greater use of fixed costs is an inevitable one.

But important issues remain as to how to implement a plan towards greater use of fixed costs and needs proper thought. While Jackson opts for a “one size fits all approach”, government’s view may be different, and of course we already have different fixed costs figures for different types of claim under £25,000. We still need to fill the gaps where costs are not fixed in claims worth under £25k such as disease claims outside the portal and non-injury claims. Jackson includes no figures for these in the paper he produced yesterday.

And another key issue is the level of claim under which costs should be fixed. Suggestions before had been aimed at filling the gaps where they exist in claims at up to £25k, and perhaps including the lower parts of the multi-track, say up to £50k. Even, at a squeeze, up to £100k where the DoH had originally pitched their idea, perhaps by getting there incrementally: first to £50k, then to £100k. Would that not be a safer way of proceeding? Jumping directly to claims worth up to £250k would be a risky approach and would be imposing radical reform in one jump.

Further developments will inevitably follow in the weeks ahead.

Jackson’s fixed costs matrix

Click here to view table.