As part of his 2010 Review of Civil Litigation Costs, Lord Justice Jackson introduced fixed recoverable costs (FRC) in "fast track" cases (for claims of up to £25,000) and "costs budgeting" for multi-track cases. Having waited for those reforms to "bed in", he published his latest report on FRC on 31 July 2017, in which he develops proposals to extend FRC to lower-value claims in the multi-track.
The aim in preparing this report was to analyse the ways in which costs recovery could be made more proportionate and thereby promote access to justice. The first paragraphs of the report set out the background succinctly:
"In England and Wales, the winning party in litigation is entitled to recover costs from the losing party. The traditional approach has been that the winner adds up its costs at the end and then claims back as much as it can from the loser. That is a recipe for runaway costs. The only way to control costs effectively is to do so in advance: that is before the parties have run up excessive bills. There are two ways of doing that:
(i) a general scheme of fixed recoverable costs (FRC);
(ii) imposing a budget for each individual case (costs budgeting)."
The views of a diverse set of interested parties were collated and the proposals include:
- a grid of FRC for all fast track cases (chapter 5);
- a new "intermediate" track with streamlined procedures for certain claims up to £100,000 (triable in three days or less with no more than two expert witnesses on each side) (chapter 7); and
- a voluntary pilot (with SMEs in mind) of a "capped costs " regime for commercial cases in B&PCs up to £250,000 with streamlined procedures and capped recoverable costs up to £80,000 (chapter 9). The trial, which should last no more than two days, should be held within eight months of the Case Management Conference.
At the heart of the review is the objective of promoting access to justice. "Controlling litigation costs (while ensuring proper remuneration for lawyers) is a way of promoting access to justice. If the costs are too high, people cannot afford lawyers; if the costs are too low, there will not be any lawyers doing the work."
Successful litigating parties should not lose sight of the fact that fixed recoverable costs in litigation proceedings will almost always be lower than the actual cost of legal fees incurred. Recovering fixed costs from the other party will still, again in almost all cases, leave the successful party liable to pay the balance of fees to its legal team.
The report is being reviewed by the Master of the Rolls, the Lord Chief Justice and the government and further consultation is expected before the implementation. (Click here to read the report in full: Review of Civil Litigation Costs: Supplemental Report – Fixed Recoverable Costs.)