Lord Justice Jackson published his second review of the costs of civil litigation on 31 July 2017 and whilst it proposes significant changes, most claimant injury claim practitioners will be relieved he did not go further.
When it was announced in November 2016 that LJ Jackson had been commissioned to review the costs of civil litigation, it appeared the primary aims were to introduce fixed costs into the whole of the fast track, and if possible to impose them on most claims with a value of up to £250,000. Since that time, LJ Jackson has arranged several seminars up and down the country, where there have been arguments for and against such an extension of fixed costs.
Fixed costs were implemented in all fast track injury cases (excluding occupation disease) in 2013. The costs are minimal and make running the claims financially unviable for most firms of solicitors.
In his new review, LJ Jackson has recommended the introduction of a new track for the personal injury claim with a value of between £25,000 and £100,000. He has come up with a catchy new title of the ‘Intermediate Track’. He has not attempted to fix costs for cases valued between £100,000 and £250,000.
The intermediate track will only apply to cases where the maximum value is £100,000, where there will be no more than two experts on each side giving oral evidence at trial, and where the trial duration will be no more than three days.
There will be different amounts of fixed costs payable depending on the complexity of the case. There are 4 bands as outlined below:-
- Band 1 – For simple a claim just over the fast track limit, with one issue and that any trial will only take a day or less.
- Band 2 – This will be the normal band for intermediate track cases, normally where quantum and liability are disputed.
- Band 3 – This will be for cases which are more complex than Band 2 cases, with no explanation provided as to what this may include.
- Band 4 – This will be for the most complex cases: for example, a business dispute or industrial disease claim where there is a serious point of law to be determined.
Interestingly, claimants will be encouraged to identify the relevant band within their letter of claim or certainly to attempt to agree on them with the defendant pre-action. If no agreement is reached and proceedings are issued, the Judge will deal with the band on allocation. The parties can dispute the band at CMC stage but there is a £300 penalty for the party who challenges the banding and does not succeed.
LJ Jackson recognises that the intermediate track, which pays much lower costs, requires a streamlined process to go along with it. The recommendations include a 10-page limit to statements of case and a 30-page limit to witness statements.
There is a grid of fixed costs payable. For pre-action settlements the level of costs payable as follows:-
Band 1 – £1,400 plus 3% of the damages
Band 2 – £4,350 plus 6% of the damage
Band 3 – £5,550 plus 6% of the damages
Band 4 – £8,000 plus 8% of the damages
The fixed costs also apply to all stages of proceedings, with cumulative amounts being paid depending on the stage reached. For example, if the case reaches trial (with the bundle being prepared) the costs are as follows:-
Band 1 – £5,700 plus 15% of damages
Band 2 – £15,000 plus 20% of damages
Band 3- £16,200 plus 20% of the damages
Band 4- £24,700 plus 20% of damages
LJ Jackson proposes an uplift of 12.5% on these figures if the claimant lives in London and instructs a solicitor practising there. There are separate allowances for barristers for drafting statements of case, conducting conferences, and advocacy at trial.
LJ Jackson “tentatively” proposes that if the claimant beats their own Part 36 offer, their entitlement to fixed costs should be increased by 30% to 40%, rather than assessing their costs on an indemnity basis.
The figures above exclude disbursements but LJ Jackson comments that serious consideration should be given to introducing fixed expert fees as has been done in fast track cases.
I assume LJ Jackson’s recommendations will be introduced and it will be interesting to see how the industry reacts. Claimant practitioners will have to look again at how they prepare these cases whilst making it economically viable to run them. Defendants may choose not to contest certain elements of a claim because doing so may cause it to leave the intermediate track so that they pay higher costs. For example, they may choose not to agree on some expert evidence to avoid the need for more than two experts on each side giving evidence at trial. In addition, I suspect there will be even more use of pre-medical offers by defendants to avoid increasing costs if a case is litigated.