Fixed recoverable costs – here we go….

Insights - 29/03/2019

Yesterday, the Ministry of Justice (MoJ) has confirmed that it intends to implement Sir Rupert Jackson’s Fixed Recoverable Costs (FRC) in the fast track and in most money claims up to £100,000, by expanding the fast track to include these “intermediate cases”.  This is only the start: the MoJ said, “It remains our intention to extend the areas in which costs are controlled… to further categories of claim including claims of higher value and controlling costs incurred before the first costs and case management conference, where cases are not otherwise subject to FRC.”

The Lord Chancellor, David Gauke, introduced the consultation by saying he believes that the proposals will enhance access to justice, because litigants will know in advance how much they are likely to recover if they win, and how much they are likely to have to pay their opponent if they lose.

Interestingly, the consultation proposes that the court should have the discretion to allocate cases to the new intermediate status, where litigants need to be protected from themselves in cases where emotions run high, such as boundary disputes or arguments over a family business.  Even more interestingly, the consultation suggests that any case could also be allocated intermediate status on the application of an impecunious litigant wanting protection from the risk of losing and having to pay substantial costs.

The MoJ has said that it will adopt Sir Rupert Jackson’s 2017 pricing.

So if you are, in Sir Rupert’s example, a householder of modest means suing his builder for £100,000 after a contract to build a big extension goes horribly wrong, what would FRC mean for you? Let’s say your contract with your builder is not in a standard JCT form, but a spit-and-handshake variety, with complex legal and evidential issues to be resolved, a counter claim by your builder for his unpaid invoices and expert evidence required about the shoddy standard of work.  It’s a tricky case and will take 3 days to resolve at trial. Applying the cumulative totals in Sir Rupert Jackson’s 2017 paper, the maximum the MoJ thinks it is reasonable for your lawyer to spend in winning the case for you is £46,700 + VAT (this does not includes advocacy fees or expert’s costs).  At the other end of the scale, where for a low-complexity, low value claim of £30,000 the maximum allowance is £10,200+ VAT.  Assuming that these cases run smoothly (and here you will spot my reservation) the figures allowed are tight, even bearing in mind that standard disclosure will not be allowed and that witness statements should be limited to 30 pages (still far too long, in my opinion).

FRC goes hand-in-hand with the Law Society’s Transparency Rules, which required all solicitors firms to publish details on their websites of their charges for debt recovery of sums up to £100,000 with effect from 6 December 2018. (My brief, unscientific and random sample of various law firms’ websites shows that quite a few of them have chosen not to comply with this requirement.  Has Chancery Lane noticed? Will anything be done about it?)

Let’s have a look at a sample published hourly rate (thank you, Law Society’s Transparency Project), choosing at random a law firm from Buckinghamshire with 5 partners. The hourly rates quoted for debt collection range from £125 to £300.  Let’s assume an hourly rate of £200, which might suggest a non-partner of about 6 years’ experience.  The FRC would allow this lawyer 233 hours of that lawyer’s time for your complex house extension dispute. Far and away the most time consuming part of litigation is disclosure, with witness evidence a close second.  These elements will have to be tightly controlled by lawyers in order to have any hope of coming in close to the FRCs.

I come back to my reservation about the underlying assumption that these cases run smoothly.  In those cases where your client is unusually demanding or vulnerable, or where your opponent is unreasonable and aggressive, it will be difficult to match the FRC figures.  How many of us have had a client deliver the case papers stuffed into carrier bags, that take hours to sift through and reduce to order? Or an opponent who quite unreasonably refuses to agree your perfectly sensible directions or requests for disclosure until the very last minute?

A final word: the sums proposed for counsel are not generous.  The proposed brief fee of £5,000 and refresher of £2,500 ought to encourage more firms to qualify their litigators as solicitor-advocates.  Those figures look more realistic for a lawyer who has handled the case from the start and does not need as much trial preparation as would counsel who is instructed “cold” shortly before trial.

If you have any questions regarding the above or to find out more please contact Catherine Fisher, Partner and Head of Dispute Resolution. Catherine is contactable by telephone on 01483 215 357 or by email on [email protected]

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