Jackson fixed fees problems
Lord Justice Jackson’s suggested rules and grid for introducing fixed fees for all claims with a value of up to £250,000 (which he suggested could be accomplished this year if the political will is there) rather has the appearance of being put out there, not necessarily with the intention it will be formally adopted in its current form but, rather, out of a sense of frustration at the lack of progress to date and is designed simply to start discussion on the issue.
It may, perhaps, therefore be unfair to be overly critical of the proposals in their current form. Nevertheless, let us take them at face value as they currently stand.
There appear to be two obvious problems.
The first relates to the decision that the grid of fixed fees should follow the ten stages set in Precedent H for costs budgeting. This is on the basis that: “Practitioners are now familiar with this structure and reasonably comfortable with it. Although ‘boundary disputes’ are inevitable in any structure, they will be reduced if we stick to the now established division of tasks”.
The Guidance Notes for preparing costs budgets state that the Pre-action phase should not include any incurred work relating to other phases of the budget. For example, if work is done in relation to witness statements pre-proceedings, that should go in the Witness Statements phase under “Incurred” costs, not in the Pre-Action phase. This is not an issue with costs budgeting as recording work under any particular phase does not trigger any payment. However, how does this work with the Jackson grid? In any case that settles pre-action in a claimant’s favour there will have been some negotiations, even if only a single offer and acceptance. Does this therefore trigger an entitlement to the whole Negotiations/ADR fixed fee in addition to the Pre-action fee? If so, why bother with a separate phase for Negotiations/ADR if it will always be triggered? Similar issues apply to phases such as Expert Reports or Witness Statements where some work may have been done pre-action.
The second problem, which does not appear to solve the first, is the proposed rule that: “The fixed cost is payable only if a work stage is completed. 50% of the fixed cost is payable if proceedings have been issued and the work stage has been substantially started”. What does this mean in real terms? If a case settles pre-action based on acceptance of an offer, it cannot be argued that the Negotiations/ADR stage has not been “completed”. However, some might think it strange that the same fee will be payable for a case that settles based on acceptance of a single offer pre-action and for a case that settles after proceedings have been issued, with years’ worth of negotiations, multiple JSMs and a formal mediation (even allowing for the fact that any system of fixed fees operates on a swings and roundabouts basis).
What, for example, does “completed” mean in the context of the Trial Preparation phase? If a party prepares trial bundles, briefs Counsel and summons witnesses but the case settles the day before the trial bundles were due to be delivered to Court, have they “completed” the phase. On one analysis, clearly not. Does this trigger only 50%? For claims in Band 4, this would reduce the fee from £7,000 to £3,750 simply because of one trivial step. However, once you start to introduce discretion into the process, the scope for satellite litigation spirals.
Again, what does it mean to complete the Expert Reports phase? If a claimant obtains one expert report and the case settles thereafter, it is difficult to see how this does not amount to completion of the phase. All work in relation to this phase necessary to conclude the claim has been completed. On the other hand, this is a world away from a case where both sides obtain multiple expert reports, there are joint reports, multiple conferences with experts and the experts attend trial. Same fee for both situations? Same fee for defendant if only the claimant has obtained a report? If not, where is the line drawn?
I rather fear the current proposals unnecessarily complicate matters. (Much the same mistake as was made with costs budgeting.)