The defendant costs specialists

Jackson is dead. Long live Jackson.

By on Feb 1, 2016 | 8 comments

Lord Justice Jackson has repeated his calls for an extension of fixed costs, this time with a recommendation it should apply to all claims with a value up to £250,000 and also produced a proposed matrix of the fixed costs that should be payable.

One of the reasons advanced in favour of an extension of fixed costs is:

“My impression is that the profession is now more willing to accept fixed costs than it was in the past. This is for two main reasons. First, such a regime would dispense with the need for costs budgeting, which not everyone enjoys.”

It is not entirely clear whether the irony is lost on Jackson LJ of justifying fixed fees as a way to avoid unpopular costs budgeting when costs budgeting one of the key Jackson reforms.

The ultimate irony is where this suggestion leaves the bulk of the Jackson reforms. Those reforms introduced a number of controversial measures (eg an end to recoverability of additional liabilities, Qualified One-Way Costs Shifting) and convoluted measures (eg costs budgeting, Qualified One-Way Costs Shifting (again)), in a report running to 557 pages, in an attempt to achieve proportionality (all at considerable disruption to lawyers and the courts in the implementation). A massive extension of fixed fees would make the majority of the Jackson reforms entirely redundant for the majority of cases (no costs budgeting, costs management, provisional assessment, new bill of costs, etc). Fixed fees across the board was always an easier (if not necessarily better) way to ensure proportionality than the bulk of the previous reforms already introduced.

Jackson LJ recommends that, at least initially, fixed fees are introduced for all claims up to £250,000:

“The first question is whether we should be fixing costs for all civil cases (like Germany and New Zealand) or just for the fast track and the lower reaches of the multi-track. This is a policy decision for others. I would favour the latter course (as recommended in my Final Report), but I acknowledge that some favour the former course. There are two particular reasons why I favour adopting the latter course: (i) Switching to a totally fixed costs regime for all claims, however large, would be too great a change for the profession to accept, certainly in the short term. The justice system only functions because of the high level of support which the profession provides.”

This is the first suggestion I have heard that any element of the Jackson reforms was ever meant to please the legal profession. It is difficult to believe that the final report would have remotely resembled its final form if that was what was intended. Secondly, if a proposal to extend fixed fees is now intended to attract a high level of support amongst the profession, surely this is being looked at the wrong way around. Fixed fees for all civil claims up to £250,000 will impact on the vast majority of claims, the vast majority of litigants and a huge proportion of the legal profession. Conversely, excluding claims above £250,000 will impact on a relatively small number of litigants and a small proportion of the legal profession. Not switching to a totally fixed costs regime for all claim will not lessen the impact for the profession as a whole, it will simply mean that the impact falls almost entirely on large parts of the legal profession whilst leaving other smaller parts almost entirely unaffected.

Surely it would make more sense to pilot an extension of fixed fees for cases worth over £250,000 only. We have repeatedly been told that City firms are much more experienced in providing their client with clear budgets and that legal costs are less of a concern for commercial litigators. If a pilot is a success, we can then extend it downwards.

    8 Comments

  1. Fixed costs is what he always wanted. It’s the easy way out for him. Watch the scramble for in-house jobs now. Glad I am coming to the end of my career (which looks to be sooner rather than later now) than at the start of it. Best of luck handling this one for the ACL, Iron Man.

    Ticklemebills

    1st February 2016

  2. I think Jackson LJ should be commended for proposing such a simple and elegant solution to the problem of excessive costs. There is, perhaps, only one thing he has overlooked, namely reality. However, I don’t see this as a significant problem; all that is required is for solicitors and their clients to adjust reality to make it fit his theory.

    Peter

    1st February 2016

  3. I wonder what Lord Justice Jackson would have to say were he faced with the thousands of people who stand to lose their jobs and their livelihood (if they haven’t already) as a result of his report? “Let them eat cake” probably.

    Costs Draftsman

    1st February 2016

  4. Mass rush to secure an in house role, followed by wage compression given sheer numbers applying then the inevitable redundancy when fixed costs are extended to all claims – 10 years employment left if you are lucky …..

    The White Horse

    1st February 2016

  5. what an admission of abject failure. Through all the nonsense spoken by Jackson and his followers about controlling costs, they failed to make it clear they were only talking about recoverable costs. Did they really believe that solicitors and counsel were going to accept significant reductions to their income streams. Who picks up the tab, the client of course, along with Joe Public via his insurance premium.

    speaktomyclerk

    1st February 2016

  6. One big gripe i’ve had with the reforms is that there has been a massive reluctance to interfere with high value cases. To me this reflects the fact that Jackson and everyone alike seems to equate proportionality with costs vs damages.

    It made no sense why high value cases were initially removed from budgeting and it makes no sense why budgets in low value cases need to be served with the DQ (i.e. about 6 months move a CMC will take place) and in high value cases they are served within 7 days of the CMC. To me it makes a massive amount of sense for budgets in low value cases to be served as close to the CMC as possible.

    The reality is that the costs in hig value cases might be proportionate to the sums involved, but they are otherwise in no way proportionate to anything else. It is not reasonable to incur costs of £500,000 because you are arguing over £5million unless the issues are complex to the tune of £500,000.

    Similarly, a fixed costs matrix as proposed by Jackson would probably result in a very good pay day for high value debt claims, but prove unworkable for clinical negligence claims.

    I’m a little bit disappointed about the shady nature of the reforms/tactics of the government (whether Labour or Con):

    (1) Legal aid scrapped on premise that CFAs with recoverable benfits would plug the gap – thus removing Govt interest in recoverability of legal costs
    (2) Inter partes recovery of additional liabilities removed to save peanuts on car insurance and the NHS bill (perhaps even a net loss if NHS charge recovery is down – it certainly will be on whiplash claims – I wonder if the stemming of cash from NHS charges will help the NHS in the long run!)
    (3) Fixing of costs for a large swathe of litigation
    (4) Reducing that fixed fee dramatically (RTA) on the premise of keeping their fat cat insurer mates in profit … oops I mean saving the consumer £50 or less a year
    (5) Narrowing liability for various parties (e.g. Good Deed Act, whiplash & armed forces claims)
    (6) Knocking IPT up – thus making ATE more expensive and making car insurance more expensive again
    (7) Suggesting that the withering BTE market will save the day (yup, the same ATE market that now largely requires the solicitor to work on a CFA)
    (8) Expanding small claims
    (9) Expanding fixed costs

    If they’d jumped straight to (9) all of this mucking around could have been avoided.

    Frankly, if the Lownds test of necessity had been the standard basis of assessment (e.g. necessary without hindsight) a lot of costs could have been saved.

    Robert Pettitt

    1st February 2016

  7. Now I am confused, we spend years and millions implementing a system/rules that still haven’t really achieved anything, so we sweep all that under the carpet and try and cram everything in one neat table. George Bush would have done a better job with these rules, well at least he would have come up with a decent blag, lie or excuse as to why the government did what it did from 01.04.13 with little or no foresight.

    There is nowhere to go from this stage apart from following Jackson’s guidance, no other member of the Judiciary/Government will try and assume this mantle, as the reforms are a sinking ship, I heard the MOJ are paying bonuses this year, Id like someone to tell me exactly what for?

    I suppose those pro conservative people are happy, just like your cotton master you can still send your kids to £50k a year schools and right around on horses chasing animals.

    Justice for the lower classes as-well as Toff’s I say. bring back John Prescott I say, the last politician who understood normal people and packed a mean right hook too.

    ohdearohdear

    1st February 2016

  8. Even better – whilst suggestions are being made that expansion of fixed costs must be the way forward – in part because of the problems being created by budgeting – we can expect next week the new statutory instrument setting out all the changes to the budgeting rules following the Coulson review. So, practitioners will have to adjust yet again to a changed set of rules, whilst at the same time being told it might all be pointless…

    Anon

    1st February 2016

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