Extension of fixed fees
Lord Justice Jackson gave the keynote speech on Tuesday to a packed-out White Paper costs conference (conference to be repeated on 28 March 2017), discussing his current review of an extension of fixed costs.
It will be remembered that Sir Rupert stated in another speech in January 2016, before he was tasked with undertaking this review:
“There should be single fixed costs grid for all multi-track cases up to £250,000.”
It is therefore understandable that there was a certain element of scepticism when he declared, after he had been formally tasked with undertaking this review in November 2016, that:
“I will keep an open mind for the time being about what types and levels of cases should fall within such a regime”
It was therefore interesting to listen to clues as to the extent his views had hardened or softened compared with his original position.
Firstly, there can be no doubt that he will look to extend fixed fees across the fast-track. Sir Rupert has repeatedly stated that the missing piece of his original reforms was the fact this was not done originally.
In terms of impact:
- For low value commercial disputes, claims under £10,000 currently fall into the small claims track. Extending fixed costs into those claims which fall between £10,000 and £25,000 is perhaps not dramatic.
- The two notable areas of personal injury work that currently fall outside fixed costs are noise induced hearing loss claims and holiday claims. In the past, this probably represented on a relatively modest proportion of the costs market. However, given earlier reforms have sucked such a large part of the personal injury market into fixed fees, these probably represent a more significant proportion of the surviving work. Certainly, those costs firms that undertake work in this area will feel the impact and this will inevitably squeeze the profits of those claimant solicitor firms heavily reliant on these areas of work.
Sir Rupert was always of the view that fixed costs, once his initial reforms had bedded-in, should be extended into the “lower reaches of the multi-track”. The most interesting comment of his recent speech was that:
“’lower value’ has different meanings according to context. In the mercantile courts (I am told) ‘lower value’ means claims up to about £250,000. In personal injury litigation, on the other hand, the upper limit for ‘lower value’ claims would be well below that figure.”
If I was a betting man, I would anticipate that he will recommend an extension of fixed fees for personal injury claims valued up to £50,000 (paving the way for further increases at a later date).
He will be significantly fortified in his views by the fact that campaigners against his original proposals for fixed fees argued they would cause significant reductions in claims numbers but this has, as he said, simply not happened. This may explain, in part, why more recent claimant campaigns have also been met by considerable scepticism.
In any event, work volumes for those working in costs will drop further.
Likely implementation date: April or October 2018.