Fixed costs extension to go ahead
The missing piece of the Jackson legal costs reforms is about to be slotted into place. Jackson proposed fixed fees across the fast-track and, although other areas of his recommendations seem certain to be implemented, this was the one glaring omission from the concrete proposals.
David Cameron has now announced the firm intention of the government to extend fixed fees. The Law Society Gazettte ran with the somewhat misleading claim that “David Cameron today announced plans to cap lawyers’ fees from personal injury claims at £25,000”.
Legal Futures gives, I suspect, a rather more accurate summary:
“The government is to extend the upper limit of the road traffic accident (RTA) portal to £25,000, while similar fixed-fee schemes are to be introduced into other, as yet unspecified, areas of personal injury … All that is definite right now is the extension of the RTA portal limit from the current £10,000 and that the model will be used for other areas of personal injury work. Legal Futures understands that this is very likely to include both employer’s and public liability, but more work is still needed before deciding whether industrial disease and clinical negligence cases will be caught too. It is unknown at the moment whether the new regimes will be for cases worth up to £10,000 or £25,000.”
The current £10,000 limit for RTA claims apparently catches around 80% of such cases. Previous government predictions are that extending this to £25,000 would capture 90% of such claims. Assuming that average damages for non-RTA claims are not dissimilar to RTA claims, a similar extension into other personal injury work would have a similar impact.
My back of the envelope calculations suggest that, excluding clinical negligence, approximately 75% of claims that currently fall outside a fixed costs regime would be caught by an extension to £25,000, with a corresponding reduction in costs work.
Best estimates are that around 50% of work currently undertaken by law costs draftsman and Costs Lawyers is personal injury work. This obviously masks the fact that some are 100% reliant on this work.