Legal Cost Specialists

Fixed costs on the multi-track

Lord Justice Jackson’s recent suggestion that fixed costs should be extended to disputes worth up to £250,000 was, according to the Association of Costs Lawyers’ e-bulletin, accompanied by the comment:

“I appreciate that, in complex and value [sic] cases, fixed costs still won’t work. Here, the only way to control costs in advance would be to continue with costs budgeting and costs management”

This is presumably meant to mean no more than cases over £250,000 should be exempt from fixed costs because they are, by their nature, complex and higher value matters where the costs are more variable from case-to-case.

The ACL e-bulletin commented this was “an observation that many costs lawyers will be relieved to hear”. I’m sure they will both be very happy. Realistically, £250,000+ cases must make up a very small proportion of the cases that most costs lawyers deal with day-to-day.

Further, nice as it would be to have some work remaining to see me through to retirement, once fixed costs are extended up to £250,000 there seems limited logic to stopping at that stage.

Fixed costs are not meant to produce a “reasonable” figure on a case-by-case basis. A fixed fee will always be too much or too little when compared to the number of hours spent. Fixed costs, at best, are designed to produce an average figure that is reasonable across a basket of cases (although it might need to be topped up on a solicitor/own client basis).

Fixed costs on the fast-track has some logic and justification. Although fast-track cases have varying (relative) degrees of complexity, by their nature, a judge must have decided each case is straightforward enough to be heard in one day. There is a relative cap on the complexity of such cases. Fixed costs for such claims will contain a margin of error as to how close the figures are compared to the time spent, but there should be a limit to the level of discrepancy.

However, once you start to introduce fixed costs for claims up to £250,000, any attempt at producing figures that correspond to the actual work undertaken is clearly abandoned. The figure will be an arbitrary payment to the other side, often likely to be too much or too little by £10,000s.

There are good arguments for and against introducing an extension to £250,000. But if the arguments in favour prevail, there is no obvious reason why fixed costs should not be introduced for all litigation regardless of value. A £250,000 cap has as little to recommend it as the old £2,000,000 (now £10,000,000) cap for costs budgeting.

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