Legal Cost Specialists

Extension of fixed costs

The Ministry of Justice (MoJ) recently announced that it intends the extension of fixed recoverable costs in most money cases worth up to £100,000 to come into force from October 2022.

This is, of course, subject to the Civil Procedure Rule Committee redrafting CPR 45 in time.  This itself is a significant undertaking, particularly as “the policy view is to commence a complete re-draft of [it] to simplify and streamline the rules”.

As with the implementation of other fixed costs regimes, the new rules will apply to those cases where the accident or cause of action arises after the implementation date, or in disease and equivalent cases where no letter of claim has been issued before the implementation date.  So, this will not be retrospective.

The fast-track will be expanded to include “intermediate” money claims valued between £25,000 to £100,000 where the trial should not last longer than three days with no more than two expert witnesses giving oral evidence for each party.

Mesothelioma/asbestos, complex personal injury and professional negligence, actions against the police, child sexual abuse, and intellectual property will all be excluded from intermediate cases.

It is easy to make too much, or too little, of these changes.

The greatest impact is likely to be felt outside the world of personal injury.  A very large number of consumer contractual disputes, commercial claims and more routine professional negligence claims will become subject to fixed fees.  There are two possible ways this may impact the market.

Firstly, and no doubt this is the hope of the MoJ, solicitors may increasingly offer their clients fixed fee arrangements broadly in line with the fixed recoverable costs.  This should lead to firms streamlining their processes and changing their approach to litigation.  (There is little point spending two hours drafting a clever letter arguing with the other side over a procedural point if you will not get paid any extra for it.)  This may mean less profit per case.  On the other hand, if the cost of litigation becomes cheaper and more predictable, this may lead to an increase in the number of claims being brought.  This may mean more work, not less.

On the other hand, if solicitors remain wedded to the hourly rate model, and successful parties are only able to recover a small amount of the costs they have incurred, this may see case numbers slump and an access to justice crisis emerging.

In terms of personal injury work, the impact is likely to be less dramatic.  Firstly, as explained by Professor Dominic Regan:

“A claimant hurt in a September 2022 accident would have three years to bring a claim.  If they only issued in 2025, the case might not be resolved until 2027.  They would be entitled to recover costs at large (unfixed) five years after the new measures took effect.”

The second reason why the impact may be more muted is that the new “intermediate” category of case will be restricted to claims with no more than two expert witnesses giving oral evidence for each party.  Once the new rules come into force, expect an immediate increase in the number of medical experts being instructed per claim by claimants.  There will always be something that justifies further investigation.  It will be interesting to see how defendants react.  The decision as to track allocation, which will determine whether fixed fees apply, will presumably continue to be made after Directions Questionnaires are exchanged.  Will there be a much greater willingness on the part of defendants to agree claimants’ experts’ reports (or, at least, not seek their own evidence in the same field) to reduce the need for more than two experts to give oral evidence?

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