When it comes to the small-claims court, all the focus seems to have been on personal injury.
There has been a lot of attention on the looming threat of a rise in the small-claims track limit for PI, currently being mulled over by government. The PI small-claims limit is £1,000 at the moment – but most commentators expect the justice secretary to bump this up to £5,000. The big point about the small-claims track, of course, is that there are no recoverable costs – so the rise risks leaving many unrepresented injured people to deal directly with defendant insurers, without having any idea of the real value of their claim.
But what about non-PI claims? Here, the small-claims limit doubled from £5,000 to £10,000 this month, and the profession does not seem to have made much of a fuss about it. Is it bad news for lawyers – and what about for litigating parties?
For those who have a very clear-cut claim, where they have good evidence that they have suffered loss as a result of a breach of contract or negligence on the part of a professional, the fact that their £9,500 claim will now fall within the small-claims limit may be unfair. Whereas previously they could have recouped their legal costs when they won, now they cannot.
But how many claims ever fall into that category? Is there really any such thing as a surefire claim? More likely, a litigant may have a very strong claim that they feel they really should win, provided that the judge on the day adopts a sensible approach. But you can never be sure – because unfortunately, that is the nature of litigation – and the opposing party may be feeling equally confident.
For the average person with a relatively small-scale dispute to litigate, their biggest concern is not the amount they might have to spend on their own lawyers. It is the prospect of paying the other side’s costs if they lose – costs over which they have no control at all, and cannot simply pull the plug on – that really scares them. And in a very many cases, it will put them off litigating altogether, and they will never enforce their rights as a result.
I have a friend who has been let down very badly by her builders. They botched the job to such an extent that she eventually had to hire another building firm to put things right. She has paid the original builders a reasonable sum for the aspects of the work that did not need to be re-done; but they continue to press her for the full cost of the job, despite their obvious negligence. It is a very large and well-resourced firm.
Because of the amounts involved, her dispute will fall within the small-claims track under the new limit - something she is relieved about. Rather than caving in, she is more than prepared to fight her corner in that court, and instruct her own lawyers if she needs to. But had she been at risk of her opponent’s legal costs, that would have involved a far greater risk, and one she probably wouldn’t have wanted to take. As lawyers know only too well, adverse costs can be a very powerful bullying tool – although it will be interesting to see what effect the new rule requiring costs to be ‘proportionate’ to the amounts at stake will have outside the small-claims track.
So while litigants will not now be able to recoup their legal costs for disputes under £10,000 allocated to the small-claims track, it may just be that we will actually see more cases being brought, and more wrongs being righted, as a result of the new limit. If that is the case, there could be an opportunity for solicitors to offer a supporting role, even if it falls short of full representation.
Rachel Rothwell is editor of Litigation Funding magazine, providing in-depth coverage on costs and the financing of litigation.
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