Momentum is building for fixed costs outside personal injury. Get ready.
Fixed costs. That’s some kind of personal injury thing, isn’t it?
You remember it all, a few years ago. The claimants, defendant lawyers and the insurers all disappeared into a big tent marked ‘Civil Justice Council’ – you could hear scuffling and fisticuffs late into the small hours, then they blearily emerged the next day with their shirts hanging out, a few bruises, and a deal they could live with.
And that deal would probably have worked out OK, until government unexpectedly lopped a large chunk off the figures when it banned referral fees, leaving claimant lawyers struggling to make ends meet.
But as long as you don’t work in PI, you don’t need to worry about any of that – right?
In the Jackson masterplan, fixed recoverable costs were never supposed to be confined to fast-track PI. We are supposed to have them throughout the fast-track, in non-PI, and also in ‘lower value’ multi-track claims. What does ‘lower value’ mean? Well in Jackson’s Final Report, he refers to a figure put forward by Lord Dyson of £100,000 – but a speech by Jackson last September suggests a threshold of £250,000.
Personally, I wouldn’t call that low.
The extension of fixed recoverable costs is the missing piece of the Jackson jigsaw. It is seen as the best way to keep costs in smaller claims proportionate. How it will affect lawyers will, of course, depend on the level of the actual fees, which may be introduced on a sliding scale. But the silver lining is that where there are fixed costs, there is no need for a budget.
Fixed costs will not be easy to introduce, because once again someone - most likely the Civil Justice Council - will have to dust off the canvas and the tent pegs; unless an emboldened new government takes the bull by the horns and simply imposes whatever fees it sees fit.
Jackson has reiterated his call for government action on fixed costs time and again, but it feels as though pressure is building, with Lord Dyson adding some strong words on the topic at the Harbour lecture this month.
Dyson said: ‘ Sir Rupert has repeated his plea for an extension of the fixed recoverable costs regime to all fast‐track cases as well as to the smaller multi‐track cases. I take this opportunity to support him on this. I have been urging it publicly for a considerable period of time. There has been no public response from the department. I do not know whether there are any objections in principle to it.
‘As far as I am aware, there are none.
‘I can see that, if the proposal were accepted in principle, there would be battles over the levels at which the fees were set and as to the cut‐off point for fixed fees in multi‐track cases. I can also see that there would have to be a provision for disapplying the regime in exceptional circumstances.
‘But in my view, the time has come for the department to say that it accepts in principle that the fixed costs regime should be extended. At a stroke, this reform would surely reduce disputes about costs and also reduce the cost of a large swathe of civil litigation more generally.’
Just a few days after this speech, the Civil Justice Council, in its response to a report by the Insurance Task Force set up to advise the government on reducing insurance fraud, also said it wanted to see an expansion of fixed recoverable costs to ‘reduce litigation costs and indirectly reduce incentives to commit insurance fraud’.
With so much of the Jackson reforms now in place and increasing pressure from the senior judiciary to act on this, the extension of fixed costs may just be creeping up the government’s ‘to do’ list.
Lawyers, get ready.
Rachel Rothwell is editor of Litigation Funding magazine