City lawyers have set out a host of reasons to be unconvinced by the government’s commitment to extending fixed recoverable fees.
The City of London Law Society said this week it would be ‘concerned’ about any extension of the present system – in particular if applied to commercial litigation.
The government has stated its commitment to extending fixed fees and a review is being led by Lord Justice Jackson, with evidence being accepted from interested parties until 30 January.
The CLLS litigation committee, chaired by Clifford Chance partner Simon James, said an expanded regime would penalise successful claimants and do little to reduce costs overall.
The committee said if the claimant has a good claim which the defendant refuses to acknowledge, they should recover both for the amount of the claim and the costs incurred. This should also work for defendants taken wrongly to court.
‘Commercial litigation commonly involved enforcing agreements or seeking damages resulting from the infringement of parties’ existing rights,’ states the response. It is seldom optional or undertaken with enthusiasm. The ability to enforce rights is, however, fundamental to trade and commerce.’
Even with fixed recoverable costs, it argues, successful parties will be required to pay their lawyers for the work needed to pursue litigation, and will end up recovering a lower proportion of costs.
Rich defendants could be inclined to fight the case knowing the claimants would have to abandon the case. The CLLS said this inequality of arms could produce ‘perverse’ results.
While accepting that the current costs scheme in England and Wales is ‘far from perfect’ and that costs have increased in recent years, the society warns that to restrict the potential to recover actual costs could damage the internal popularity of the legal system.
It explains that the main costs of litigation are the product of steps required by Civil Procedure Rules. Changing these, as well as judges exercising their powers to control costs, was a better solution.
‘To have any significant impact on the actual cost of litigation, it is necessary to look beyond the system for determining the amount of costs’ recovery and to consider what steps are genuinely required in order to take a case to a fair trial.’
The CLLS said Jackson’s attempt to set out a model for fixed costs, in a speech made a year ago, raised considerable scope for argument about costs, with terms such as ‘substantially started’ and ‘exceptional complexity’ yet to be defined.