Extension to Fixed Recoverable Costs
On 6 September 2021 the Ministry of Justice confirmed that it would follow Sir Rupert Jackson’s 2017 Report and introduce fixed recoverable costs to most personal injury and money claims worth up to £100,000.
At present, successful Claimants are awarded the majority of their legal costs based upon their solicitor’s hourly rate in personal injury claims worth more than £25,000 and in money claims worth in excess of £10,000. In this article, Greg Porter looks at the proposed reforms in-depth, and explains what they could mean for parties involved.
The Proposed Reforms Explained
The proposed reforms therefore represent a very significant change to the costs rules for the vast majority of personal injury and money claims. Sir Rupert recommended that different types of claim be placed into 4 bands of complexity and that the successful party receive a fixed sum towards their legal costs based upon the stage at which the claim concludes. He proposed that the complexity bands would apply to the following cases:-
Band 1: Non-personal injury road traffic accident claims, defended debt claims and other “simple” claims involving one issue and where the trial will take one day or less.
Band 2: Personal injury claims arising from road traffic accidents which are dealt with within the Ministry of Justice Portal, holiday sickness claims and similar cases.
Band 3: Personal injury claims arising from road traffic accidents which are dealt with outside the Ministry of Justice Portal, personal injury claims concerning employers’ liability or public liability, tracked possession claims, housing disrepair claims and other money claims.
Band 4: Disease claims (other than noise induced hearing loss), particularly complex possession claims or housing disrepair claims, property disputes, professional negligence claims and other complex claims where the trial is likely to last 3 days or more and there are serious issues of fact/law to be considered.
Sir Rupert’s report proposed the following level of recoverable costs in 2017, although the Ministry of Justice have confirmed that these figures will be increased to take account of inflation:
The figures set out in the table will be increased by 35% where a party beats its own offer at trial and unreasonable behaviour during the litigation will result in the opponent being awarded a 50% increase on the above costs.
What The Reforms Could Mean
The Ministry of Justice claims that the reforms will ensure costs incurred in litigation are proportionate to the sums in dispute and will provide certainty about the level of costs, thus allowing the parties to take an informed decision on the appropriate way to pursue or defend a claim.
Fixed recoverable costs do not, however, take into account the complexity or amount of work required to pursue individual cases, which often has no bearing upon the sum of money in dispute.
The reforms are also likely to play into the hands of large corporate defendants and their insurance companies at the expense of members of the public who have been injured or suffered a loss due to the defendant’s actions. Such defendants will have the means to incur whatever legal costs are necessary to defend claims against them, whilst individual claimants may only be able to recover a small percentage of the costs their solicitor actually incurs pursuing the claim.
It therefore seems that the reforms will have the effect of preventing claimants pursuing meritorious low value claims because they will simply be uneconomical to pursue.
Butcher & Barlow LLP
It is therefore recommended that, if you are considering seeking legal advice concerning a dispute, you do so without delay to take advantage of the current costs rules before the above reforms are implemented.