Lord Justice Jackson, the principal architect of the LASPO Act 2012, gave a speech last night where he recommended that fixed costs be applied to all civil claims valued up to £250,000. Currently fixed costs apply only to personal injury claims valued up to £25,000. Lord Jackson would like to see his plan implemented as early as the end of this year and has urged the government to make this a priority.
In his speech he proposed a grid of rates (which excludes VAT and disbursements) for each value of claim: £18,750 for claims up to £50,000; £30,000 for claims up to £100,000; £47,500 for claims up to £175,000 and £70,250 for claims up to £250,000.
On a positive note for clinical negligence practitioners Lord Jackson recommended that the government not apply fixed fees to clinical negligence claims for the moment in order to stop the ‘Balkanisation’ of fees for different types of claim.
“What we do not want to have is a series of separate grids for different types of cases,” he said. “There should be a single fixed costs grid for all multi-track cases up to £250,000.”
In relation to claims over £250,000 Lord Jackson stated that “would be too great a change for the profession to accept”, though he did say a universal costs regime could be implemented once the dust had settled on his latest proposal.
Lord Jackson accepted that the proposed extension of the fixed fee regime was not likely to be welcomed by either claimant or defendant solicitors. We suspect it will actually be welcomed by defendant insurers for the purposes of applying a reserve to the claim. Further we are of the opinion that many more cases will likely proceed to Trial given that the proposed change will very much limit a defendant insurer’s desire to propose a commercial settlement on “50/50 cases” so as to avoid the usual high costs associated with proceeding to a five day Trial. Further what incentive is there for the defendants to conduct their end of the case cost effectively? Currently, no proposal has been made in this regard by Lord Jackson.
As he has done before Lord Jackson stated that the fixed fee regime will help solicitors to explain to clients how costs have been accrued and what the likely final fees will be. This cannot be contested however, we suggest, this is the wrong consideration. The extension of the fixed fee regime is more likely to lead to solicitors having to explain to clients why they cannot take on a case unless the client is willing to contribute to the “shortfall” in costs from their damages as a result of the fact that the fixed fee is insufficient in some cases. Ultimately this is likely to lead to a further hurdle to jump for clients to get access to justice.
Lord Jackson also stated that “My impression is that the profession is now more willing to accept fixed costs than it was in the past”. He went to say “I do accept if we have a regime of fixed costs there will be winners and losers, it is impossible a case will cost the client precisely the amount set out in the grid. That is a price worth paying in order to obtain the benefits of certainty, predictability and proportionality. I have come across cases which have flown out of control where the issue is of modest value.” In our experience the only reason fixed fees have been “accepted” is because solicitors do not have a choice on the matter, not because they like it.
It should be noted that not all of Lord Jackson’s recommendations have been accepted by the government in the past. By example Lord Jackson opposes the increase in the limit of the small claim track yet this is currently still proceeding however, given past experiences, we suspect this is one recommendation that will likely be implemented.