More than a quick fix
Date: 12 February 2010
Authors: Andrew Parker
Issue: Vol 160, Issue 7404
Categories: Opinion, Costs
Fourteen years ago Lord Woolf advocated a fast track for low value claims. Inherent in his proposals was the idea of a matrix of fixed costs for all claims within the track limits. In the end, however, he was persuaded to proceed with only limited fixed costs (for trial fees). Implementation of any further fixed costs since 1999 has been minimal.
It is no surprise Jackson LJ has set out to redress this, again advocating fixed costs in all fast track cases. The surprise may be that he has gone much further and has produced a matrix of figures for all personal injury accident cases within the fast track, with a commitment to extend this to employers’ liability disease cases within a few months.
This may not be the most controversial of his recommendations, but it will be seen as the standard bearer for his report, for the simple reason that he calls for implementation by October 2010. In fixing costs for all accident cases and by basing those figures on extensive data, Jackson LJ has produced a set of proposals which are difficult to challenge objectively.
The starting point
It is important to understand that the two alternative tables in Appendix 5 of the Final Report reflect the status quo, with minor adjustments for inflation and predicted efficiency savings (see p 538 of Lord Justice Jackon’s Final Report of his Review of Civil Litigation Costs). These tables aim to control costs in fast track accident cases rather than to reduce them. Some may even say that because of that, the figures are too high.
Critics of fixed costs claim that, once fixed, the costs are never varied.
However, Jackson LJ has made it quite clear that the level of fixed costs should be reviewed annually by the proposed Costs Council. Review means exactly that, not an automatic inflation-proofed increase.
The council, when reviewing the costs, can increase them, leave them at the current level or reduce them. As Ch 44 (p 450) makes clear, there is every prospect that the figures might be reduced: the council will have the difficult task of assessing the reduction that needs to be made for removing referral fees from the system when this is achieved, plus it will have to take account of the commercial rates set between defendant insurers and their panel firms.
As with the current fixed recoverable costs, the new fast track costs will have an escape mechanism, where there are exceptional circumstances and the party can show that the costs incurred were at least 20% more than the relevant fixed fee. There is an additional escape mechanism for complex cases, in that there is, as now, the opportunity to have such cases allocated to the multi-track.
The Ministry of Justice’s new RTA Claims Process, due to come into force in April, is incorporated into the two tables for RTA claims up to £10,000 in value (see p 538). Jackson LJ gives this new process a cautious welcome but wants to be satisfied that it does genuinely simplify the process and does not lead to satellite litigation. If successful then it could be extended to other accident claims.
A or B?
There is only one difference between the two tables. Table A contains a flat fee structure, calculated with reference to the amount of damages recovered. Each box shows the total costs that can be recovered by the winning party up to that stage. The numbers in table B are marginally higher, to allow for a reduction for early admission within the relevant protocol period: £250 reduction where the case settles pre-issue, £500 on settlement post issue. All figures are inclusive of any counsel’s fees incurred.
The choice of table is finely balanced and is likely to go to consultation: table A has the advantage of simplicity, while table B would promote good behaviour by defendants. The proposed reduction would not apply to the new RTA Claims Process, which deals solely with cases where liability is admitted within the first 15 business days.
Integration
How does a table incorporating success fees fit with the other major proposal: to abolish recovery of success fees and after the event (ATE) premiums? The answer lies in Jackson LJ’s thoughts on “integration”, where he explains that his plans will need to be phased. Fixed costs can be achieved quickly and simply via the Rule Committee. Removing the recovery of success fees and ATE premiums will require primary legislation and take longer.
In the meantime, fixed costs deliver some control and create benefits for efficient lawyers. Work on the file can be confined to essential steps needed for the benefit of the client. Access to justice is not restricted: the German system, where fixed fees apply to claims up to €30m and beyond, demonstrates that fixed fees for both parties can improve access, as those funding litigation have more certainty as to their exposure. There will be other efficiency savings. Costs disputes in fast track cases should dwindle to nothing. Solicitors can concentrate on obtaining a suitable remedy for the claimant, not building an enforceable claim for costs.
Delivery
For non personal injury cases there will be a cap of £12,000 on pre-trial costs, inclusive of counsel and experts’ fees. A separate matrix for housing disrepair claims may follow.
Like the rest of his report, Jackson LJ’s vision for the fast track is, to quote the Master of the Rolls, “imaginative and practical”. Above all, it is deliverable—and urgently needed.
Andrew Parker is head of strategic litigation at national commercial law firm Beachcroft LLP & one of Jackson LJ’s assessors
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