Why I am not in a fix about the new Fixed Costs Regime
On the 1 October 2023 a new rule 26.9 of the new Civil Procedure rules came into force. This brought in a new “Intermediate” track, for cases between the value of £25,000 and £100,000, which extended the application of fixed costs, setting a limit on the amount which a successful party can recover from an opponent in civil disputes within these numerical values.
The response from some colleagues and practitioners to these rules has been to state that they do not intend to take on cases falling within the intermediate bracket, so that they do not have to face the constraints imposed on the costs which can be recovered from an opponent in litigation.
It is an automatic reaction to fear change, but change does not have to be a threat; it can be an opportunity if it is embraced. So which cases can be allocated to the Intermediate Track?
CPR Rule 26.9
The Intermediate track is the normal track where-
- The claim is suitable for neither the small claims track nor the fast track.
- The claim includes a claim for monetary relief, the value of which is not more than £100,000.
- The court considers that (i) If the case is managed proportionately the trial will not last more than three days (ii) oral evidence at trial is likely to be limited to no more than two experts per party (iii) the claim may be justly and proportionately managed under the procedure set out in Section iv of CPR Part 28, and (iv) there are no additional factors which would make the claim inappropriate for the intermediate track: and
- The claim is brought by one claimant against either one or two defendants or is brought by two claimants against one Defendant.
Claims including relief for non-monetary relief will not be allocated to the intermediate track unless it is in the “interests of justice” for the claim to be allocated to that track, and cases may also be allocated to the intermediate track if it is in the interests of justice to allocate them there or if it is not one which must be allocated to the multi-track.
There are certain types of cases which must automatically be allocated to the multi-track, namely:
- Most clinical negligence claims, except where liability and causation have been fully admitted.
- Claims involving children/vulnerable adults.
- Claims which involve the right to a trial by jury.
- Claims against the police.
- Housing disrepair claims.
Claims might still be allocated to the multi-track, although the value is not more than £100,000, due to the particularly complex nature of the case.
Section IV of CPR Part 28
This sets out provisions which apply to the allocation of claims to the intermediate track.
This provides that parties shall fix a case management conference and may fix a pre-trial review to agree or set appropriate directions for the management of the case, dealing with matters such as disclosure, witness statements, expert evidence, whether to fix a pre-trial review and listing the case for trial.
Standard directions which apply unless the court orders otherwise include limiting witness statements to 30 pages and expert reports to 20 pages. These are hardly of concern as far as I am concerned because it should be possible, except for unusual cases, for witness statements and expert reports to be limited to these lengths except in very complex cases.
The tables of what is allowed within fixed costs are set out in CPR Part 45. These set out the costs which are permitted within specific phases of work, from pre-action to the issue of proceedings, the CMC, disclosure, witness statements, expert evidence, the pre-trial review and through to the Trial.
Precise details of the amounts allowed will depend on the band within which the case is bracketed: the starting point being Band 1 for the least complex cases, through to Band 4 for the most complex cases.
It is important that a case is brought within the right band, as this affects the level of costs which is recoverable and so also will have a bearing on the level of costs which it will be proportionate for a practitioner to do and for a client to pay in dealing with the case. The parties can seek to agree as to which is the most appropriate band, and the court will assess each case to determine which band is the best fitted to the issues and evidence in each case.
The Effects of the New Fixed Cost Regime
I have read some views on the effects of the costs limits which have been imposed, suggesting that rather than helping clients with keeping costs down and knowing what their legal adviser can recover if the case is successful, the effect of the new regime will be that solicitors will refuse to take cases as the fixed costs have been set at too low a level.
Concerns have also been expressed about the damaging effect on solicitors’ profitability, with the suggestion that the new rules might drive some practitioners and firms to the wall.
In my view, what is required here is the willingness for practitioners to adapt to the changing environment in which they practice and to be flexible. Above all, as highlighted in the text of CPR rule 26.9 set out above, the new regime places greater emphasis on the need to run cases proportionately. This is something I welcome, as it has always been my practice to run cases in such a way that my clients are given estimates for the work which it is intended will be carried out, for every phase of a case, so that when presented with a bill of costs for that phase of work my bill will not come as a surprise, indeed the way in which I work is that each phase of work has been agreed and paid in advance, which makes both my life and the client’s life much more straightforward.
The starting point for approaching this subject generally must be the words of Lord Justice Jackson, who introduced the Fixed costs regime via his IPA annual lecture on 28 January 2016. He stated that “Fixed costs is an effective way of ensuring that a party’s recoverable costs and its adverse costs risk are proportionate”. As I have said, I accept the emphasis on proportionality, because it is a concept that I have long applied, as have the barristers who I instruct in cases in which I have been instructed.
Having looked at the levels of costs permitted for each phase, my view is that these have been set at sensible levels, and that here is nothing to fear from the extension of the fixed costs regime, indeed I see it as an opportunity for practitioners, like me, who are prepared to be practical and flexible, to continue to run cases in a proportionate way, which allows courts to operate more efficiently and gives clients certainty so that they can plan for the potential costs of litigation.
It must be remembered that the tables of maximum costs figures allowed under the Fixed costs tables is a “worst case scenario”: my approach is always to seek to resolve cases at an early stage, if possible, and there is, after all, always the possibility of settling cases by way of mediation or other forms of alternative dispute resolution along the way, and following the recent case of James Churchill v Merthyr Tydfil County Borough Council,  EWCA Civ 1416, a court can compel parties to engage in ADR procedures, which might allow costs to be kept within proportionate levels.
If you are considering bringing a claim in an amount between £25,000 and £100,000 and would like to discuss it with me, please call me – [email protected] or on my mobile telephone, 07843 484 201.
Jeremy is very experienced in dealing with various types of monetary claims, and dealing with negotiation, mediation, and other means of resolving disputes.