Fixed Recoverable Costs – a Costs Lawyer’s view

Adam Grant

Costs Lawyer

KE Costs

We are on the verge of the biggest shake-up of civil litigation costs since 2013. 107 pages of additional rules will come into force which will absolutely transform the landscape in which parties recover their costs. These changes are as profound as they are wide-ranging – they do away with costs budgeting, the indemnity principle and most detailed assessments, and cover the vast majority of cases worth up to £100,000.00.  This is not an exercise in merely tweaking the rules.

The Intermediate Track

All cases on the Fast Track, with a very small number of exemptions, will be covered by a table of fixed costs, which vary based upon how far the litigation progresses and the complexity of the case. There is some precedent with fixed costs for cases worth less than £25,000.00; PI practitioners will be familiar with the tables within the current CPR r45.29.

The massive change is with the introduction of a new Intermediate Track, bringing a complex, yet uncertain fixed costs system to a huge number of cases, with significant quantum values and a wide diversity in respect of complexity.

A lack of clarity

There are a few notable fixed exemptions to the new rules, such as housing disrepair cases on the Fast Track or asbestos-based diseases on the new Intermediate Track. But clarity is not a recurring theme in the new rules, with their emphasis on judicial discretion.

Take allocation. The new track should only be for cases which require no longer than three days for trial and oral expert evidence from no more than two experts per party. The cynic may foresee claimants seeking oral evidence from 3+ experts and a four-day trial on every case, and defendants maintaining that two experts and two days will be sufficient on the most complex of cases.

The initial CMC will be a major battleground, and the implications in money terms of allocation and banding decisions will be immense. There will undoubtably be expensive mistakes made in the early days of the new regime.

How the changes will play out

This uncertainty will be a recurring theme in the work of Costs Lawyers over the coming months and years.  It will mean that we Costs Lawyers are more involved in your cases earlier on. The rules are complex, and we will be expected to understand not just the rules themselves, but how the judiciary are interpreting them – the current guidance is not great. We will be working tactically to ensure that if a case is subject to fixed costs, we obtain the highest banding possible, the cash differences between even adjacent bands is significant.

But the biggest expansion in a Costs Lawyer’s practice will be on the solicitor/client front. Having ‘wargamed’ some of the figures on recent cases I have been instructed on (and their likely fixed costs award had they been operating in the new regime), the shortfall between costs actually incurred and recovered will be stark.

It is almost unavoidable, in my opinion, that solicitors will be compelled to seek larger and larger contributions from their own client to make up this shortfall. It will be simply become uneconomical to run these cases without something plugging the gap.

It will be of paramount importance that your retainers with your clients are kept up-to-date and are watertight, as is your client billing process. Fall foul of the rules in this arena and an expensive, nasty solicitor/client assessment may be the result.

So my advice in a nutshell; work closely with your Costs Lawyer and keep your seatbelt on – there will be turbulence!