ACL blasts Ministry of Justice’s latest “piecemeal and unreasonable” reforms of fixed costs

The Ministry of Justice is acting unreasonably in already proposing piecemeal reform of October's fixed recoverable costs (FRC) regime for implementation next April, the Association of Costs Lawyers has argued.

The body representing regulated costs professionals strongly criticises key aspects of the changes as well, saying that the recoverable fees proposed for costs-only proceedings are “nominal” and fall far short of capturing the amount of work required.

The ACL has previously made clear its opposition to more FRCs on the basis that they will reduce access to justice and also called for a comprehensive review of the costs provisions of the Solicitors Act 1974, a view echoed by the Master of the Rolls in last year’s Belsner case.

In its response to the Ministry of Justice’s consultation on changes to the FRC regime, the ACL says “the legislation is significantly out of date and is arguably not fit for purpose in modern litigation”. The government needs to get this right first as the new FRCs will inevitably lead to a rise in costs challenges as parties test the new regime.

The ACL also objects to the six-month hiatus between the new FRC regime going live and these new changes as it will result in a basket of cases where a different set of rules apply.

The response says: “The ACL considers that it is unreasonable to proceed with an October 2023 implementation and instead proposes that the new rules be updated and implemented in April 2024 at the very earliest.”

The ‘one size fits all’ approach of a condensed assessment procedure for disputes arising from the FRC is inappropriate, the ACL continues. “A significant number of initial challenges are likely to be focused solely on the interpretation of the rules and will, in turn, be seeking judicial guidance.

“We strongly reject the notion that such work, requiring a very high level of experience and expertise, can be correctly served by a condensed assessment procedure and where the proposed costs [£500] are nominal at best.”

A survey of ACL members says £500 is “significantly below what would be reasonable for the amount of work that is likely to be required in the average FRC dispute, let alone the significant shortfall that there would be in more complex disputes”.

The ACL argues instead for an escalating and significantly higher cap on costs depending on the value of the claim.

While the majority of members agree with introducing fixed costs for issuing part 8 costs-only proceedings, they again say the proposed level (£300 for a claimant and £150 for a defendant) is “far too low” for the work required. The ACL also predicts that this will not reduce the number of proceedings that are commenced.

“Such proceedings are not issued on the sole basis that it is another form of costs building. Instead, part 8 costs-only proceedings are issued because there is a fundamental disagreement between the parties regarding the amount of costs in issue and that this is the only means available to the parties to obtain a court assessment to resolve it.”

While welcoming the planned uprating of the FRC figures to reflect the high level of inflation, the ACL implores the Ministry of Justice to review all fixed costs within the CPR – many of which have not changed for many years – and also introduce a “comprehensive framework” to ensure this happens regularly.

On clinical negligence, the ACL’s starting point is that such claims should not be included within the extension of FRC as they are simply too complex.

It warns: “By their very nature, clinical negligence claims are ‘front-loaded’ given the significant amount of investigations to be undertaken, including the costs of obtaining expert evidence. As the proposed FRCs are unlikely to cover the work required to properly investigate claims at the outset, claims may not be properly assessed before the letter of claim is prepared.

“Consequently, there could actually be an increase in the number of speculative claims initiated by claimants.”

The ACL says clinical negligence claims should be excluded from the new rules until the Department of Health & Social Care’s separate FRC scheme for cases worth up to £25,000 has been published and the extended FRC regime has had time to bed in for other types of claim.

ACL chair Jack Ridgway says: “Irrespective of our opposition to the FRC extension on principle, it is clear that the government’s piecemeal approach to reform is only going to cause more problems than it purports to solve. It fails to give the legal market sufficient time to plan, prepare and adapt to what will be a significant upheaval.

“The Ministry of Justice needs to fix the Solicitors Act before tipping a new load of cases into the system. Otherwise, it will fail in its stated aims of improving access to justice and providing clarity and certainty to all parties in respect of the costs of civil litigation.”