Fighting apathy: the data behind costs reforms
With the government intending to extend fixed recoverable costs further, it's essential litigators engage with current and future reforms, urges Francis Kendall
It was no doubt one of Sir Rupert Jackson’s great regrets about his report on the costs of civil litigation that not all of his recommendations were implemented, most significantly those on legal aid.
But when it comes to his supplemental report on extending fixed recoverable costs (FRC), he can have no such complaint.
The Ministry of Justice announced in March that it is set to implement his plan for FRC across the fast-track and in most money cases worth up to £100,000, and to introduce costs management in judicial review cases where a party’s costs exceed £100,000.
The MoJ also confirmed that it was backing the Civil Justice Council’s proposals for FRC in noise induced hearing loss cases.
The consultation issued at the same time showed that the government only rejected two of the former Court of Appeal judge’s recommendations: rather than introducing his new intermediate track for cases worth £25,000 to £100,000, given “the costs and complexity that that would involve”, it proposed assigning these so-called ‘intermediate’ cases to an extended fast-track.
Second, it does not intend to extend the ‘Aarhus’ costs-capping rules for environmental claims across all JR cases, given that both costs-capping orders and legal aid are available.
The MoJ has accepted the four different bands of fast track and intermediate cases, the criteria for the latter, and the actual figures included in Sir Rupert’s 2017 report.
The impact assessment published by the MoJ alongside the consultation said the reforms “should mean less time is spent arguing over costs, resulting in cases being settled quicker”.
An “overall net reduction in legal fees” was likely, it added. “This is therefore likely to represent a cost to lawyers from reduced income per case.
It may result in lawyers reducing the resource they spend on each case, as any increase in expenditure would reduce their profit margins.”
Ability to compete
On the other hand, the MoJ said the reforms might generate “business process efficiencies in the form of reduced management costs or overheads, in order for solicitors to maintain their profit margins, and cases may be settled more quickly which means they can take on more cases”.
This assumes, of course, that there are more cases to be taken on. It did acknowledge that the proposals “could make small legal firms less able to compete with larger firms that have greater economies of scale and can provide services on mass [sic] as cheaply as possible”.
Ultimately, the question of fixed costs comes down to the figures. Do they provide genuine access to justice and allow a party to conduct litigation effectively, or do they only work for the privileged few who can afford to pay for litigation irrespective of what they recover from an opponent?
The proposed figures adopted by the MoJ are some two years out of date from when Sir Rupert formulated them.
He devised them based on data submitted by defendant firm Taylor Rose and analysed by Professor Paul Fenn, whose statistical analysis has underpinned all the fixed costs introduced over the years.
We believe the government needs a much more rigorous statistical base, and also needs to commit to regularly reviewing and updating FRC.
This is absent from the consultation, and indeed history shows that it does not happen, to the detriment of clients, their lawyers and access to justice.
But the fact is that nobody else supplied figures to Sir Rupert. This shows that, unless there is engagement, apathy may play a part in determining the future of funding within litigation generally.
All interested parties need to recognise the importance of engaging meaningfully with this consultation, including providing data, absent which they will have to accept the outcome without complaint.”
This is particularly so as the consultation hints at further reform down the road: “It remains our intention to extend the areas in which costs are controlled in due course: such an extension could include extending FRC to further categories of claims, including claims of higher value, and controlling costs incurred before the first costs and case management conference, where cases are not otherwise subject to FRC.” You have been warned.
Francis Kendall is vice-chairman of the Association of Costs Lawyers associationofcostslawyers.co.uk