Fixed recoverable costs regime failing claimants

The Law Society of England and Wales has voiced its concerns regarding the effectiveness of the extended Fixed Recoverable Costs (FRCs) regime in civil litigation. The new regulations, which expanded the FRCs from low-value personal injury cases to encompass most civil cases valued up to £100,000, were introduced with the promise of providing clarity around legal costs. However, the society argues that these expectations are yet to be met.

Currently under review by the Civil Procedure Rules Committee and the Ministry of Justice, the FRC extension has prompted a call for a detailed consultation to accurately assess its practical impact. Law Society vice president Brett Dixon stated, “The FRC regime is currently failing to deliver what it promised.” He elaborated that since the extension was introduced just over two years ago, it is premature to judge its overall effects as only a handful of cases have effectively tested the full scope of the regime.

Dixon highlighted key areas that require investigation, noting that the current system may "unfairly penalise the successful party" and complicate the early settlement process. One of the primary concerns is that successful parties may find themselves liable for covering the difference between their lawyers' reasonable costs and the fixed recoverable costs, deviating from traditional expectations that this burden falls on the losing party.

He emphasised the potential negative ramifications for vulnerable parties within the legal system, asserting that it is crucial for the regime to provide adequate protection. “Further, detailed evidence must be sought to fully assess the impact of the regime on vulnerable parties,” he stressed.

The Law Society welcomes the government's promise of further consultation but insists that it must thoroughly evaluate the implications of the new FRC regime. Dixon also advised against including housing cases within the extended scheme, arguing, “Housing cases should continue to be excluded from the extended scheme. We suggest this exclusion should be made permanent, given our concerns about how the regime is operating and the catastrophic impact FRCs could have on housing legal aid providers.” The ongoing review thus poses a pivotal opportunity for reform to enhance access to justice and ensure that the legal process does not become unfavourable for those who are most in need.