How fixed fees are killing costs firms

The costs industry has always worked on the premise that as long as there is costs shifting, there will be a role for costs experts.

There is no doubt that the introduction of fixed fees has had a massive impact, not only on the costs industry but also on the other members of the legal profession practising within the areas of law where fixed fees apply.

In July 1996, in his 'Access
to Justice' final report to the Lord Chancellor, Lord Woolf recommended a system of
fixed recoverable costs in all cases allocated to the fast track. The reasons why this was not introduced were both complex and political.

When the Civil Procedure Rules came into being, the costs industry had to grapple with the introduction of summary assessments. At first it was envisaged that the courts would assess costs during each stage of the proceedings, which would negate the need for detailed bills of costs to be produced at the conclusion
of the case.

However, summary assessments have not impacted the costs assessment process
as first feared. Even today,
while summary assessments
are frequently requested, the under-resourced courts struggle to deal with these matters in a consistent and efficient manner, and parties often end up seeking interim payments on account
of costs only.

The problem has been compounded by costs budgeting, which seems to
be on similar ground with the lack of judicial time available
to deal with costs properly.

Thankfully, costs shifting remains, but the threat of
fixed costs is becoming more prevalent.

When Lord Justice Jackson revisited this area, he said: 'I have canvassed views from my panel of assessors and it is our unanimous view that we should take forward this work and try to achieve a fixed costs system in fast track cases.'

He has achieved this in respect of personal injury matters. Gone are the complex issues and the political barriers. Access to justice no longer appears to be the driving force.

Fixed costs are now back on the agenda, with Jackson LJ's suggestion that this will apply
to all claims of up to £250,000.
It is one thing to fix costs for fairly standard personal injury matters, but it will be a completely different challenge to deal with the variety of cases that fall under the £250,000 mark.

Jackson LJ is hoping to create a new form of benchmarking
for case types and values. All
of the other factors (generally known as the 'seven pillars of wisdom') that we grew up with, such as complexity, novelty, and importance to the parties, will
no longer be relevant.

Fixed costs will certainly reduce costs between the parties, but as for the question
of access to justice, that will be
a thing of the past.

Ultimately, fixed costs shift the balance of justice and kill
off the basic principle that
the loser pays the winner's reasonable costs. This system will mean the parties have to litigate in person or pay their lawyers out of their damages. The 10 per cent increase in damages will simply not cover the shortfall. SJ

Matthew Kain is a costs lawyer and managing director for the Kain Knight group of companies