As of Friday 18th November 2022, a number of solicitors up and down the country will have taken a sharp intake of breath and rejoiced at the fact the extension to fixed costs, proposed for introduction in April 2023, has now been postponed until October 2023. However, for those that missed it, Lord Bellamy speaking at the Civil Justice Council national forum confirmed:
“the government wanted to give the legal sector more time to adjust to the new regime. The plan had been to extend fixed costs from April but it has proved logistically difficult to redraft the rules in time.”
Now, whilst this may be excellent news in the short term, it is worth remembering, Sir Rupert Jackson confirmed the intention was always to wait until previous reforms (introduced in 2013) had bedded in before widening their scope. As such, these reforms are not likely to fall by the wayside and firms should be prepared for their future implementation. This article seeks to give a little background for what lies ahead and where ominously the new battlegrounds for costs are anticipated to be…
Introduction of the Intermediate Track and Extension of the Fast Track
What will likely be the biggest change for practitioners and the reasoning for why the rules have been delayed, is the fact the CPR is being changed to accommodate an entire new ‘track’ of case, the intermediate track. This track intends to sit between the Fast Track and Multi-Track and will catch all ‘money claims’ between £25,000 – £100,000.00. This is in itself a very recent U-turn, with a previous consultation paper concerning implementation of Jackson’s reforms advising “we not see the need for introducing a new track, with the costs and complexity that would involve.”
Nevertheless, this introduction of an intermediate track would represent a very big change to the profession with a large batch of cases now captured by the rules, however, not just Personal Injury cases, but, boundary disputes, housing disrepair matters, credit hire claims and so on to name just a few. Furthermore, this new track (nor the revised Fast Track), will not operate like the current Fast Track and fixed costs regime, instead, it will introduce the concept of bands. Below is a copy of the fixed costs table as included in Jackson’s report in 2017:-
|Stage (S)||Band 1||Band 2||Band 3||Band 4|
|S1 Pre-issue or pre-defence investigations||£1,400.00 + 3% of damages||£4,350.00 + 6% of damages||£5,550.00 + 6% of damages||£8,000.00 + 8% of damages|
|S2 Counsel/ specialist lawyer drafting statements of case and/or advising (if instructed)||£1,750.00||£1,750.00||£2,000.00||£2,000.00|
|S3 Up to and including CMC||£3,500.00 + 10% of damages||£6,650.00 + 12% of damages||£7,850.00 + 12% of damages||£11,000.00 + 14% of damages|
|S4 Up to the end of disclosure and inspection||£4,000.00 + 12% of damages||£8,100.00 + 14% of damages||£9,300.00 + 14% of damages||£14,200.00 + 16% of damages|
|S5 Up to service of witness statements and expert reports||£4,500.00
+ 12% of damages
+ 16% of damages
+ 16% of damages
+ 18% of damages
|S6 Up to PTR, alternatively 14 days before trial||£5,100.00 + 15% of damages||£12,750.00 + 16% of damages||£13,950.00 + 16% of damages||£21,050.00 + 18% of damages|
|S7 Counsel/ specialist lawyer advising in writing or in conference (if instructed)||£1,250.00||£1,500.00||£2,000.00||£2,500.00|
|S8 Up to trial||£5,700.00
+ 15% of damages
+ 20% of damages
+ 20% of damages
+ 22% of damages
|S9 Attendance of solicitor15 at trial per day||£500.00||£750.00||£1,000.00||£1,250.00|
|S10 Advocacy fee: day 1||£2,750.00||£3,000.00||£3,500.00||£5,000.00|
|s11 Advocacy fee: subsequent days||£1,250.00||£1,500.00||£1,750.00||£2,500.00|
|S12 Hand down of judgment and consequential matters||£500.00||£500.00||£500.00||£500.00|
|S13 ADR: counsel/specialist lawyer at mediation or JSM (if instructed)||£1,200.00||£1,500.00||£1,750.00||£2,000.00|
|S14 ADR: solicitor at JSM or mediation||£1,000.00||£1,000.00||£1,000.00||£1,000.00|
|S15 Approval of settlement for child or protected party||£1,000.00||£1,250.00||£1,500.00||£1,750.00|
(c) £100,000 damages
Now, this table is not set in stone and one of the big issues raised with extending fixed costs, is the failure to uplift the rates in regards to inflation. The fixed costs as introduced in 2013 are the fixed costs that still exist today. However, with fixed costs being extended to £100,000.00 and the capture of some very large litigation, Claimant Solicitors will be adamant that cannot continue. However, putting that issue to one side (the consultation paper acknowledged this was an issue which needed addressing) what is likely most striking about the above table is the concept of banding, with the above table split into four columns, listed one, two, three and four. So how do we know what case goes into what band?
Well Jackson’s report envisioned straightforward cases, where only one issue (such as quantum) is in dispute, will generally go into Band 1 and commentators have since speculated this will capture housing disrepair and credit hire claims. Cases where both liability and quantum are in dispute will generally go into Band 2 or Band 3. Finally, cases where there are serious issues on breach, causation and quantum (but which still fall within the intermediate track) will go into Band 4.
A New Battleground Dawns
On paper that sounds a simple enough exercise to determine what case should be in what band. However, for those with experience running litigation, you will no doubt be aware, in practice things never run so smoothly. A case which may start out as a simple whiplash injury could months / years later turn into a complex regional pain syndrome type case. As such, when the decision to propose a band and track is taken (when the case is incepted by either a CNF or Letter of Claim), Solicitors will need incredible foresight and a good grasp on the case at hand. Defendants will no doubt be of the view, almost every case is a Band 1 / Band 2 type matter (band 4 is reserved for only those most exceptional cases as you would with an application under CPR 45.29J) and the decision will fall at the door of Judges up and down the country when the case reaches allocation.
It is likely this will be a very crucial point in the case for both Claimants and Solicitors. The difference in bands can be quite stark when it comes to the question of costs and one only needs to look at the difference between bands 1 and 2 in this regard. Furthermore, what about the situation when the case settles before allocation? If parties cannot agree, will a shortened form of detailed assessment be required, that is what Sir Rupert Jackson considered, albeit, his purported level of costs for such an assessment (£500), certainly leaves a lot to be desired when you consider the current costs allowed under the Provisional Assessment cap.
However, one thought does arise. These banding disputes that will likely come across the desks of most practitioners in the future have an inbuilt challenge – “Either party could challenge that decision by an application on paper under CPR rule 3.3(5) – (6)”. The costs of such application are proposed to be fixed at £150 for the Fast Track and £300 for the Intermediate Track (for the successful party be that Defendant or Claimant). However, given both the Claimant and Defendant stand to gain so much by a simple moving from one band to another and with the costs liability for such an application relatively low, are Courts not going to be inundated with applications of this ilk? Cost lawyers may have a future yet assisting with these applications and that is without touching on what will likely also be prickly topics, with ‘unreasonable conduct’, ‘vulnerability of clients’ and ‘exceptional circumstances’ all being mechanisms for either escaping or seeking an uplift on fixed costs.
Satellite litigation remains rife in the current fixed regime, with all manner of weird and wonderful issues still being identified to this date (not least with disbursements alone). As such, it is no wonder the rule drafters have asked for a further six months to create an entire new track of case, these rules are going to affect QWOC’s, Part 36, retainers and so much more.
This article however, is only the tip of the iceberg and chapter and verse could be written regarding any of the other topics identified above with respect to escaping or seeking an uplift on fixed costs. However, litigation is changing for cases up to £100,000.00 and whilst the arguments on costs will still continue, they will likely now just be moving to a different arena. Fewer detailed and provisional assessments and more disputes concerning banding, track, value and applications for an uplift on fixed costs, or escape altogether are expected. Stay tuned for what will likely be a very important year for all lawyers.
Please contact Jack Andrew at MRN Solicitors should you wish to discuss.