With the Jackson reforms bringing fixed costs to RTA, EL & PL claims, a Commercial Court Judge stated that a tariff of recoverable costs would likely be introduced in the commercial arena.
Mr Justice Flaux was addressing litigators at the Law Society’s commercial litigation conference when he said ‘My own view is that where we are heading is fixed costs; with a tariff for what is recoverable. The whole system of costs assessment will just go out of the window’.
Whilst Mr Justice Flaux confirmed that fixed costs were likely, he stated he was not advocating fixed costs and further stated that he had ‘not the faintest idea’ what the tariff should be based on. He continued, ‘how do you assess how complex a case is? Certainly not by how much money is at stake’. Flaux also raised the integral point in that commercial court cases do not fit any type of mould which would make it difficult to make fixed fees work.
Despite the apparent inevitability of fixed costs Mr Justice Flaux stated that he would prefer to see costs-capping orders used more to control excessive costs, adding that anything other than a fixed costs regime would be appropriate.
Whilst there is no word on what form the fixed costs will take, National Law firm Irwin Mitchell LLP has launched its own staged fixed fee scheme for commercial claimants. The firm describes the move as a response to rising costs of litigation, typified by the recent staggering increase in court fees. Jonathan Sachs, the firms London head of commercial litigation, said “The obvious benefit of this product to a Claimant is that he/she will have absolute certainty as to what it will cost to bring legal proceedings, and seek recovery of losses suffered. No extra costs above and beyond that which has been proposed will be charged. Corporate financial officers will be able to budget for the litigation appropriately, there will be no unwelcome surprises which would require an explanation to the board of directors, and no unexpected costs to report to shareholders. Claimant clients will be given a huge degree of certainty, in an often uncertain environment.”
Looking to the fixed costs regime in RTA, EL and PL cases it is clear that the system, whilst not without issues and possibly not to every bodies satisfaction, is functioning. Whilst firms will have seen a drop in the overall recoverable costs, they are also able to charge Clients a success fee, limited to 25% of the total damages recovered (excluding damages for future care and loss), it is unlikely that the same system can be applied to commercial litigation given the differing nature of commercial litigation claims from one case to the next, but it will be interesting to see what the rule makers on the Civil Procedure Rule Committee come up with.