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David Eminton | 2nd February 2016

Scales of Justice rocked by scale fees: more Jackson reforms on the way?


David Eminton | 2nd February 2016

Scales of Justice rocked by scale fees: more Jackson reforms on the way?

Sir Rupert Jackson, speaking last week at the annual conference of the Insolvency Practitioners Association, has delivered his vision for fundamental reforms aimed not at his hosts, but at the legal profession.

Sir Rupert has already overseen a sea of change in litigation in England and Wales. He introduced, amongst other things, cost budgeting, the process by which the Judge assesses at an early stage a cost estimate for each party to a court case. Costs budgeting results in a cap on fees recoverable from the opponent that is unique to the matter in hand, taking into account the particular complexities of each case.

At the IPA conference, however, Jackson went much further, unveiling a table of fixed fees intended to apply to all litigation with claims for damages not exceeding £250,000.

These fees, he says, should apply regardless of the complexity of the case with no tailoring to its specific characteristics as happens currently with costs budgeting (although he did recognise that there would still be exceptional cases, and he conjectured that defamation and clinical negligence might warrant a mark-up).

The Proposals in Context

A fixed fees regime is already in force limited to personal injury claims up to £25,000 and Sir Rupert reported that this has been a success with an increasing number of minor injury claims being disposed of at significantly lower cost than hitherto.

The fixed fees proposed would be those that a losing party will have to pay to the successful opponent. Sir Rupert does not say the fees charged as between solicitor and client should be limited by these reforms. Indeed, he has taken inspiration from Germany and New Zealand which already have fixed fees in place which have been deliberately set at substantially below the true cost of litigation.

Sir Rupert would have it that the changes will improve access to justice by reducing the uncertainty of the cost risk in the event that a litigant loses. It may also result in ATE insurance (obtained “after the event” to cover opponent’s litigation costs) being more of a viable product as parties and their insurers can know their precise adverse costs exposure in advance.

For the table of fixed fees, please see page 13 of Sir Rupert’s full speech, here. The table slices up a legal case in to 10 stages and fixes a price for each. The total fees for all 10 stages including up to a 5 day trial for each of the proposed bands of claims according to value is summarised below.

Band – dependent on value of claim 1. £25,000-£50,000 2. £50,001-£100,000 3. £100,001-£175,000 4. £175,001-£250,000
Total fees £18,750 £30,000 £47,500 £70,250

Sir Rupert was keen to stress these figures are put out by him for discussion. Ultimately it will be for the Government to decide whether to implement his proposed changes and to set the rates. Less than a year after the Ministry of Justice increased court fees, some by more than 600{ba3215b0bf35eaeb06be458b3396ffbfc50bb9db10c9ff1594dfc3875e90ea48}, it is reported by leading costs expert Rachel Rothwell that nonetheless the Ministry is keen on improving access to justice and Sir Rupert’s proposals are being received favourably as a means of achieving this.

The Government will have to consider not only if it should implement a fixed fee regime but whether, perhaps in time, to extend the scheme to apply to all litigation, regardless of value (an approach which Sir Rupert himself does not favour).

A Warm Reception?

Sir Rupert clearly does not expect these fee changes to be welcomed by the legal profession. He suggested that pushing them through was best left to a Judge who did not mind being “pilloried” and expressed a preference that it should not be him. Perhaps his wish not to be pilloried might explain his announcing his recommendations to an audience of insolvency professionals, rather than at an event hosted by lawyers.

Law Society President Jonathan Smithers has responded with some positive thoughts on the content of the speech, albeit with reservations, commenting that “a fixed costs scheme could curtail the ability for important cases to be brought, where the severity of the issue is not reflected in monetary terms but the purpose of the case is to reduce incidents of harm in the future by ensuring lessons are learned.”

Our View

Smithers’ comments highlight the difficulty in trying to commoditise justice and if the law reformers do take up Sir Rupert’s lead (it seems very likely they will do so) then they will need to be clear that – regardless of the obvious advantages to the fixed fee approach – any attempt to adopt a ‘one size fits all’ approach is sadly bound to result in barriers to justice for some.

At Paris Smith, we would wish for all our clients to be able to achieve cost effective access to justice, whether they are advancing a claim, defending one or merely caught in the crossfire. We do have our reservations about whether the proposed new costs regime would achieve this, bearing in mind that the current ‘Jackson reforms’ have not had long to bed in and, to date, have not delivered any tangible improvements, particularly in the face of last year’s massive increase in court fees. However, we will look upon the proposals with an open mind and follow developments closely with a view to ensuring that we continue to offer the best available solutions to the huge range of contentious issues which arise for a great many of our clients, in all walks of life and of business.

Should you have any issue or dispute which you feel would benefit from legal advice, including those relating to the recovery of costs from others, please do not hesitate to contact me or any other member of the Dispute Resolution Department at Paris Smith.

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