The Master of the Rolls today publicly accepted the recommendations of the Civil Justice Council’s (CJC) costs review, starting with an increase in the guideline hourly rates in January.
Meanwhile, the Lord Chancellor announced that the recently introduced fixed recoverable costs (FRCs) for cases worth up to £100,000 would be uprated for inflation next April.
Speaking at the CJC’s national forum in London, the MR said: “I’m announcing today that I endorse all the recommendations [of the report] and we’ll be proceeding immediately to the implementation phase.
“The 2021 guideline hourly rates will be uplifted for inflation from 1 January 2024 in accordance with the services producer price index as they recommended. And I will establish, as the report suggests, a further working group to examine the methodology underpinning guideline hourly rates.
“As regards cost budgeting. I accept one size does not necessarily fit all and I’m asking the CPRC [Civil Procedure Rule Committee] to take forward the suggestions contained in the costs review to pilot what [it] suggests.”
The report also recommended a review of the costs provisions of the Solicitors Act 1974. Sir Geoffrey said: “I hope that, following a number of recent cases, the CJC may also in a short time be able to do some work on the Solicitors Act 1974, which really requires a generational look.”
The review, chaired by the deputy head of civil justice, Lord Justice Birss and published in April, said costs budgeting should be retained but reformed in recognition that “one size does not necessarily fit all”.
The review suggested three pilots. The first, for cases where qualified one-way costs shifting applies, particularly in clinical negligence cases involving the NHS, would see defendants only having to provide the Precedent H front sheet and not full budgets, subject to the court requiring one.
The second was a “costs budget light” regime for part 7 cases in the multi-track valued up to £1m and a “lighter touch” approach for Business and Property Courts cases worth more than £1m.
Other key recommendations of the review included ending the distinction between contentious and non-contentious costs.
Lord Chancellor Alex Chalk also addressed the event. He said October’s extension of FRC would boost access to justice by helping control costs outlay in advance, “providing clarity and transparency”.
He continued: “I know there are concerns about the impact of these reforms on the ability to pursue some cases, mainly around the level of which the costs have been set. The figures for the costs were based on data analysis and consultation and we’ve upgraded them for inflation.
“I can confirm that we can do so again from April next year and we will continue to keep the regime under review. We’ll be led by the evidence. Some further refinements to the scheme are still being considered by the CPRC.”
In questions, Mr Chalk was pressed to commit to regular inflation increases for all fixed costs and to put the decision in the hands of an independent body, rather than politicians.
While saying he could not make any promises now, the MP said it was “something that temperamentally really appeals to me”.
He added: “The idea of trying to keep things stable, predictable and proportionate is I think is a positive one. So I’ll look at it carefully.”
David Bailey-Vella, vice-chair of the Association of Costs Lawyers, says: “The CJC report offers a sensible route to build on the gains achieved by costs budgeting over the past decade. Our research has constantly shown that many solicitors remain reluctant to engage in it but making it a more tailored and proportionate process should win them over. It is undoubtedly in the interests of clients.
“A survey we conducted last month found that 70% of members said the guideline hourly rates set in 2021 already needed updating, so it will be a great relief to the profession that this will happen in six weeks’ time.
“The review of the costs provisions of the Solicitors Act 1974 is long overdue and will hopefully result in a far more efficient process for resolving costs disputes.”