Government plans to widen the use of fixed recoverable costs (FRCs) in civil cases would blow a hole in access to justice, the Law Society has said in urging the government to rethink.
President I Stephanie Boyce said the vulnerable and the less well-off “would too often be unable to seek redress if fixed recoverable costs were extended to cover cases valued up to £100,000”, as announced by the Ministry of Justice this week.
“If the government caps the amount of reasonable costs a claimant can recover then – without safeguards – a deep-pocketed and unscrupulous party could force their opponent to run up legal bills they’ll never recover.
“This could seriously damage the justice system, leaving claimants unable to obtain effective remedy or vindicated defendants out of pocket through no fault of their own.”
Saying the government needed to “rethink”, Ms Boyce also criticised the data underpinning the proposals, which she said was “both out of date and drawn from too narrow a pool of cases, given changes would apply across almost the entire spectrum of civil litigation”.
Since the 2017 report from Lord Justice Jackson on which the reforms are based, she continued, the justice system has been “reshaped” by the pandemic, the court reform programme and a raft of changes in other areas of civil justice.
“The legal profession would need greater clarity on how the regime would be applied, with a long lead-time to enable solicitors to adapt to what looks to be significant change.
“A regime to limit the recoverable costs of civil litigation will need to be carefully calibrated based on present realities if it is to be fair to everyone engaged in a claim.”
Claire Green, chair of the Association of Costs Lawyers, similarly questioned the data: “The question of fixed costs ultimately comes down to the figures,” she said.
“Do they provide genuine access to justice and allow a party to conduct litigation effectively, or do they only work for the privileged few who can afford to pay for litigation irrespective of what they recover from an opponent?
“The proposed figures for the fixed costs adopted by the Ministry of Justice were based on just one law firm’s sample of cases, where it acted for the defendants. The government needs a much more rigorous statistical base if it is to widen the use of fixed costs, and also needs to commit to regularly reviewing and updating them.
“Aside from uprating them to start with, this is absent from the response, and indeed history shows that it does not happen, to the detriment of clients, their lawyers and access to justice.”
Neil McKinley, president of the Association of Personal Injury Lawyers, said the approach adopted by the government ignored the fact “that most personal injury cases really are complex and cannot simply be shoe-horned into a simpler system with which they are just not compatible”.
He continued: “Employers’ liability disease claims, for example, can be incredibly complex, as can product liability claims, yet both categories of claim are to be included in this new system.
“The Ministry of Justice has also provided little detail about how this will work, leaving it to ‘the parties and judges’ to work that out. That will take time and, until we get clarity on these matters, injured people will be subjected to a great deal of uncertainty at a time when they are very vulnerable.”
Matthew Maxwell Scott, executive director of the Association of Consumer Support Organisations (ACSO), said he was not surprised that the government had pressed ahead with implementing most of Sir Rupert’s recommendations and quoted the former judge’s own remark that: “If the costs are too high, people cannot afford lawyers. If the costs are too low, there will not be any lawyers doing the work.”
He welcomed the decision to revise the figures prepared by Sir Rupert on the basis of the services producer price index, as a measure specific to the professional services sector, but was concerned that there did not appear to be a formal review period for the regime.
“We would like to see more clarity on how the government will measure success for FRC reform, and a formal review mechanism, of, for example, every five years, like the Ogden rates for serious injuries.
“Finally, we urge the government to clarify how the regime will take proper account of vulnerable claimants, ensuring there is no risk of consumer detriment.”
A client briefing from defendant firm BLM said the reforms were likely to generate satellite litigation, but “experience also suggests that paying parties will be better able to predict the costs of litigation within the FRC schemes and therefore to resolve claims more efficiently”.
It said a “very significant amount of work” would be needed to implement the changes. “Absent any clear indication otherwise, it may be realistic to plan for implementation in autumn 2022.”