The government has delayed the extension of fixed recoverable costs (FRC) for most money cases worth up to £100,000 by a further six months to October 2023.
Meanwhile, the Civil Justice Council (CJC) has reopened its recent costs consultation for the sole purpose of receiving submissions on the impact of the Court of Appeal’s ruling last month in Belsner.
The FRC extension was initially meant to happen in October 2022 but earlier this year it was delayed until April 2023, with Ministry of Justice officials stressing over the summer that it would happen then.
However, speaking at the CJC’s National Forum on Improving Access to Justice this morning, justice minister Lord Bellamy said: “Extending FRCs requires an extremely complex set of reforms… So I’d like to offer my sincere thanks to the CPRC, and its costs sub-committee, chaired by Mr Justice Trower, for its tireless work here.
“I know it hasn’t been an easy task. I know that these reforms have particular implications for housing cases, and I am grateful for the constructive input of housing providers which we continue to consider.
“Progress has been made, and we hope the rules will be approved in the near future. But we’re also very conscious of how important it is to get this right.
“That’s why I can today confirm that we’re giving these reforms a little more time… and will implement the extension of FRCs in October 2023, rather than next April as originally planned. We think this will give the sector more time to adjust to the new regime.”
He added that another issue to consider was the Belsner decision.
The new rules to support the extension have also not yet been agreed. The Civil Procedure Rule Committee had a full review of them at its meeting earlier this month, with a view to approving them next month.
Speaking at the Association of Costs Lawyers conference earlier this month, committee chair Lord Justice Birss – who is the deputy head of civil justice – said the intention had been to get them out to the profession in draft form before they had been signed off by ministers.
Matthew Currie, chief legal officer for Minster Law, said: “We warmly welcome this delay, if the net effect is a more considered and sensible approach to fixed costs going forward, including a regular review mechanism to ensure costs reflect inflation.
“After a period of turmoil in the sector, driven by reform and external macro factors, we need a period of stability and certainty, so that we can plan effectively to manage the needs of our clients in the post-reform world.”
Jack Ridgway, chair of the Association of Costs Lawyers, said: “Delaying the implementation of FRC to perfect the rules is eminently sensible, as is giving lawyers as much time as possible to prepare for them.
“But the reality is that the eventual rules will still cause a significant amount of satellite litigation. As costs specialists, we are preparing to move from arguing about numbers to arguing about words and particularly which track and band a claim should be allocated to.”
Qamar Anwar, managing director of First4Lawyers, said: “It was apparent to everyone, apart from the Ministry of Justice it seems, that it would not be ready to implement this in April.
“Only last week we heard that plans had changed significantly, with the required introduction of an ‘intermediate track’ that the MoJ had initially said was not necessary.
“The whiplash reforms and the resulting fallout which we are still dealing with 18 months in is a clear sign that these decisions cannot and should not be rushed.
“It has forced injured people, the majority of whom find the system too complicated to bring claims without help, out into a legal market where there is now vastly reduced choice because firms can no longer afford to operate with such reduced margins…
“These same issues apply to the extension of fixed costs and it is this that the MoJ should be focusing on instead of setting yet another arbitrary deadline.”
Matthew Maxwell-Scott, executive director of the Association of Consumer Support Organisations, said: “We hope that this welcome delay will allow more time for the Ministry of Justice and rule committee to agree a sensible regime that is future proofed, giving certainty and stability to law firms wishing to continue to work in this market.
“It is also essential that our members see the detail of the proposals as soon as possible, and have the opportunity to comment on them.”
Lord Bellamy also confirmed that a “full-scale” review of civil legal aid would be announced before the end of the year with the aim of bringing the scheme “into the 21st century”.
He described the Ministry of Justice as having emerged from the autumn statement “relatively unscathed”.
Its day-to-day spending budget, £9.4bn for 2022/23, will rise by 4% in 2023/24 to £9.8bn and then by 2% to £10bn the year after. The capital budget will rise by 35% from £1.7bn this year to £2.3bn next, before falling back to £1.5bn in 2024/25.
Lord Bellamy said the aim was to build “a modern, seamless, joined-up system of civil justice”, providing a “holistic overview” of the whole process, rather than just courts.
The CJC costs consultation closed last month but its costs working group said it needed to consider the impact of Belsner “before reaching recommendations in respect of costs incurred under pre-action protocols/portals and possibly in other areas”.
There are no consultation questions but the CJC has published a template response document. The consultation period closes on 15 December.