New Costs Reforms Mooted by Jackson

Lord Justice Jackson has set out his views on further changes which he thinks are necessary to the way costs are awarded in litigation cases.

Following on from his previous set of reforms which came into force in 2013 and which included the abolition of the recovery of success fees under conditional fee agreements and the introduction of costs budgeting, LJ Jackson now wants to see a fixed costs regime implemented for all claims up to £250,000.00 in value. The idea was only put forward in a speech and it is very much only Mr Jackson’s opinion at this stage, but that opinion is likely to hold considerable sway amongst policy makers.

Under this new proposal, a sliding scale of Fixed Costs would be awarded to successful parties in all Multi-Track (£25,000.00 and above) cases, valued at £250,000.00 and below. Mr Jackson even went so far as to suggest the bandings for these costs awards, showing that the matter had been given some serious consideration, as follows:-

£18,750 in costs for claims up to £50,000.00 in value;

£30,000 in costs for claims up to £100,000.00 in value;

£47,500 in costs for claims up to £175,000.00 in value

£70,250 in costs for claims up to £250,000.00 in value.

In promoting the idea, Mr Jackson said that a fixed costs regime would see increased proportionality and clarity.

Comment

So LJ Jackson, this generation’s greatest legal landscape architect, is at it again. On the face of it, fixed costs for all civil cases up to the value stated is a sensible proposition. It will, as he suggests, ensure that costs incurred are more and more proportionate and will not get out of hand unnecessarily on cases which are fairly simple despite being high in value. The appeal to clients is clear: they have a dispute which needs litigating, they have a good idea of it’s value and can be given a fairly concrete estimate of what it is likely to cost them to pursue it and, perhaps more importantly, what their exposure to adverse costs will be if they are unsuccessful.

The trouble with banding fixed costs based on value however, is that it is necessarily arbitrary in nature. A claim of £170k, for example, is by no means guaranteed to be any less complex or time consuming than a claim for £177k, yet the costs awardable in the latter will exceed the former by over £20,000.00.

Access to justice, the maxim which is talked of so frequently the government should really trademark it, also rears it’s head. A party with a highly complex case which is relatively low in value may struggle to find representation, particularly on a CFA basis. If the solicitors whom they are seeking to instruct know that the costs which they will be able to recover are limited by a judicially imposed glass ceiling and know that those costs are far below the time value which they will have to spend litigating the case, many will simply refuse to take it on on the grounds of simple economics.

Mr Jackson said that he acknowledges that there will be “Winners and Losers” from any regime such as this. It may be that some of the losers are not those he intended.