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Tuesday, 23 May 2017

Fixed costs - is Jackson shifting?

We began 2017 expecting the legal news to be dominated by whiplash ‘reforms’ and small claims. The announcement of a snap election brought all of that to a halt, although it seems highly likely that the proposed changes will be back with a vengeance in the near future.

This has shifted the focus of debate to Fixed Recoverable Costs – always a controversial topic.  At the beginning of May, the Consultation on FRC in Clinical Negligence Cases ended. I have previously summarised the proposals –

It is encouraging that the plan is limited to cases up to £25k although there is likely to be heavy lobbying from defendants to have that cap raised –

But the discussion is not limited to Clinical Negligence. As we speak, Jackson LJ is working on his report on FRC for all cases up to £250k. This review is expected by the end of July 2017. He has previously made no secret of his preference for FRC to be introduced across the board –

More recently he has appeared to abandon thoughts of a cap as high as £250k. Some are suggesting £125k but he himself has not said anything. At last week’s APIL Conference he acknowledged the difficulties of fixing clinical negligence costs in contested cases worth more than £25k. There is also talk of imminent news about fixed costs in hearing loss cases –

I have to say that I don’t think FRC are necessarily a bad thing in appropriate cases.

Payment based solely on hourly rates can present problems. An experienced and able lawyer might turn a task around in one hour. Another might need 3 hours to do the same job. But the second gets paid more. There is a temptation to feel we are somehow short changing ourselves if we do not rack up enough hours for doing something that was not particularly onerous. Of course the contrary and entirely reasonable argument is that some tasks are so complex that they will require work far and above what might be recoverable on a fixed fee basis. But if the fees are calculated on the basis of the swings and the roundabouts then this should not be a major worry.

I understand that most commercial clients have been demanding fixed fees for years.

What is most important is selecting the right cases. Cases worth over £250k are rarely straightforward. If they are to be introduced then a low start surely makes sense – such as the £25k figure proposed in Clinical Negligence.

Whether we love them or hate them (marmite anyone?), I think that there is now an inevitable tide which will see FRC introduced for most straightforward cases in the next couple of years. Firms should be planning ahead with this in mind. We should be lobbying for fees to be realistic and for the most complex and high value cases to be excluded.


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