Jackson opts for cost capping over fixed in Mercantile Court pilot
Lord Justice Jackson has chosen the strategy of cost capping over fixed costs for the voluntary pilot he plans to introduce in the Mercantile Courts of Manchester and London; all part of his on-going investigation into whether to extend fixed recoverable costs.
He stated the pilot which will first target commercial cases worth up to £250,000, will follow the model used in the Intellectual Property Enterprise Court (IPEC), capping recoverable costs for each stage of the case and an overall cap on the total. For the liability and damages/profits stages, these caps will be £50,000 and £25,000 respectively. The pilot can be voluntarily entered into by claimants (subject to objection on the part of defendants) and is awaiting Civil Procedure Rule Committee (CPRC) approval. He hopes an accelerated procedure would “reduce the burden of work on the lawyers for each party.”
That said, unlike commercial and business claims, whose demand for fixed costs generally increases as the size of the case increases, Jackson LJ recognised that PI and clinical negligence claims will need to be approached differently when deciding which cases would suit an updated fixed recoverable costs regime. Therefore, we’re yet to see whether the pilot outcomes will be relevant to those sectors at all.
The pilot is not the only feedback method being pursued; the judge also commissioned a Just Costs Solicitors Poll of 146 practitioners from 200 of the UK’s top Law firms, which showed that 65% were “unhappy” with costs management. 10% stated that costs management had made a “positive impact.” 33% believed clients would prefer fixed recoverable costs.
Overall however, 90% said the procedure of costs management was “preferable” to fixed recoverable costs, so that low value claims still had a chance of being pursued vis a vis access to justice considerations and reducing the burden of legal work needed to see a successful outcome.
The judge has not yet rejected the need for fixed costs outside and above the fast track as he is still considering how to deal with incurred or historic costs which at the moment do not fall under costs management.