Jackson LG acknowledges one-size-fits-all to fixed costs unlikely to satisfy
In a progress speech at a costs conference in March, Lord Justice Jackson referred to the possibility of there being a number of different costs thresholds according to the type of case being heard.
He laid out the arguments for and against fixed costs stating that lower value cases could benefit from costs being fixed as it was “simpler and cheaper” but added that he was yet “to identify which types of case and which ‘levels’ of case are suitable for fixed costs”.
“One view is that costs management should take care of everything above the fast track,” he said. “The alternative view is that lower value multi-track cases should have fixed costs.”
He also acknowledged the frequently heard argument that “the value of a claim should not be the sole determinant of whether it is suitable for fixed costs. One must also look at the complexity of the case, the number of issues, the number of experts and so forth.” And it was on the back of this statement that rested his suggestion of a potential new “intermediate track” to accommodate such cases. What would however be the procedural rules for this intermediate track? These kinds of questions are still waiting for review.
The multi-track also throws up a number of its own complexities. Whilst claimant lawyers have been keen to espouse costs management to the judge, the issue of incurred costs not falling within budgeting is causing a problem in the overall review, particularly as incurred costs account for a significant 31% of claimants total costs and 14% of defendants. So, the question is if costs management is to be viable in multi-track will incurred costs need to be reigned in?
Jackson also acknowledged the difference between what is perceived as a lower value case in the multi-track. To the mercantile courts £250,000 was considered modest/low, in contrast to personal injury litigation, “the upper limit for ‘lower value’ claims would be well below that figure.”
In his speech he also talked about the possibility of piloting a voluntary scheme for individuals and SMEs involved in low-value business disputes so they can capitalize on fixed costs combined with a more streamlined process. Judge Jackson has always been concerned that small business should have fair access to the courts and this was always a key motive behind fixed costs from the outset.
By testing the market, a pilot scheme will be the true test of whether there’s an appetite for fixed costs amongst this type of client; the challenge will be convincing enough law firms to take part in it however.
What wasn’t mentioned however was the day-to-day reality of inconsistency across the county courts, some being poorly run, under-resourced and inefficient; a hot issue for lawyers, that shouldn’t be overlooked in this review.
However, it’s encouraging to see that the “Jackson Reforms” are not just about blindly pushing through major reforms and fixed costs and that it is now being recognised that it is indeed complex and the “one-size-fits-all” approach will not do.
There will be no perfect solution; however if the judiciary were to use a system like LHQ they could build up a database of historical average costs budgets of similar cases which could be available across the courts system. Judges could use the database figures as a “guide” so reducing the potential postcode lottery but at the same time negating the need for the imposition of fixed costs. It would then be for the parties to argue how their case can be distinguished from the average due to the differing circumstances and assumptions so requiring a different allowable budget.