A great deal has happened since our September blog Fixed Recoverable Costs: an update on our work, so we thought it would be useful to give an update as we enter 2023.
The creation and maintenance of Fixed Recoverable Costs (FRC) regimes in civil justice is of understandable importance to consumer access to justice and to our members who support them. It’s therefore a vital constituent part of the work for ACSO’s Civil Litigation Reform Group this year.
As described in our previous blog, the following elements of FRC are our key focus:
1) reviewing the areas in which recoverable costs are already fixed and lobbying for those costs to be adjusted in the interest of fairness, proportionality and reasonableness;
2) analysing and engaging with stakeholders on existing proposals to extend FRC in legal areas where they already exist, such as personal injury, or applying them to new areas where they do not, such as clinical negligence; and
3) a more thematic review of costs in civil justice litigation.
The following is intended to give a view on progress and plans for each of the three separate areas.
Existing Fixed Costs
Long-established FRC remain static, despite lobbying the government and admissions by the Ministry of Justice (MoJ) that a review of these is necessary. Static FRC, i.e. costs fixed at a rate that is not adjusted over time by formal mechanism or ad hoc review to account for inflationary changes, have been eroded by inflation.
We have warned the government that allowing the degradation of recoverable legal costs to persist will send consumers into an access-to-justice crisis, either by forcing damages deductions to increase to allow representatives to balance their increasing shortfall and placing the burden on the consumer as an only option, or by a reduction in the representation available to consumers as solicitors leave an untenable market. Both are becoming a reality, simultaneously.
ACSO has engaged directly with the Civil Procedure Rules Committee (CPRC) and the MoJ to request that FRC are reviewed and adjusted both now and on a formal and frequent basis in future. We mirrored these requests in our response to the Civil Justice Council’s (CJC) recent consultation on costs. The MoJ has since responded to confirm that the logistics and timing for inflating the ‘Jackson’ FRC can be expected shortly, and though the CPRC has shown little appetite to formalise adjustments within the rules, we are pleased to see that it is committing to review the position of extended FRC 18 months after implementation.
We do, however, remain of the mind that costs, fees, rates, track limits, damages and discount rates adjustments should no longer be made in silo, as adjustments in one can have unintended consequences in another. We are therefore continuing in our pursuit for a simple, all-encompassing framework for the adjustment of these standards on a regular basis and with a clear process.
Extending or Establishing Fixed Costs
On extended FRC, we have lobbied the government to provide greater detail and make to adjustments in the areas of the proposals where we have significant concerns. These include a lack of a formal adjustment process as described above, a lack of detail on what is and is not included within the FRC regime as a whole and within each complexity band, inconsistent and incoherent phasing in the FRC matrix and a lack of due regard to the significance of the pre-action phase of a matter and the impact on counsel availability in complex cases, to name a few.
The CPRC has since considered and made decisions on some of these issues. For instance, in its November meeting it was confirmed that there will be no formal adjustment process for the extended FRC built into the rules, at least from the date of implementation. It has instead committed to an 18-month review. It has also further clarified its position on actions against the police, maintained its intention not to prescribe further the complexity bands and has pushed back the date of implementation by six months to October 2023, citing concerns regarding the outcome of the Belsner v CAM Legal Services case and the impact on housing disrepair cases.
Throughout 2023, ACSO will continue in its efforts to ensure that the implementation of extended FRC is done with access to justice at the forefront of everyone’s minds.
We are also continuing to monitor the position in relation to FRC in lower-value clinical negligence cases, where it remains government policy to act despite it being eight years since it first announced proposals in this area (and despite the impossibility to date to agree how this might work – and work fairly to the most vulnerable consumers in particular – in practice).
Thematic Review of Costs
In our last update we noted that a large proportion of our work on civil costs related to our response to the CJC’s consultation, which covered matters such as costs budgeting, pre-action costs and digitisation, the likely impact of FRC and guideline hourly rates. We have since submitted a detailed response to the consultation and while awaiting the response from the CJC they reopened the consultation for further commentary related to the outcome of the Belsner case.
We have provided the CJC with more views, submitting that Belsner gave only very limited certainty in relation to solicitor-client funding agreements and the Solicitors Act 1974 for the purposes of its wider use, and that outstanding issues caused by the act must be addressed by a full review and re-drafting. We additionally suggested the FRC should not be extended without further action first having been taken to address the consumer protection discrepancies that the act currently causes.
The recoverability of fair and proportionate legal costs has and will continue to underpin our civil justice system and it will therefore remain a priority for ACSO throughout 2023.
Please contact our legal policy advisor Daniel Bates at daniel.bates@acso.org.uk should you wish to find out more details or contribute to any of the work discussed.