Fixed Recoverable Costs Review Required for Stagnant Costs

 

 

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2013 Fixed Recoverable Costs

 

Claimant solicitors and representatives are calling for a review on fixed costs which have remained stagnant since 2013.  This has become a particular point of concern given that in October 2021, the guideline hourly rates were updated to account for inflation, and is likely to be further exacerbated given the significant levels of inflation observed in 2022.

 

Fixed Recoverable Costs – An Overview

Fixed recoverable costs (FRC) were introduced in 2013 by Sir Rupert Jackson as part of a number of reforms to the civil justice system which were intended to improve access to justice and streamline processes in civil litigation. Low value claims arising from accidents (in RTA, EL and PL) after 31 July 2013 which are low in value (between £1,000 to £25,000) fall into the fixed costs category as they are subject to the Pre Action Protocol. This Protocol allows for a claim to be settled more swiftly, with short deadlines on liability decisions set.

In July 2017, Lord Justice Jackson and the government proposed extending FRC, meaning personal injury claims with a claim value of less than £100,000 were to fall under fixed recoverable costs when exiting the Portal also.

The scope of fixed costs remains at the time of writing as applying to personal injury cases up to £25,000, and these cases are subject to the general pre-action protocol rules and the fast track Civil Procedural Rules. The amount of fixed costs to be recovered is assessed based on the value of the claim and as set in Tables 6b – 6d in CPR 45.

The RTA reforms which were introduced in May 2021 mean that RTA cases valued below £5,000 fall into the small claims track and those valued between £5,000 and £25,000 will be subject to fixed costs.

Following a fixed recoverable costs review, the government has recently confirmed that there will be an extension to fixed costs next year. This now means that all civil cases valued up to £100,000 will generally be allocated to the Fast Track and fixed costs will therefore apply, though a specific date of introduction is yet to be fixed, and the implementation has already been delayed once.

The reason for this change is to reduce the overall costs of litigation, and it is proposed that the Fast Track will be divided into four categories of complexity which cater for different levels of fixed costs, including a category for intermediate cases. Standard costs will continue to apply for Multi Track costs claims (which will be for damages claimed of in excess of £100,000, rather than the current limit of £25,000), and further details of the extension of fixed costs can be found here.

The levels of fixed costs are set out in Part 45 of the Civil Procedure Rules. The set amounts to be recovered exclude VAT. Disbursements to be recoverable under the fixed costs regime include fees for medical reports, medical records, non-medical reports, Engineer report for RTA claims and Court fees. There is also the provision that allows for “any other disbursement that has arisen due to a particular feature of the dispute”. 

 

Calls for a Fixed Recoverable Costs Review

 

The Association of Consumer Support Organisations (ACSO) have stated that an immediate fixed recoverable costs review is in need for some services, namely personal injury and RTA cases. ACSO have stated that, in order to keep in line with inflation, an RTA which settles for more than £10,000, fixed costs should now be set at £1,020; however, they are still set at the original 2013 rate of £800 + VAT.

Similarly, the fixed rate for a medical report in an RTA valued above £10,000 is set at the 2014 rate of £180 + VAT; if costs were to increase in line with inflation, they would amount to £225 for the same report in 2022; however, we are still using the same 2014 rates.

Maxwell Scott, Director at ACSO stated the following on the matter;

“There is an elephant in the room when it comes to inflation and the FRC regime. While PI costs have remained static for almost a decade, elsewhere ministers have committed to a review of the discount rate every five years…The freezing of rates for so long means dramatic real-terms cuts for claimants, their representatives and for medical experts and there has been no explanation for this.”

ACSO have further highlighted the fact that guideline hourly rates were increased last year due to inflation; however, the same has not been applied to fixed costs and the small claims track limit has been extended in some cases, affording even lower levels of legal costs recovery to lower value claims.

It is clear that a fixed recoverable costs review is required now more than ever with the cost of living crisis and growing inflation.

We are likely to start seeing more firms struggling and exiting the personal injury markets. More solicitors will begin leaving the profession as profits fall and it no longer appears to be a viable and profitable industry.

 

How can ARC Costs Help?

ARC Costs are a team of independent Costs Draftsmen and Costs Lawyers who regularly assist you in the recovery/contention of costs. Whether you are the Paying Party or the Receiving Party, we hold vast experience in dealing with costs matters on both sides. We can assist in fixed recoverable costs cases and cases where costs are awarded on the standard basis. Should you require our assistance or have any further queries regarding costs, please contact us on 01204 397 302 or info@arccosts.co.uk. Alternatively, please complete our online enquiry form, and we will contact you to discuss your query or speak to our staff using the live chat function.

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