PI Brief Update

Lord Justice Jackson Is Right: It’s Time to Extend Fixed Costs - Duncan Rutter, President of the Forum of Insurance Lawyers

13/05/16. Costs control in the civil justice system has proved a tough nut to crack. From Lord Evershed’s inquiry into English procedural reform in the 1950s, through Lord Woolf’s Access to Justice reforms in the 1990s, to Lord Justice Jackson’s review of Civil Litigation Costs in 2009, the conclusion has been the same– the litigation process costs too much. The solutions, however, have proved less easy to identify and even harder to apply.

All three of the reformers named above supported proportionality – linking allowable costs to the value of the claim. Jackson LJ aimed to achieve this by a mixture of some fixed costs, a new test of proportionality, and by case and costs management. FOIL supported those proposals, including the introduction of costs budgeting in 2013. It still supports costs budgeting, which has been effective, but it is not a panacea. Not least of the issues it raises is the pressure it places on the court system leading to very significant delays, requiring in clinical negligence a temporary halt to the process to clear the backlog. It also raises issues of front-loading of costs pre-issue, together with concerns of judicial inconsistency. The Ministry of Justice accepts that costs budgeting has not worked as well as hoped.

In January this year Jackson LJ returned to the issue of fixed costs. He has called before for fixed costs on all cases up to £250,000 but this time the call came with a draft grid and a sense of urgency. For him, the time for introducing a fixed costs regime for all cases on the fast track and the lower reaches of the multi-track “has now come” and, on timescale, “If the political will is there, the whole project could be accomplished during the course of the year.”

FOIL agrees: it too has been a long-term supporter of fixed costs, welcoming Jackson LJ’s proposals in his final report and the Government’s proposals in 2015 to introduce fixed costs in clinical negligence cases up to £250,000. Although much has been achieved with the reforms introduced to date, including fixed costs for personal injury claims in the fast track within and outside the portal, the time is now right to take a further step and introduce fixed costs for all cases on the fast track and the lower levels of the multi-track. It is right that in the multi-track fixed costs in clinical negligence cases should be part of an overall regime, not an isolated exception to the hourly rate.

The proposals on clinical negligence show the Government’s commitment to fixed costs. As Jackson LJ highlighted, it is a question of political will and it has been disappointing to see only limited activity this year on the introduction of a general regime. For Government the issue should be personal; it stands to gain both the advantages of fixed costs as a litigant, and the beneficial effect of reduced costs budgeting on court resources.

Following on from Jackson LJ’s speech, FOIL has set up a Fixed Costs Working Group to focus on the issue and examine the draft proposals in detail. The group will be working with a number of FOIL’s Sector Focus Teams, including Clinical Negligence, to develop its own recommendations on making fixed costs work. The hope is that this work will be of assistance in developing and introducing a workable fixed costs regime in the near future. It may now be expecting too much to hope that the project can be completed this year but the need for urgency is still there.

Duncan Rutter
President of the Forum of Insurance Lawyers (FOIL)
and a Partner with DACBeachcroft LLP

Image ©iStockphoto.com/Clivia