At the Civil Procedure Rules Committee meeting on 13 May 2022, it was confirmed that the extension of fixed recoverable costs (FRC) is planned for April 2023. Please follow this link for a summary of the meeting which provides updates on other topics as well as FRC.
FRC for the whole of the fast track and ‘lower reaches’ of the multi-track were first proposed by Lord Woolf during the last century! No progress was made and the topic went stale. Lord Justice Jackson raised FRC in his reports ahead of the LASPO reforms in 2013. Since 2013, progress has been delayed due to Brexit and COVID-19, but the government are now firmly focused on ensuring that the extension of FRC is rolled out. I recently spoke to Dominic Regan who confirmed that he thinks implementation will be April 2023, whereas I am of the view that it will be October 2023.
Regardless of the implementation date, it is important that all law firms who undertake contentious work (with damages under £100,000) start to prepare for implementation. Fees recovered inter partes will be very different, here is an example:
- Band 2 case under the expanded fast track
- Pleaded value of £50k but settles for £25k
- Settles at Stage 5 – Witness Statements and Experts Reports
- No JSM or Mediation
- L3 firm instructed (12.5% uplift)
- Fee would be £9,500 plus 16% of damages (£4,000) plus 12.5%
- Total = £15,187.50 plus any disbursements and VAT
The fee of £15,187.50 allows circa. 82 hours at £185 per hour (Grade C SCCO GHR for an L3 firm). Remember, the £15,187.50 fee is for the lawyer and Counsel except where Counsel are instructed using one of the ‘bolt-on’ fees. The ‘bolt-on’ fees are not factored into the calculation, but if they were then they would allow no more than £3,250 for external Counsel drafting of statement of case and for a written opinion and/or advising in conference. I suspect £15,187.50 represents grim reading for most litigators and is significantly lower than a litigator would expect to recover inter partes at present for a case with the above assumptions.
The extension of FRC will bring significant change to inter partes costs recovery and create further pressure on solicitor/own client relationships. However, FRC will create opportunities for many law firms but those firms will need to rely on increased economies of scale. Efficiency, efficiency and guess what? Efficiency will be key! The Costs and Litigation Funding team at Clarion has followed the topic of FRC extensively since 2013 and can provide training on the reforms for law firms.
Please do not hesitate to contact Andrew McAulay at email@example.com or on 077645 01252 for further information or Rob Patterson at Robert.Patterson@clarionsolicitors.com or on 07961 875496.