Coming soon to a court near you: Fixed Litigation Costs

If Lord Justice Jackson has his way, fixed recoverable litigation costs will be introduced this year – across the whole of the fast track, for multi-track cases up to £250,000 and, longer term possibly for bigger ticket litigation too. He has published a 4 band grid for claims up to £250,000 with fixed costs at different litigation stages and judicial discretion to award percentage uplifts for particularly complex or work heavy cases. There’s even a 15% ‘London weighting’.

It is now up to the government to take soundings. Strong resistance is expected from the legal profession but financially, it could be an inexpensive coup. The government could claim a huge stride forward for SME’s and individuals in obtaining access to justice, added to which eliminating the need for costs budgeting and  assessment should also substantially reduce demands made on the courts.

It would give clients certainty over cost, especially over the other side’s legal costs, while ensuring that recoverable costs are proportionate to a litigation. Arguably, there could be upsides for litigators. Removing that risk at the outset might lead more clients to pursuing litigation – and there’s nothing to stop a client agreeing to pay whatever their lawyers wish to charge.

Jackson delivered his thoughts during this year’s IPA lecture*. He made particular reference to the German and New Zealand systems and their introduction of meaningful price bands to address potential shortcomings on particularly complex or task-heavy cases.

It may not seem fair for litigators to have to adjust their business models to cope with the new fee regime but it is symptomatic of other industries that have been disrupted to meet consumer interest. Even if that disruption has usually been due to technological advances, not government intervention.

Clients don’t want to be charged depending on how fat a file is – and even if the profession can resist the current onslaught, it is hard to see this going away. But maybe the model can also be adjusted to suit litigators. What about if a client has a dispute and you get them the solution they want – but really quickly? Shouldn’t that warrant a premium, a la Amazon prime?

What do you think?