Fixed Recoverable Costs: effective now?
The Ministry of Justice Consultation considering the extension of Fixed Recoverable Costs (“FRC”) to most areas of civil litigation remains live with responses due by 6th June this year. It may seem premature to be speculating about commencement but as explained in the previous Blog "Wake up and sell the coffee!" it seems very likely that the reforms will be adopted. The question is not so much if but when – and for some organisations the extension could have an impact on business and pricing decisions already made.
In considering when change might be effected it should be noted that the extension will be relatively easy to implement. Fixed Recoverable Costs are up and running in Fast Track personal injury cases. Broadening the definition of what is included (or conversely identifying the categories excluded) is not the most challenging of tasks that has ever faced the Civil Procedure Rules Committee (“CPRC”). Jackson’s recommendation to include cases above the Fast Track limit to a value of £100,000 has already been critiqued by the Ministry of Justice. The proposal to introduce an Intermediate Track for those cases has been altered. The Ministry of Justice had concerns about the costs and complexity of defining and introducing a new “track” with the consequent need for a thorough and extensive review of the Civil Procedure Rules (“CPR”). The Ministry of Justice suggest that cases of up to £100,000 be included within an expanded Fast Track and included as Intermediate Cases subject to the FRC outlined in the Table that appears at pages 106/107 of Jacksons July 2017 report.
The necessary amendments to the CPR will not therefore keep the CPRC burning the midnight oil and the question is at what point in the April / October CPR amendment cycle it is likely that the changes will be made. It is interesting in that context to note not only that the deadline for responses to the Consultation is June 6th but that the Ministry of Justice commits to reviewing the responses and publishing its own response “later in the year”. Further the Ministry of Justice indicates that it will “start engagement with the Civil Procedure Rule Committee at an early stage” (author’s italics). These indications strongly suggest a clear design to introduce the FRC extension soon. It seems likely that October, though a possibility, is too soon but with a number of other reforms (RTA whiplash claims, increase in Small Claims Track limit and changes to the RTA portal) scheduled for April 2020 that this is the target date for the FRC extension.
“Next year” of course seems quite some way distant but the reality is that if the legal profession is to adapt it does need to consider how it will handle cases now and how it can market the change to its clients. An April 2020 date will also impact on Legal Expenses Insurance – where the window for planning and preparation is narrow to the point of non-existence – a claim for indemnity under an annual BTE policy incepted today could be fall in to the FRC regime before expiry of the policy. Similarly the legal advice to clients on cases not yet issued will need to take in to account the likelihood that FRC may well apply to that case. Does the client prefer the certainty of FRC? Should proceedings be issued before or after the onset of the new regime? Should investigations be hastened to issue before? Will the settlement strategy vary? There are many questions to be considered between the present and commencement but amongst those should be the nature of the retainer with the client and the fee structure. The FRC regime in that respect has already commenced.
 Review of Civil Litigation Costs: Supplemental Report Fixed Recoverable Costs, (July 2017), Jackson LJ