By: 4 February 2017
Fixed recoverable costs extension would be a “grave risk” following Brexit, says ACL

The Association of Costs Lawyers (ACL) has told Lord Justice Jackson that a radical extension of fixed recoverable costs (FRCs) would be a “grave risk” given the economic uncertainty created by Brexit.

The Association has expressed concern that a FRC extension could make it uneconomic for foreign companies to litigate in England and Wales.

In its response to Lord Justice Jackson’s call for evidence on the matter, the ACL has pointed out that there are several areas of law, such as clinical negligence and defamation, where the introduction of FRCs would be “unfair and unworkable”.

The ACL has argued that the proposed Ministry of Justice reforms to personal injury claims also need to be in place before it would be possible to consider how further changes to the regime would operate effectively. It added that the modernisation agenda for the courts could also have a major impact on costs, and that extending the FRC regime when the impact of the current regime – which was barely three years’ old – had not been assessed, would be wrong.

It also questioned the need for a review into the FRC regime, given that active case and costs management was proving successful in restricting many of the excesses of litigation.

“Our members accept that extensions to the FRC regime may follow over time,” said the ACL.

“However, it is vital there is consultation with all stakeholders who use the court system to ensure that any extension will be consistent with the key tenet of all recent reforms – namely access to justice – and will provide fair and proportionate remuneration for the work done to promote such access.

“If a FRC regime is introduced at the wrong level and without fair remuneration, there must be a real concern that litigants will not be able to access the correct level of legal expertise without bearing much of the cost themselves, thus potentially creating an inequality of arms.”

The ACL stressed the importance of a major data collection exercise to ensure that an FRC scheme is applied to the correct categories of cases and at the right level. It said there had already been talks with the Law Society and others about pooling such data.

Simon Murray, chair of the ACL’s fixed costs working group, and CEO of specialist costs law firm NeoLaw, said: “The overarching concerns of the [ACL’s] membership are that if there is to be any extension to FRCs, timing is key and the level of fees must be informed by meaningful data provided by all of the key stakeholders in the legal industry.

“Moreover, it is extremely unlikely that a one-size-fits-all system will be achievable and so a tailored approach to the various classes of action will be required.

“In our opinion these issues are of the utmost importance to ensure access to justice is maintained.”