Fixed costs extension – An overview of the new regime

fixed costs extension

In April 2023, it was announced that the new fixed costs regime will come into force on 1st October 2023. The new regime will apply to all civil litigation claims, with some exceptions. This regime sets out a fixed amount of costs that can be recovered by a successful party in a civil case. It is intended to provide greater certainty and transparency for litigants and solicitors, and to reduce the overall costs of litigation.

The new fixed recoverable costs regime introduces the intermediate track for cases with a value of in excess of £25,000 up to £100,000.

Implementation criteria for the fixed costs extension

The implementation criteria for the new rules is different depending on the type of action:-

  • In personal injury cases, the new rules will apply only where the cause of action accrues on or after 1st October 2023.
  • In disease cases, the new rules will be implemented where a letter of claim has not been sent before 1st October 2023.
  • In general civil claims, these new rules apply to cases issued on or after 1st October 2023 . 

The Intermediate Track

The intermediate track will apply to claims that are not suitable for the small claims track or the fast track. The small claims track is for claims with a value of up to £10,000, while the fast track is for claims with a value of up to £25,000. Claims will be assigned to the new intermediate track if they have a value between £25,000 and £100,000.

The courts will set a timetable for the case and will require the parties to comply with that timetable. The courts will also be able to make orders about the disclosure of documents and the use of experts. Trials arelimited to three days, and oral expert evidence at trial will be limited to two experts per party.

The costs of litigation in the intermediate track will be fixed. The fixed costs will be set out in the Rules based on the complexity of the case and the stage at which it settles.

The new intermediate track is a significant change to the way in which civil litigation is conducted. The aim is that it will lead to a more efficient and cost-effective system for resolving disputes, ensuring claims can be managed justly and proportionately.

Allocation and assignment under Part 26 of the Civil Procedure Rules

New rules in relation to allocation and assignment will be found under Part 26 of the Civil Procedure rules. Draft changes can be found on the Government’s website and the draft rules under CPR 26.14 state the following:

“(1) When a claim is allocated to the fast track or the intermediate track, the court must also assign the claim to a complexity band, unless it is one to which Section VIII of Part 45 applies.

(2) In both Table 1 and Table 2, below, the complexity bands numbered 1 to 4 provide an ascending scale of allowable costs commensurate with the complexity of the claim.

(3) The complexity band to which a claim is assigned shall determine the costs that are to be allowed under Table 12 or Table 14 in Practice Direction 45.

(4) Subject to paragraph (5), the parties may agree the complexity band to which a claim is assigned. (5) The court may direct that a claim be assigned to a different complexity band than that agreed by the parties, but shall have regard to the factors set out in rule 26.13(1).

(6) A party must state on their directions questionnaire—

(a) the agreed complexity band; or

(b) where the parties disagree, the complexity band considered appropriate by that party”

Assignment – Complexity bands

Different complexity bands for fast track and immediate track will be set out in two tables under CPR 26.15 and CPR 26.16.

Complexity bands for claims assigned to the fast track (excluding noise induce hearing loss claims) are set out in table 1 under CPR 26.15.

Complexity bands for the intermediate track can be found in table 2 under CPR 26.16.

  • Complexity band 1 includes claims where only one issue is in dispute and the trial is expected to last no more than one day. This includes personal injury claims where quantum or liability is in dispute, non-personal injury RTA claims and defended debt claims.
  • Complexity band 2 includes less complex claims with more than one issue in dispute, including personal injury claims in which quantum and liability are in dispute.
  • Complexity band 3 includes more complex claims where more than one issue is in dispute; but the claim is not suitable for assignment to complexity band 2.
  • Complexity band 4 includes more complex claims, not suitable for assignment into complexity bands 1 to 3. This includes personal injury claims where there are serious issues of law or fact.

For example, Stage 1 (from pre-issue up to and including the date of service of the defence) costs for a claim within complexity band 3 of the intermediate track will amount to £6,400 + an amount equivalent to 8% of damages.

How can Recovery First assist?

The fixed costs extension is set to bring huge changes to the legal industry, and many law firms are worried about the impact the changes will have on their cash flow and overall profitability.

If you are concerned about the impact of the fixed costs extension on your business and you wish to discuss your options, please do not hesitate to contact us at Recovery First for a confidential chat.

We offer a positive solution to any law firm by helping them exit any legal market whilst remaining solvent, maintaining cash flow, and ensuring they get the most out of their files.

We will provide you with all the advice and support you need, and we guarantee 100% confidentiality for all clients.

If you would like to find out more about Recovery First’s process, feel free to get in touch with our Managing Directors on a confidential basis: David Johnstone at david.johnstone@recoveryfirst.co.uk, or 01357 440140, or Sally Dunscombe at sally.dunscombe@recoveryfirst.co.uk or 01357 440140.

 

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    David Johnstone:

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