Solicitors fees (often referred to as ‘costs’) are a consideration for anybody who is a party to Court proceedings.
For all clients, the hope is that if they are successful in their claim or defence, the other side will have to pay their costs. However, this is rarely the case, and a recovery of 60% of a successful party’s costs is considered good. The uncertainty around how much can be recovered is very off-putting for parties to proceedings, especially when costs can reach tens of thousands of pounds – or even more – and the fear of not being able to afford to see the case through to the end has become a bar to justice for many.
At the start of October, the Ministry of Justice brought in new rules to fix costs at a certain level, in an attempt to provide parties on both sides of the case with certainty about how much they could recover if they win, or how much they could be forced to contribute to the other side if they lose.
Those who have litigate before will know, the Courts have different ‘tracks’ for different claims of different values and complexities. In brief, these are-
- Small claims track – mostly claims up to £10,000
- Fast track – mostly claims from £10,000 – £25,000
- Intermediate track – mostly claims from £25,000 – £100,000
- Multi track – mostly claims over £100,000
The small claims track has had a fixed costs recovery regime in place for years. However, the new rules bring in fixed costs for claims up to £100,000. The new rules are very complicated – depending on the complexity of the claim, two different claims for the same value could be awarded a different amount of costs. Here are two fast track claims as an example (some key components to working out the costs are in italic font)-
Claim 1 – a claim for £20,000 which reaches trial. It is classed as complexity band 1, but has three defendants and full damages are awarded.
£3,800 would be recoverable in claim 1.
Claim 2 – another claim for £20,000 which also reaches trial. This time there are still three defendants, but the complexity is band 4. Again, full damages are awarded.
£18,180 could be recovered for claim 2. This is broken down as £7,900 + an amount equivalent to 40% of the damages agreed or awarded + £760 per extra defendant
Whether a claim is categorised as more or less complex depends on the type of claim, and the categorisation will be different within the tracks. Within the fast track, a very complicated medical negligence claim with medical reports, expert witnesses etc would be band 4/more complex. A simpler debt claim would likely be band 1 or 2.
The stage at which the matter settles also affects the costs that can be rewarded, so using similar claims to claim 2 above:
Claim 3 – another claim for £20,000, there also are three defendants, and the complexity is band 4. However, this time the matter reaches settlement before court proceedings are issued.
£580 is recoverable.
Claim 4 – again, a claim for £20,000, there are three defendants, and the complexity is band 4. This time, the court proceedings are issued, but the parties reach settlement before the hearing date is listed.
£16,680 is recovered for costs. To break this down – £6,400 + an amount equivalent to 40% of the damages + £760 per extra defendant.
As you can see, working out the costs that may be recoverable for a particular case can be a minefield, particularly before the claim has started. The rules add further considerations for advocacy fees, for different tracks, involvement of minors and a London weighting.
Many lawyers have criticised the new rules for this, and the Law Society raises concerns that the consultation for the new rules began in 2019 and the legal system has changed hugely since then. They are also concerned that the Ministry of Justice are in fact making justice less accessible because people realising that only a small amount of their solicitors fees will be recovered even if they win they may be put off bothering to fight for their claim at all. Their evaluation of the new regime can be read in more detail here – https://www.lawsociety.org.uk/topics/civil-litigation/fixed-recoverable-costs.
For the time being, it is a case of ‘watch this space’ to see how the courts apply the different complexity bands. We expect a subset of satellite litigation around this issue for some time until there is some judicial guidance.
The new regime applies to most claims issued after 01 October 2023. If you need advice about a claim or the associated costs, please call our litigation department on 0114 272 9721