The time has come

This week, ended with a flourish with a speech by Jackson LJ (delivered it seems with the concurrence of the Master of the Rolls) on the subject of fixed fees.

The text of the speech can be read here: Fixed Costs The Time has Come.

Already the internet has exploded with alarm, satisfyingly in tandem with the release of the Dads Army reboot, with complaints echoing Private Fraser’s famous cry of: “We’re all doomed!”

In truth, a broad based scheme of fixed costs which applies to all claims up to £250,000 has a lot to commend it in terms of facilitating access to justice. It will provide certainty.

It reduces the risk that the losing side to litigation will go bust, due to a huge and unknown costs liability and at a stroke, it means that the pointless and expensive costs budgeting regime can be locked away with the cutlass and the broadsword, as a relic belonging to another time.

It also is likely to overtake the move to J codes and digital billing: if virtually all costs are fixed, who will care when inter partes costs come to be awarded about time management and logging each and every individual letter? J codes can then be relegated to  solicitor own client charging, for those who choose to adopt them, which after all, is what they were designed for.

Such a regime might also kick start a properly funded and worthwhile BTE industry now able to more accurately gauge and quantify its exposure to adverse costs, with reasonable premiums and also provide stabilisation of the ATE industry.

It also, represents the reinvention of the way litigation used to be funded: devotees of the nineteenth century practice of costs, will  be well aware that most costs were fixed by scales, and event those who practised at the end of the twentieth century will recall with fondness the scale costs that applied then.

The only reason, that I could discern why scale costs were not carried forward into fixed costs under the Woolf reforms in 1999, was because the rules were rushed into force whilst half written, leading to endless updates as the vestigial remnants of the County Court Rules and Rules of the Supreme Court were gradually cleared away.

The biggest concern that the introduction of fixed costs will have, is one that affects the workload and the remuneration of the lawyers.

Fixed costs in Germany, undoubtedly affect the structure of the legal profession: most firms there are small, engaged with a very different court process than the one we have in England and Wales, and have the benefit of a very stable BTE insurance industry.

I cannot see how a significant proportion of the legal profession, which currently makes a living from disputes over costs and their quantification can continue in their current employment, or rather continue doing what they do now.

I also suspect that in absolute terms, it will lead to lower costs awards across the board, and a likely decrease in remuneration in traditional areas of work, although much will turn obviously, at what levels fixed costs will be set at.

However, equally, I think that areas of work which are currently in desuetude, due to LASPO 2012, might flare into life again: I have in mind particularly disability discrimination claims and environmental claims.

Moreover, fixed costs are more generally likely to cause cases to fight and go to trial, as defendants know that the downside to defending a case tooth and nail will be limited.

So the upshot of fixed costs could be more litigation rather than less: in which case, the solution for those lawyers who practise exclusively in costs, is perhaps to engage with what could be optimistically described as a process of “creative destruction” and start to think about the opportunities that this will create, and start planning for them now.

I would draw a parallel with industrial change. It is now more than 30 years since the miners strike of 1984-1985: the mining industry has effectively gone. Many of those miners, who lost their jobs in the decade after the strike, never worked again. But the demand for energy and the need for an energy industry has never been greater: the key is to ensure early recognition and adaptation to the way the legal services industry is going to change over the next few years to avoid the miners’ fate.

 

 

2 thoughts on “The time has come

  1. As an Australian cost lawyer, working in jurisdictions with scale cost regimes, I can say that this is not the end of the world for UK cost lawyers. However, I am coming to the view that fixed cost regimes are becoming more and more problematic in the Susskind world of rapidly changing technology and approaches to practice. I am one of the authors of some of our scales, and can see that scales we developed 5 years ago are out of touch with new practices (in particular use of technology in litigation and the use of extranets and the like in conduct of litigation).
    One of the interest impacts of a fixed fee regime can be the highlighting of the disparity between fees recovered and costs charged. In Australia, this has contributed to a significant increase in disputes between lawyers and clients, which are keeping cost lawyers busy

    • Liz. Thank you very much for your comment. It is always pleasing to know that the blog is read by lawyers from outside England and Wales. I think you make a valuable point. Fixed costs are set on the basis of assumptions as to how lawyers work and how they can conduct the case. If those assumptions are ill founded or overtaken by events, such as the implementation of new technologies, then the balance of overhead versus profit, can be skewed in one direction or another. Interesting to note your comment on the effects of solicitor-own client charges too: here I am waiting for the slew of cases that should flow from the practice of charging success fees as a solicitor- own client charge: they are surely coming.

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