Fixed Recoverable Costs: It’s not about the drill
The MoJ Consultation on extending Fixed Recoverable Costs (“FRC”) to most civil cases valued up to £100k concludes tomorrow (6 June 2019). A number of factors, discussed in previous blogs ("FRC - effective now?"), suggest that implementation is likely. The questions raised in the Consultation do not go to the issue of whether FRC is a good idea but to the detail of some of the recommendations that were originally made by Jackson LJ in 2017. Solicitors should be very wary of responding in the manner of Vercingetorix (Chief of the brilliant Asterix the Gaul) and (again) insist that the civil justice sky is falling in because a new costs regime is suggested. Lawyers should be mindful of the strong public policy argument that fee certainty offers benefits to consumers and to legal expenses insurers whose products will broaden and become more attractive stimulating the economic demand for access to justice. Advocates for the status quo should also be mindful that the public will not be sympathetic to lawyers taking up busy Court time arguing about the fees payable to lawyers.
As well as the broader interest of the consumer and the client attractions of FRC the consumer interest also extends to some of the detail recommended by Jackson. For some years now Professor Susskind, IT Adviser to the Lord Chief Justice, has been reminding the legal profession that its customers are not admirers of the litigation process per se. He observes, (and the analogy is picked up time and time again by the Senior Judiciary) that
Consumers want the resolution "hole" not the litigation "drill" - Prof Susskind
when a consumer buys a drill from a DIY warehouse it is not the drill that is the desire of the consumer but the hole in the wall that the drill creates. In the same way a consumer client of a lawyer is not undertaking litigation for the joy that is brought by statements of case and disclosure but because s/he wants to achieve resolution of a dispute.
In this respect there is some intriguing detail within the recommendations. Jackson recommended “carve outs” or standalone allowances for a small number of activities associated with the case. Whilst the bulk of the costs allowed will depend on a case stepping through a process from issue of proceedings to trial he suggested that for the intermediate cases (of value up to £100k) an allowance of between £1,200 and £2,000 (depending on complexity) would be recoverable for the specialist lawyer attending a JSM / mediation and £1,000 for the solicitor. Those fees are not linked to any particular stage of proceedings and would be payable at any point whether the mediation took place before issue or trial.
FRC means that litigators will need to give careful consideration to their business models and to the service that they offer to their clients. Cases will have to be project managed to ensure that the costs of legal effort do not exceed the value of revenues recoverable. Settlement within that context will be important, not only to achieve the desired client outcome of resolution of the case but to ensure that the case is resolved economically for the solicitor. The specific ADR “carve out” proposed within the FRC regime together with the flexibility that mediation offers to parties will be an essential tool for litigators in achieving both client satisfaction and profitability.