Shake up of costs regime may leave civil claimants out of pocket
3rd August 2023
More areas of civil law will be affected by a shake-up of the fixed costs regime which could leave a claimant with little or no money even after winning a case.
Litigation claims in cases of professional negligence and breaches of contract are among the areas set to be governed by the new fixed recoverable costs regime which is set to come into effect from October 1st this year.
The new changes to the Civil Procedure Rules mean people pursuing civil claims could be left out of pocket or even find it difficult altogether to bring their case to court as claims of up to £100,000 are less commercially attractive for legal firms to pursue.
Each case will be judged on its complexity, with the more complex cases coming with higher costs and in turn having a significant impact on both recoverable and payable costs.
So even if they are successful the client could still be left with little or no money.
Proceedings issued before October 1st will not be affected by the changes.
Legal firms will look at whether cases are even worth taking on.
Fixed costs have been in existence for a long time but are creeping into more areas of the law.
After these changes legal teams will have to look at the complexity of each case, and how far into the proceedings any dispute is settled, which will then calculate how much a claimant is entitled to recover for their legal costs.
Some firms may only take on a cast iron case – although you could argue nothing in litigation is ever cast iron – but if there is a good case, they could take it on as a no win no fee and they would then take a percentage of the money awarded. However, most firms, we imagine, will continue to charge clients on a time spent basis as usual, which will mean the clients are out of pocket on costs on conclusion, even if they’re successful. Proportionality is key.
Litigation is highly risky. It can depend on the judge on the day, and how well your client performs whilst giving evidence. . You could produce a brilliant witness statement but then your client simply does not perform well on the stand on cross-examination under pressure. These are risk factors which prevents any law firm from giving a cast iron guarantee on winning a legal case and reduces the number of solicitors who are willing to take on cases on a no win no fee basis.
With a steep rise in the number of civil disputes reaching a court room over the past five years, we reiterate the importance of the parties being able to demonstrate their efforts in attempting to resolve their differences before issuing proceedings.
People have become far more litigious, especially in the last five years, and this is not looked upon favourably by a judge. We would always advise people with a dispute to speak to the other party with a view to resolving their differences, or at least coming to some arrangement, before issuing civil proceedings, which could include mediation.