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Fixed costs in litigation - changes in April 2023

The long-debated push to introduce fixed costs for civil litigation claims of less than £100,000 appears to be over, with the announcement that the new regime could be in place by April 2023.

 

The news is likely to be welcomed and criticised in equal measures, with supporters believing the plans will reduce litigation costs and opponents raising concerns about access to justice.

 

At present, the position with most types of civil claims (not personal injury or clinical negligence) with a value of more than £10,000 is that the losing party pays the winners costs. However, while the Courts do monitor the level of fees the losing party pays to the winner, there is no fixed limit on what the losing party could be ordered to pay.

 

Under the new proposals all claims which are valued at less than £100,000 will be subject to fixed costs, which are set depending upon the complexity of the case, the damages awarded/agreed and the point at which the issue is resolved.

 

A privately funded client can be charged fees as agreed with their own solicitor, however the fixed costs may be significantly less than the costs a client has actually paid. This potential gap between incurred and recoverable fees is likely to be a great influence on how/if litigants decide to proceed.

 

How the reforms will ultimately affect the conduct of litigation from next April is not clear or agreed.

 

One argument is that certainty over what costs you would pay to an opponent if your action failed, could improve access to justice by giving certainty and could even result in an increase in lower value claims.

 

The counter argument is that individuals or businesses without access to funds may be put off litigating their claims as they may not recover the majority of the fees paid to their own solicitor – even if they win. Conversely it may be that more claims are defended to a later stage in proceedings as the costs risk in doing so is reduced.

 

The likely result is that the reforms will have an effect that combines a little of all of the above arguments, but as with any change in the legal profession it may be some time before we see a clear picture.

 

At Fishers we always give our Clients the best information we can regarding costs, so that they can understand the potential risks they may face.

 

If you have a civil law issue and need advice, please contact one of our specialist solicitors.

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