Law Society concerned over fixed recoverable costs rollout

The Law Society of England and Wales has expressed concern over the extension of fixed recoverable costs (FRC)* and has urgently sought clarity from government on certain aspects of the regime.

“There are too many unanswered questions around how the regime will work in practice,” said Law Society president Lubna Shuja.

“FRCs can be used for low-value and straightforward cases, but the extension of the regime will now encompass virtually all areas of civil law.**

“The government’s intention with these reforms has been to provide certainty for litigation costs, but the lack of clarity emerging from the reforms will surely lead to years of satellite litigation.***

“At the very least, the government needs to provide further guidance in support of the rules.

“FRCs are not the same as fixed incurred costs. To set FRCs at levels that do not accurately reflect the broad spectrum of civil litigation, increases the risk of recoverable costs for some cases not being sufficient in relation to the actual costs incurred.”

On the potential impact on solicitors, Lubna Shuja concluded: “Solicitors should be aware of this when taking on cases and adapt their business models as needed.

"We urge our members engaged in this type of litigation to thoroughly review their fee agreements with their clients to ensure that the consequences of the regime are being considered.

“Clients should be given as much information as possible at an early stage concerning their own costs risk to avoid any potential challenges at a later date.

“The ongoing impact on solicitors and their clients needs to be closely monitored, to ensure access to justice is not being compromised.

“We call on the government to ensure there are processes in place to quickly remedy any immediate and important issues that emerge.”

Notes to editors

*From 1 October, FRCs will apply to most civil litigation claims with a value of up to £100,000, including all fast and intermediate track cases.

**There are some exceptions to this rule, including:

• abuse claims related to children or vulnerable adults
• certain claims against the police
• mesothelioma claims
• clinical negligence claims that fall below £25,000 or above £100,000 and where liability and causation are not admitted
• housing cases are exempt for two years

***Satellite litigation is where one or more lawsuits connected to major litigation are conducted in another court.

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Press office contact: Naomi Jeffreys | 020 8049 3928