As of 1st October 2023, a significant change has been implemented in the legal landscape with the extension of the fixed recoverable costs (FRC) regime.
Here, we provide information on the implications of this reform and shed light on the potential benefits and challenges it presents for clients.
From the above date, the FRC regime – which previously only applied to monetary claims for up to £10,000 allocated to the Small Claims Track and which fixes the amount of costs recoverable by the successful party – has been extended in civil litigation.
The extension of the FRC regime means that fixed costs now apply to most monetary claims up to the value of £100,000.
In addition to the current Small Claims Track and the Fast Track (for monetary claims between £10,001 and £25,000), a newly introduced ‘Intermediate Track’ will now cover claims valued at more than £25,000 but not more than £100,000, rather than them being allocated to the Multi-track as previous.
Additionally, a new system of ‘complexity banding’ has been introduced within the Fast Track and the new Intermediate Track, which will be used to determine the actual amount of the costs that can be recovered.
The FRC does not cover mesothelioma and other asbestos-related lung disease claims, abuse cases, or claims against police involving intentional or reckless behaviour and judges will retain the discretion to allocate more complex cases valued under £100,000 to the Multi-track.
The amended Civil Procedure Rules (CPR) for England & Wales also include changes to ‘Part 36 offers’, which was previously implemented to encourage parties to settle their claims. For example, a claimant who now beats their Part 36 offer after trial may receive a fixed 35% uplift on their fixed costs accruing from the date of the expiration of their Part 36 offer until the date of judgment.
The extended FRC regime aims to streamline the legal process by limiting and simplifying the assessment of costs and promoting cost efficiency for both clients and solicitors.
One of the key advantages of the new FRC regime is increased predictability, meaning that clients can budget more accurately and can better estimate their recovery from the other side if they are successful in their claim.
While the extended FRC regime brings certain benefits, it does also bring about serious concerns. One such concern is the possibility of insufficient compensation for complex cases; the fixed fee structure may not adequately account for the intricacies involved in handling certain legal matters, potentially impacting the quality of representation or the amount of recovery versus the costs of bringing the action.
Overall, the implementation of the extended FRC regime brings both advantages and challenges. While increased cost predictability and expedited litigation process are significant benefits, it is essential to consider the potential limitations of this reform to ensure clients receive fair and comprehensive legal representation and maximise their cost recovery.
As ever, there are lots of factors to consider when deciding whether or not to pursue litigation. Our expert Dispute Resolution and Litigation team can assess your case on an individual basis and advise you on the merits and the potential costs of exposure and recovery of bringing a claim. Please contact Richard Dobson-Mason to discuss your case in detail.