What are fixed recoverable costs?
FRC are the set amount of legal costs that a winning party can recover from the losing party at different stages of the civil litigation process.
What has changed?
The extension of the FRC regime on 1 October 2023 applies to personal injury claims where the cause of action occurs after 1 October 2023. It also applies to non-injury claims issued after this date.
FRC now apply in the fast track with four bands of complexity found at Part 26.15 of the Civil Procedure Rules. There is also a separate intermediate track, again with four complexity bands. However, it is also worth noting that ‘judges will retain the discretion to allocate more complex cases valued at under £100,000 to the multi-track, so that complex cases will not be inappropriately captured by the extended FRC regime in any event.'
Mesothelioma and other asbestos-related lung disease claims, abuse cases, claims against the police involving an intentional or reckless tort, or relief or remedy in relation to the Human Rights Act 1998 are excluded from the FRC.
Changes to Part 36 offers to settle a claim have also come into force to encourage the parties to settle at an earlier stage. Where a claimant beats their Part 36 offer, they may receive a 35% uplift on the fixed costs to the stages from the date of the expiry of the Part 36 offer to trial.
The FRC changes should, in the short-term, benefit councils, which can expect a significant reduction in cost exposure on a large volume of future claims. We expect particular benefits to accrue in low value data breach claims.
In the longer-term, claimant solicitors will no doubt try to develop hourly rate work-types that are excluded from the FRC regime. This may generate coverage issues.
We also expect claimants to routinely argue that their cases carry an unusual degree of complexity in order to push the claim into a higher band.
There may also be an increase in claims where it is suggested a claimant is ‘vulnerable’ to escape the FRC regime.
It remains to be seen how the judiciary will interpret these matters, and there is a potential for satellite or peripheral litigation on these points as the new rules bed in.
Other civil justice developments – what is on the horizon?
There have been other recent developments that potentially have a favourable impact on costs for defendants.
Separately, in August 2023 the Civil Justice Council working group published an interim report and consultation on pre-action protocols (PAPs). Recommendations include that compliance with PAPs should be mandatory except in urgent cases. The report also proposes that the Ministry of Justice should look at the feasibility of developing a general online portal linked to the main PAP steps, but capable of being linked to existing online portals such as Online Civil Money Claims and damages claims.