(updated 01/08/13)
WHAT ARE THEY?
The government put forward a proposal in November 2012 regarding the extension of the RTA Personal Injury scheme regarding fixed recoverable costs. The Ministry of Justice set out the proposals of the amount the costs should be fixed at in their Consultation Response on 27 February 2013. The 65th update to the CPR came into force on 31 July 2013. The 65th update amended CPR 45 and introduced Pre-Action Protocols for Low Value RTA and EL/PL claims (links below).
Effective from 31 July 2013 the Portals have now been expanded to include RTA claims up to a value of £25,000.00 and also EL and PL matters.
The relevant dates are as follows:
RTA
Value £1,000 – £10,000
| CNF before 30 April 2013 | Old portal fixed costs |
| CNF from 30 April 2013 onwards | New portal fixed costs |
Value £10,001 – £25,000
| Cause of action before 31 July 2013 | Does not enter portal |
| Cause of action from 31 July 2013 onwards | New portal fixed costs |
EL & PL (except industrial diseases)
| Cause of action before 31 July 2013 | Does not enter portal |
| Cause of action from 31 July 2013 onwards | New portal fixed costs |
Industrial diseases
| Letter of claim served before 31 July 2013 | Does not enter portal |
| Letter of claim served from 31 July 2013 onwards | New portal fixed costs |
The fixed costs for claims within the Protocols are fixed as follows (CPR45.18):
Claims of £1k-£10k Stage 1 Stage 2 Total |
Claims of £10k-£25k Stage 1 Stage 2 Total |
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| RTA claims | £200 | £300 | £500 | £200 | £600 | £800 | |||
| EL/PL claims | £300 | £600 | £900 | £300 | £1,300 | £1,600 | |||
Stage 3 Fixed Costs
Type A
The legal representative’s fixed costs for a hearing in the RTA/EL/PL portals are £250.00 plus VAT.
Type B
The additional advocate’s costs for conducting a Stage 3 hearing are also £250 for RTA/EL/PL portals, so a total fee of £500 for an oral Stage 3 hearing in all portals.
Type C
Fixed costs for advice on the amount of damages where the claimant is a child – £150 plus VAT.
*All fixed costs at all stages are exclusive of VAT*
From 31 July 2013, any cases which exit the RTA, EL and PL protocols now go into a new Fixed Costs scheme. The exception is Industrial Disease, and such cases which exit the portal will move into standard basis costs.
The scheme separates the costs for RTA, PL and EL matters and the costs are also fixed for each stage of the claim starting from pre issue right through to trial:
| Pre issue £1,000-£5,000 |
Pre Issue £5,001-£10,000 | Pre Issue £10,001-£25,000 | Issued – Post issue Pre Allocation |
Issued – Post allocation pre listing |
Issued – Post listing pre trial |
Trial – Advocacy Fee |
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| Case Settles pre-Issue | Case Settles pre-Issue | Case Settles pre-Issue | |||||||||||
Road Traffic Accident |
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| Fixed Costs | Greater of £550 or £100+ 20% of Damages | £1,100+15% of Damages over £5k | £1,930+ 10% of Damages over £10k | £1,160+ 20% of Damages | £1,880+ 20% of Damages | £2,655+ 20% of Damages | £500 (to £3,000)£710 (£3-10,000)£1,070 (£10-15,000)£1,705 (£15,000+) | ||||||
| Escape | + 20% | + 20% | + 20% | + 20% | + 20% | + 20% | na | ||||||
Employers Liability |
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| Fixed Costs | £950+ 17.5% of Damages | £1,855+12.5% of Damages over £5k | £2,500+ 10% of Damages over £10k | £2,630+ 20% of Damages | £3,350+ 25% of Damages | £4,280+ 30% of Damages | £500 (to £3,000)£710 (£3-10,000)£1,070 (£10-15,000)£1,705 (£15,000+) | ||||||
| Escape | + 20% | + 20% | + 20% | + 20% | + 20% | + 20% | na | ||||||
Public Liability |
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| Fixed Costs | £950+ 17.5% of Damages | £1,855+10% of Damages over £5k | £2.370+ 10% of Damages over £10k | £2,450+ 17.5% of Damages | £3,065+ 22.5% of Damages | £3,790+ 27.5% of Damages | £500 (to £3,000)£710 (£3-10,000)£1,070 (£10-15,000)£1,705 (£15,000+) | ||||||
| Escape | + 20% | + 20% | + 20% | + 20% | + 20% | + 20% | na | ||||||
Notes: Base fees – in all cases increased by 12.5% where London firm as per CPR 45
There is however an ‘escape clause’ to fixed costs applying to a matter outside the protocols however in order to take advantage of this the Claimant would have to expect to recover at least 20% more than the fixed costs.
There was a similar system in place under the previous Predictive costs regime, however this was rarely effective and only used in a limited amount of situations. Therefore it appears as though the vast majority of claims will attract fixed costs.
Links to Protocols:
Pre-Action Protocol for Low Value Personal Injury Claims in Road Traffic Accidents
Pre-Action Protocol for Low Value Personal Injury (Employers’ Liability and Public Liability) Claims
MRN OUTLOOK
It is understandable that this is causing controversy amongst the Personal Injury sector, it is our view that fixing costs for fast track matters will cause a number of significant issues not only at the end of the claim but at the outset and through the duration of the same.
Firstly we believe that this will only add to the inequality of arms that currently exists between Defendants and Claimants that are apparent within the present system. Defendant Insurers often have the benefit of unlimited resources compared to those of a Claimant this is because the Claimant is often a lay individual.
In addition Defendants may take the view that they have essentially ‘nothing to lose’ as they do not have the threat of having to pay a large amount of costs at the conclusion of a claim as they are fixed. It is therefore likely that Defendants will contest more claims and take a more aggressive approach to litigation. This could lead to Claimants carrying out substantial investigations meaning that the costs are incurred in excess of those recoverable leaving the representatives with a short fall.
We believe the proposal to calculate the fixed costs by adding a percentage of the amount the damages recovered to a fixed sum is flawed, it is our view that the value of the claim does not always have a direct correlation with the complexity of the issues involved. A matter could settle for a relatively modest amount but due to issues raised by the Defendant a substantial amount of costs could have been incurred in order to carry out sufficient investigations.
Furthermore it is our opinion that Claimant representatives will take an overly cautious approach when taking on new claims as they will want to ensure that they can predict the outcome from the start. This could have a detrimental effect on the access to justice for some Claimant’s with more complex and serious complaints as the representatives would be wary to take on such matters for fear that they will struggle to spend within the fixed costs limit.
Finally, it should be noted that the above figures are recoverable costs and solicitors are entitled to charge their clients in excess of these sums dependant upon the retainer e.g. 25% of appropriate damages (see our separate article on DBA’s)
In conclusion it is apparent that introducing fixed costs for matters that fall outside the RTA, EL and PL protocols will have a significant effect on the personal injury sector. We would advise that solicitors need to put systems in place in order to investigate a claim fully at the outset and to carry out sufficient reviews on the costs being spent on a claim throughout its life span to ensure that overspending does not occur.
CHRISTOPHER KNIBB & HANNAH LOWE