Getting to grips with costs
Association of Costs Lawyers chair Jack Ridgway outlines the changes on the horizon for legal costs and why CILEX practitioners should be prepared
Costs are as important to the modern Chartered Legal Executive as they are to any of the other regulated legal professions and take up an increasing amount of judicial time – in particular that of district judges in the county court.
In a world where the legal landscape is ever-changing, the role that legal costs play can lag behind, which sometimes means that the real change comes after it appears the dust has settled.
While the changes on the horizon are innumerable, it seems to me that there are three key events, or possible events, that could have the biggest impact on practitioners, namely:
- The extension of fixed recoverable costs (FRC);
- Future digitisation of the courts; and
- Reform of the Solicitors Act 1974
Fixed recoverable costs
The purpose of FRC is simple and has been mooted since the reforms led by Lord Woolf in the 1990s: to provide consumers with a predictable cost for legal services.
Fixed fees will be well known to those who practice in criminal law or deputyships and FRC have existed in some form in civil claims since 2005, with the introduction of fixed success fees in certain types of litigation. Since 2014, we have also seen FRC in most personal injury claims valued at less than £25,000, with the notable exceptions of clinical negligence, mesothelioma and historic sexual abuse.
“The extension of FRC to types of work which have never been subject to them before is likely to cause significant disruption to the market”
The significant changes anticipated next year are twofold, with FRC applying to most types of contentious litigation where they are valued at up to £100,000. Outside of the main FRC proposals, steps are also being taken to agree FRC for clinical negligence claims and mesothelioma claims.
The main FRC proposals should be implemented in April 2023, but this date has been pushed back several times and so a further reprieve is not beyond the realms of possibility.
The extension of FRC to types of work which have never been subject to them before is likely to cause significant disruption to the market; everything from contentious probate to boundary disputes will become subject to fixed fees. Setting the upper limit at £100,000 will cause further upheaval, with some areas seeing consolidation to ensure that there is sufficient volume to maintain profits, while other areas will use technology to streamline processes.
While these changes represent risks, they also represent opportunity. CILEX practices are younger than many of their competitors, meaning they are likely to be built around technology and more modern working practices.
Areas which may be subject to fixed recoverable costs or fixed percentage fees in the future, are conveyancing, leasehold and non-contentious probate.
Future digitisation
HM Courts & Tribunals Service (HMCTS) has embarked on one online initiative or another since the invention of email. However, the pandemic has seen certain elements – such as virtual hearings and electronic bundles – become normalised; Court of Appeal hearings and Supreme Court judgments can now be found on YouTube.
Alongside these more general changes, HMCTS has, over the past several years, introduced the Common Platform in criminal cases and CE-filing in the High Court.
It now seems likely that some form of online platform for the county court will be implemented. However, whether the vision of a fully digital court system outlined by the Master of the Rolls, Sir Geoffrey Vos, and others, will be born from this, or a system built from the ground up for the digital age, remains to be seen. In either eventuality, those practitioners who invest in technology will be best placed to serve their clients.
The Solicitors Act
The Solicitors Act 1974 is a dated piece of legislation, being only 11 years younger than the Chartered Institute of Legal Executives itself. CILEX practitioners will likely wonder why such a piece of legislation may be of relevance to them.
The legislation gives significant powers and protections to the Solicitors Regulatory Authority and solicitors generally. The Act is why solicitors have not had to seek Chartered status like legal executives, patent attorneys or trade mark attorneys. Reform of the Act in this regard, while possibly welcome, is unlikely to have a significant impact on practitioners.
Where reform will be relevant is in the distinction between contentious and non-contentious business, as well as solicitor/client assessments.
In broad terms, all matters – including disputes – are treated as non-contentious work until proceedings are issued, upon which they become contentious matters. Obviously, a lot of work can go into a case before proceedings are issued but FRC are currently only applicable once they are. However, there is a growing call for the distinction to be removed. Practitioners could see the law of unintended consequences in play, with FRC applying to an even wider number of cases and types of work than envisaged when the fees were set.
Any reform of the Act is also likely to result in changes to solicitor/client assessments, where a client challenges their legal fees, which will affect the basis on which all law firms, including CILEX practices, can raise invoices to their client.
Overall, the picture continues to shift, with short, medium, and long-term changes to the legal costs landscape which will affect practitioners. However, the pace of change ensures that those who prepare will fare well.