Fixed Costs Pilot Scheme Introduced on a voluntary basis

The High Court in London, Manchester and Leeds has recently commenced a two-year trial under which it is proposing to limit parties costs for litigation that meets the specific criteria of the pilot scheme. Whether there are sufficient cases that will meet these criteria remains to be seen but there is no doubt that commercial court users will welcome some certainty as to the potential costs risk of litigation. This does not address the risk that so few cases will fall within the criteria and that so few parties will agree to volunteer for the process that there will only be limited engagement with it.

The one benefit of the scheme that may attract volunteers is expediency with a proposal that those that volunteer for the scheme will be able to expect a much swifter Court Hearing than those outside of it with a trial proposed to take place within eight months of the initial Case Management Conference. Given that it can sometimes take parties some time to reach that stage of the Court process, there is a risk that with substantial costs already incurred, they are unlikely to agree to a restriction in their overall costs.

The scheme proposes to limit costs to a maximum of £80,000 (ex VAT) for disputes that can be resolved within a two-day hearing and where the sums in dispute at worth more than £100,000 and less than £250,000 and there are no overly complicated issues requiring expert evidence or a substantial amount of evidence.

There is no doubt that we have encountered cases that could be well suited to this scheme and clients that would welcome the opportunity for greater certainty as to not only their costs but the often unseen costs of their opponents. The only problem with the proposal is that the Courts have in recent years started to wrestle with the “costs budgeting” process in which parties have to seek to agree their costs and those and their opponents. This process has led to greater visibility of parties costs and the costs of their opponents.

The costs budgeting process is not without its problems and more cynical practitioners have formed the view that parties are not averse to either inflating their own costs a means of intimidating their opponents or reducing them if they think it might result in a limitation of their opponent’s costs.

The fixed costs pilot will at least spare more sophisticated users from that process. We believe that there is certainly a place for fixed costs within litigation and expect that the pilot is likely to be expanded and improved over time. If fixed costs are something that interest you as Court user then please do not hesitate to contact us.

Martin Stafford

mjs@sdmlegal.co.uk