Lightbulb moment: DBAs and the Fixed Fee “grid”
8th February 2016
“Remuneration on a time basis rewards inefficiency…”
“This inefficiency combined with the complexity and procedure of modern litigation has resulted in a civil justice system which is exorbitantly expensive…”
“High litigation costs inhibit access to justice and undermine the rule of law.”
Taken from Lord Justice Jackson’s recent lecture, these form (apparently?) the genesis of the current problem with our civil justice system and the foundation of the argument for moving toward a “grid of fixed costs.” Indeed, he believes that the time is now ripe to move towards a fixed costs regime for all cases under £250,000 (and, in turn, for solicitors to think seriously about offering DBAs to a wider variety of clients…)
As he points out, fixing costs is an effective way of ensuring that a party’s recoverable costs are proportionate to the subject matter of the litigation, as well as providing that certainty and predictability that clients desire, and frankly require. Also, a fixed costs regime dispenses with the need for costs budgeting and costs assessment (how much time and expense is focussed on dealing with precedent H?)
Such a regime, Jackson LJ is (unsurprisingly) happy to report, has already worked well in respect of fast track personal injury claims, leading to “the resolution of hundreds of thousands of personal injury cases per year at proportionate cost.” In addition, such systems work effectively abroad, with the models of Germany and New Zealand held out by Jackson to be particularly good examples. In the latter, “the fixed costs regime allows a successful litigant to recover 2/3rds of the costs that are ‘deemed’ to be reasonable with reference to the complexity of the issues and the time it would be reasonable to take on the tasks.”
Lord Jackson’s proposed system is not wholly dissimilar. A ‘grid’ would set fixed costs for solicitors’ and barrister’s fees, excluding disbursements, enforcement fees and VAT. It would divide the course of a case into 10 stages, following the 10 stages in precedent H, and dispense with the need for costs management. Fixed costs for each stage are then set by reference to four bands, determined by the value of the claim (the sum of the property recovered where the claimant won. Where the defendant won, it would be determined by the amount claimed.) In the first band (cases worth between £25,000 and £50,000) Jackson LJ’s suggested fixed amount is £18,750. Under the top band in the grid, cases worth between £175,000 and £250,000, the figure rises to £70,250.
As you would expect, lawyers have given the proposal (which could be implemented within the year if his call for Government action is met) a frosty reception, describing it as a “report from an Ivory Tower that fails to address how the changes will impact on real people.” Indeed, whilst the proposal may (or may not) be a move in the right direction, a single approach for all cases, regardless of complexity, is on first glance oversimplified.
In particular, one could point to the fact that there is no allowance for the complexity of claims as being particularly unsatisfactory. Would £70k really be enough remuneration for the work that goes into a complex £250k claim, and if not would the NZ regime be a better example to follow? If it is to be the case, however, it seems to be the perfect opportunity for firms to begin offering DBA’s, meaning that whilst there is a ceiling on recoverable fees, they can at least be fairly remunerated for their work!