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10 questions on the new fixed recoverable costs ‘FRC’ regime

From October 2023 the government are planning to make changes to FRCs.
This article offers an overview of what the changes may look in practice.

Summary

  1. What are fixed recoverable costs?

    The amount of predicted legal costs that a successful party may claim from an unsuccessful party in litigation, in certain circumstances.

    It can be the amount, or the method of calculating the amount, that is fixed. 

     

    Keep an eye on updates to Civil Procedure Rule (‘CPR’) 45.

     

  2. Why do we have new rules?

    Amongst other things, to impose proportionality on the parties. As such, the costs of assessing costs almost disappears.

     

  3. When do these new rules come into force?

    The original suggestion was October 2022, then April 2023 which has now been extended to be implemented in October 2023.

     

  4. What claims does this affect?

    Claims up to £100,000 in damages.

     

  5. What do the new rules change

    Until we see the drafting of the new rules, it remains to be seen, however changes are likely to include:

    a. amendments to CPR 45 (Fixed Costs)
    b. amendments to CPR 26 (Case Management)
    c. amendments to CPR 28 (Fast Track)
    d. minor amendments to other CPRs
    e. expanding the types of FRC case, to apply to matters with values between £25,000 – £100,000 in damages (with exceptions) via the introduction of an ‘Intermediate’ Track for cases of ‘modest complexity’, lasting no more than three days at trial, with no more than two expert witnesses per party and where the case can be justly and proportionately managed under an expedited procedure (subject to exceptions). (Nb: the existing multi-track court fees may remain, but shall be kept under review)
    f. case classification under a system of ‘complexity bands’

     

  6. Practically what does this mean?

    In reality, the new rules may have a real impact on:

    a. the cases Lawyers are able to take on (the expansion of FRC rules, may affect smaller firms where ‘fixed’ fees are just not enough renumeration for the firm to survive),
    b. time recording / work in progress systems (not as important if costs are already fixed although of course, Lawyers still need to account for the work completed),
    c. cost budgeting (could disappear in these types of cases),
    d. costs assessment proceedings (could significantly reduce in these types of cases), and more.

  7. What is one of the main advantages of the new FRC rules?

    Certainty in advance, of the maximum amount of legal costs for the potential losing party.

     

  8. What is one of the main disadvantages?

    The ‘actual’ amount of costs incurred, may not be able to be claimed from the losing party, if those ‘actual’ costs exceed the ‘fixed’ costs set. This potentially leaves the successful party with a shortfall they remain liable to their Lawyers for.

     

  9. How do you claim fixed costs?

    You can include them on your Claim Form, Application Form and can request them during the enforcement process.  

    Remember that you are entitled to recover any court fees, in addition to your fixed legal costs.

     

  10. How do you avoid fixed costs?

    Place ‘to be assessed’ in the costs box on your Claim / Application form. You can do this even if fixed costs apply, but you do not want the Court to Order them, because for example, your case is complex and you have incurred (or are likely to incur) significant costs. You can bring your reasons to the Court’s attention in a cover letter for the Court to apply its discretion.

Author, Victoria Hatton

Should you require advice regarding this or any other financial crime compliance matters, please do not hesitate to get in touch at hello@tenetlaw.co.uk

Published on March 15, 2023

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