High legal costs for firms taking or defending professional indemnity claims may fall, following a review of fixed recoverable costs to be led by Lord Justice Jackson.
The review, which will be completed by July 2017, will recommend whether to introduce a fixed cost model for more civil court cases. It may extend the fixed cost regime, already used in some small claims cases to larger claims of up to £250,000.
The review intends to make the costs of going to court clearer. “Our aim is that losing parties should not be hit with disproportionately high legal costs, and people will be able to make more informed decisions on whether to take or defend legal action,” said the Lord Chancellor, the Lord Chief Justice and the Senior President of Tribunals in a joint vision statement.
At present some small claims of up to £25,000 are subject to a fixed cost regime, which sets out the amounts of money which can be charged by lawyers at various stages of a claim. In a speech in January 2016, Lord Justice Jackson suggested that the figure could be extended to claims of up to £250,000, after which the current costs budgeting process would apply.
Lord Justice Jackson originally proposed that a fixed cost regime be introduced in his review of civil litigation procedures and costs in 2010. He believes that the momentum is now heavily for reform but will “provide ample opportunity for comments and submissions on the form and scope that reform should take,” in his review.
The Law Society is cautious about the proposals. “We have previously expressed concern at suggestions that costs should be fixed for all claims up to £250,000 – a tenfold increase on the current limit for many claims subject to a fixed cost regime. Cases at this level of compensation include situations where people have been very seriously harmed and where the application of fixed costs would be totally inappropriate,” said Law Society president Robert Bourns in a press statement.
James Burgoyne, Director – Claims & Technical, Brunel Professional Risks welcomes the review. “This has the potential to reduce the cost of professional indemnity claims, which has to be good news for firms accused of negligence and for their insurers. Whilst we understand the concern at fixing costs for complex actions, it remains the case that costs routinely submitted by claimant’s lawyers are often shockingly high.” he said.