LEGAL
FIXED COSTS IN LITIGATION The litigation landscape is changing and Simon Elcock, Head of Dispute Resolution at DMH Stallard, explains the changes. There are changes on the horizon relating to the way litigation claims are run with a fixed cost regime to be introduced for claims worth less than £100,000. RATIONALE FOR CHANGE Litigation can be expensive and unpredictable and this puts off many claimants from taking formal legal action. The government’s intention is to make the law more accessible and
46
encourage early settlement where appropriate, so reducing costs and injecting more certainty into the process. Early settlement, whilst attractive in principle, is not always the “right” or “fair” outcome and there is an argument that a fixed recoverable cost regime may penalise both claimants and defendants, by dissuading the former from bringing claims and encouraging the latter to settle irrespective of the merits of the claim.
THE CURRENT SITUATION When a dispute goes to court, the “losing party” can usually expect to be ordered to pay the majority of the “winning party’s” legal costs in addition to its own. These potential costs can act as a disincentive to bringing claims and particularly in lower value, “Fast Track Claims” (currently claims with values between £10,000 and £25,000) - where each party’s costs to trial can easily exceed the sum in dispute, and where the “losing party” may well face a significant costs liability compared to the value of the claim. Costs can become the dominant and determining factor in this kind of litigation.
