Fixed Recoverable Costs
Fixed Recoverable Costs: What you need to know
The long-awaited expansion of the fixed recoverable costs regime will have a significant impact on the legal costs which a successful party is able to recover from their opponent in claims valued between £25,000 and £100,000. Having first been confirmed by the Government in September 2021, its implementation is presently scheduled for 1 October 2023. This means that only a fixed amount of costs (as set out in more detail in the tables below) will apply to civil claims issued on or after 1 October 2023. So if you are considering issuing a claim, or are seeking to resolve a dispute, you should be aware of the impending changes which the expansion of the regime will bring about in respect of the recovery of legal costs.
What’s changing?
Under the current regime, costs recovery is subject to an assessment by the Court which can entail a detailed analysis of costs to determine how much the successful party should be entitled to recover from the opponent party. Under the proposed new regime, the level of legal costs recoverable in most civil claims will be fixed depending upon the complexity band the claim is allocated to and the stage at which the claim is concluded.
Following the issue of proceedings and the filing of a defence, the claim will be allocated to a particular track and the various tracks are:
- the Small claims track (for claims worth less than £10,000);
- the Fast-track (for claims worth £10,000 to £25,000);
- a new Intermediate track (for claims worth between £25,000 and £100,000); and
- the Multi-track (for claims over £100,000).
If allocated to the new intermediate track, your claim will then be assigned to one of four different complexity bands and the parties will be expected to try to agree the appropriate band between themselves. In the absence of agreement, the Court will determine which band should apply to the claim. The complexity of your case will determine the band, and the relevant band will outline a range of fixed recoverable costs. The bands are as follows:
Band 1: Straightforward cases where there is only one issue and which can be dealt with at a one day trial.
Band 2: Any less complex claims where more than one issue is in dispute.
Band 3: Any more complex claims where more than one issue is in dispute but which is unsuitable for band 2.
Band 4: Claims which are more complex and so unsuitable for bands 1 to 3.
From 1 October 2023, the fixed recoverable costs regime will capture most monetary and non-monetary relief claims up to a value of £100,000 (save for certain exceptions). However, claims seeking non-monetary relief only will not be allocated to the intermediate track unless the court also considers that it is in the interests of justice to do so.
Fast Track: Claims up to a value of £25,000
Under the current proposals, the maximum fixed recoverable costs for a case allocated to Band 1 in the Fast-Track which proceeds to trial will be £3,800 plus a trial advocacy fee of £580-£2,000, depending on the value of the claim. The maximum fixed recoverable costs for a case allocated to Band 4 in the Fast Track is £7,900 plus an amount equivalent to 40% of the damages agreed or awarded plus a trial advocacy fee ranging from £1,600 to £2,900. All amounts are exclusive of VAT (see Table 12 below).
Intermediate Track: Claims valued between £25,000 and £100,000
As above, a straightforward claim will likely fall into band 1 attracting a lower level of fixed fees and the more complex the claim, the higher the band and in turn the higher the level of fixed fees recoverable. The amount of fixed costs increases depending on the complexity band a claim has been assigned to, and also the stage at which the claim either settles or is resolved by the Court. There are 15 stages within the intermediate track which provide for the amount of fixed fees recoverable which can include an additional sum equivalent to a percentage of the damages (see Table 14 below).
Key points to note
Once the expanded regime comes into effect from 1 October 2023, those who are seeking to issue proceedings should, as a matter of good practice, ascertain how their own solicitors’ costs are calculated and whether the fixed recoverable costs are sufficient to make it worth pursuing an action at court. The fixed recoverable costs only apply between the parties so unless a solicitor’s retainer limits the legal costs payable by their client to the level of the fixed costs applicable to their client’s case, their client will likely face a shortfall in pursuing their claim and they will need to understand the likely level of that shortfall at any particular stage in the proceedings.
Under the new regime, there will be liability for costs even if the claim is never issued so a claimant who intimates a proposed claim but then fails to issue it, will be liable for the defendant’s fixed costs associated with that stage.
As it stands, claims between £25,000 and £100,000 are not captured by the expanded regime until its introduction on 1 October 2023. Therefore, those contemplating issuing such a claim should give serious consideration to either doing so or attempting to negotiate settlement of the dispute, prior to the end of September, in order to avoid limits on the amount of costs recoverable from the opponent party.
If you require any legal assistance arising out of the contents of this blog, please contact our Commercial Litigation team on 0345 872 6666, or fill in our online enquiry form to request a call back at a convenient time for you.
Table 12 (Rule 45.44): Fixed Costs – Fast-track (as proposed)
If Parties reach a settlement prior to the claimant issuing proceedings under Part 7
| Complexity Band 1 | Complexity Band 2 | Complexity Band 3 | Complexity Band 4 | |
|---|---|---|---|---|
| Where damages are not more than £5,000 | Nil | The greater of £660 or £120 + an amount equivalent to 20% of the damages | £1,100 + an amount equivalent to 17.5% of the damages | In each case £2,600 + an amount equivalent to 15% of the damages + £510 per extra defendant |
| Where damages are more than £5,000, but not more than £10,000 | Nil | £1,300 + an amount equivalent to 15% of damages over £5,000 | £2,200 + an amount equivalent to 12.5% of damages over £5,000 | As Above |
| Where damages are more than £10,000 | £580 | £2,300 + an amount equivalent to 10% of damages over £10,000 | £3,000 + an amount equivalent to 10% of damages over £10,000 | As Above |
If proceedings are issued under Part 7, but the case settles or is discontinued before trial
| Complexity Band 1 | Complexity Band 2 | Complexity Band 3 | Complexity Band 4 | |
|---|---|---|---|---|
| On or after the date that the court issues the claim, but before the date that the court allocates the claim under Part 26 | £2,100 | £1,400 + an amount equivalent to 20% of the damages | £3,200 + an amount equivalent to 20% of the damages | £3,000 + an amount equivalent to 40% of the damages + £760 per extra defendant |
| On or after the date that the court allocates the claim under Part 26, but before the date that the court lists the claim for trial | £2,500 | £2,300 + an amount equivalent to 20% of the damages | £4,000 + an amount equivalent to 25% of the damages | £6,400 + an amount equivalent to 40% of the damages + £760 per extra defendant |
| On or after the date that the court lists the claim for trial but before trial | £3,800 | £3,200 + an amount equivalent to 20% of the damages | £5,100 + an amount equivalent to 30% of the damages | £7,900 + an amount equivalent to 40% of the damages + £760 per extra defendant |
Trial Advocacy Fees
| Complexity Band 1 | Complexity Band 2 | Complexity Band 3 | Complexity Band 4 | |
|---|---|---|---|---|
| Where the value of the claim is not more than £3,000 | £580 | £580 | £580 | £1,600 |
| Where the value of the claim is more than £3,000, but not more than £10,000 | £820 | £820 | £820 | 1,600 |
| Where the value of the claim is more than £3,000, but not more than £10,000 | £3,800 | £3,200 + an amount equivalent to 20% of the damages agreed or awarded | £5,100 + an amount equivalent to 30% of the damages agreed or awarded | £7,900 + an amount equivalent to 40% of the damages agreed or awarded + £760 per extra defendant |
| Where the value of the claim is more than £10,000, but not more than £15,000 | £1,200 | £1,200 | £1,200 | £2,100 |
| Where the value of the claim is more than £15,000 | £2,000 | £2,000 | £2,000 | £2,900 |
Table 14 (Rule 45.50): Fixed Costs – Intermediate Track (as proposed)
| Complexity Band 1 | Complexity Band 2 | Complexity Band 3 | Complexity Band 4 | |
|---|---|---|---|---|
| S1 From pre-issue up to and including the date of service of the defence | £1,600 + an amount equivalent to 3% of the damages | £5,000 + an amount equivalent to 6% of the damages | £6,400 + an amount equivalent to 6% of the damages | £9,300 + an amount equivalent to 8% of the damages |
| S2 Specialist legal representative providing post-issue advice in writing or in conference or drafting a statement of case | £2,000 | £2,000 | (a) £2,300; or (b) £3,500 if counsel is also instructed to draft a defence to a counterclaim | |
| S3 From the date of service of the defence up to the earlier of the date set for CMC or the order giving directions under 28.2 | £4,000+ an amount equivalent to 10% of the damages | £7,700 + an amount equivalent to 12% of the damages | £9,100 + an amount equivalent to 12% of the damages | £13,000 + an amount equivalent to 14% of the damages |
| S4 From the end of Stage 3 up to and including the date set by the court for inspection of documents | £4,600 + an amount equivalent to 12% of the damages | £9,400 + an amount equivalent to 14% of the damages | £11,000 + an amount equivalent to 14% of the damages | £16,000 + an amount equivalent to 16% of the damages |
| S5 From the end of Stage 4 up to and including the later of the dates set by the court for service of witness statements or expert reports | £5,200 + an amount equivalent to 12% of the damages | £11,000 + an amount equivalent to 16% of the damages | £12,000 + an amount equivalent to 16% of the damages | £20,000 + an amount equivalent to 18% of the damages |
| S6 From the end of Stage 5 up to and including the date set for the pre-trial review or up to 14 days before the trial date, whichever is earlier | £5,900 + an amount equivalent to 15% of the damages | £15,000 + an amount equivalent to 16% of the damages | £16,000 + an amount equivalent to 16% of the damages | £24,000 + an amount equivalent to 18% of the damages |
| S7 Specialist legal representative advising in writing or in conference following the filing of a defence | £1,400 | £1,700 | £2,300 | £2,900 |
| S8 From the end of Stage 6 up to the date of the trial | £6,600 + an amount equivalent to 15% of the damages, less £580 if that party did not prepare the trial bundle | £17,000 + an amount equivalent to 20% of the damages, less £870 if that party did not prepare the trial bundle | £19,000 + an amount equivalent to 20% of the damages, less £1,120 if that party did not prepare the trial bundle | £29,000 + an amount equivalent to 22% of the damages, less £1,400 if that party did not prepare the trial bundle |
| S9 Attendance of a legal representative (other than the trial advocate) at trial per day, less an amount equivalent to 50% per day where, on any day, the trial lasts no more than half a day | £580 | £870 | £1,200 | £1,400 |
| S10 Advocacy fee: day 1 | £3,200 | £3,500 | £4,000 | £5,800 |
| S11 Advocacy fees for subsequent days, less an amount equivalent to 50% per day where, on any subsequent day, the trial lasts no more than half a day | £1,400 | £1,700 | £2,000 | £2,900 |
| S12 Handing down of a reserved judgment and consequential matters, where dealt with separately from the trial | £580 | £580 | £580 | £580 |
| S13 Alternative Dispute Resolution: additional fee payable once only where a mediation or joint settlement meeting takes place | £1,200 | £1,200 | £1,200 | £1,200 |
| S14 Alternative Dispute Resolution: additional fee payable once only for specialist legal representative attendance at a mediation or joint settlement meeting covered by S13 | £1,400 | £1,700 | £2,000 | £2,300 |
| S15 Approval of settlement for child, unless the settlement is approved at trial | £1,200 | £1,400 | £1,700 | £2,000 |
