Kerry Underwood

COMMERCIAL LITIGATION: FIXED COSTS COMING IN?

with 5 comments


Look here for Kerry’s new course on this subject. 

The attitude of the Commercial Court towards Fixed Costs appears to have backfired.

Remember Mrs Justice Gloster’s boast that she had “won the battle” by getting the Commercial Court exempted from costs budgeting (Law Society Gazette 13 May 2013), not a particularly bright remark by a High Court Judge in relation to one policy that commands almost universal support amongst politicians of all parties and which has been a source of considerable trouble to rather less well resourced lawyers outside the  Magic Circle.

More recently speaking at the Law Society Commercial Litigation conference in October 2015 Mr Justice Flaux said that he thought that commercial litigation is heading towards Fixed Recoverable Costs and that “the whole system of assessment will just go out of the window”.

He said that he was not advocating such a scheme and had “not the faintest idea” how the tariff should be calculated:-

“How do you assess how complex a case is? Certainly not by how much money is at stake.”

The judge’s view, shared by few outside the commercial sector, is that commercial cases “do not fit into any type of mould”, making it hard to make Fixed Recoverable Costs work. He said that he would prefer costs-capping orders to control excessive costs and commented that “anything other than a fixed costs regime would be appropriate.”

Speaking at a separate event on the same day Justice Minister Lord Faulks supported the spread of fixed costs:-

“The Germans, for example, have very much more in the way of fixed costs. Once you decide to go [down] the court route you know what is coming at the end of the road.”

It would now be surprising if fixed costs are not with us in commercial work within the life of this Parliament.

Comment

 

I can understand why lawyers in any given area of work fear fixed costs, which obviously reward the more talented lawyers who know their stuff and can advise quickly and accurately whereas the hourly rate system treats everyone the same and provides a lucrative living for the mediocre.

However I do wish the Commercial Court would stop pretending that somehow its work is more difficult or more important than the work that other lawyers do. Much of it is glorified debt collecting with lots of noughts on the end. Even the more complex work is basically contract law and involves disputes between companies who have the resources to finance the litigation and where almost always both parties are represented.

Perhaps the Commercial Court judges should spend a week with a firm of solicitors or a barristers’ chambers dealing with matters such as employment, family, judicial review, immigration and personal injury. To achieve profits in a fixed costs regime when there is far more than money at stake and where you have truly complex issues such as disparate impact and appropriate selection pools in discrimination cases is much harder. Likewise when one’s client may be illiterate or have a very poor command of English and be under enormous stress and pressure.

Commercial work is by far the simplest and easiest of general work types. I have nothing against those who do it – and as everyone knows I am in favour of lawyers being involved with all litigation.
All I ask is that the Commercial Court realises that in the great scheme of things its work is straightforward and is far less important and socially useful than almost any other kind of work.

Please also see my related blog: COSTS MANAGEMENT ORDERS & COSTS BUDGETING

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Written by kerryunderwood

November 13, 2015 at 8:13 am

Posted in Uncategorized

5 Responses

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  1. Couldn’t agree more Kerry

    I am somewhat tired of the Court believing that the value of the claim is in someway indicative of the complexity of the issues.

    Just because someone sticks the word ‘commercial’ into the proceedings and because the value of the claim has several noughts does not in itself mean that the litigation is more complex or important than say a discrimination/stress at work/clinical negligence claim which may be of a relatively modest value but of huge significance to the individual concerned and can genuinely involve hugely complicated issues (for example issues such as causation, foreseeability, estoppel, abuse of process to name but a few) on which historic legal precedent can be contradictory or open to debate.

    So the lawyers do their bit to argue and advise on these complex issues on modest value cases only to be told by the Court at the end that it wasn’t ‘proportionate’ for the lawyers to dedicate that amount of time to a matter or charge such an hourly rate whereas our colleagues in the commercial sector appear to avoid all such scrutiny.

    richardcoulthard

    November 13, 2015 at 9:00 am

  2. “However I do wish the Commercial Court would stop pretending that somehow its work is more difficult or more important than the work that other lawyers do. Much of it is glorified debt collecting with lots of noughts on the end. Even the more complex work is basically contract law and involves disputes between companies who had the resources to finance the litigation and where almost always both parties are represented.

    Perhaps the Commercial Court judges should spend a week with a firm of solicitors or a barristers chambers dealing with matters such as employment, family, judicial review, immigration and personal injury. To achieve profits in a fixed costs regime when there is far more than money at stake and where you have truly complex issues such as disparate impact and appropriate selection pools in discrimination cases is much harder. Likewise when one’s client may be illiterate or have a very poor command of English and be under enormous stress and pressure.

    Commercial work is by far the simplest and easiest of general work types. I have nothing against those who do it – and as everyone knows I am in favour of lawyers being involved with all litigation.
    All I ask is that the Commercial Court realises that in the great scheme of things its work is straightforward and is far less important and socially useful than almost any other kind of work.”

    Well said Kerry. this should be inscribed somewhere.

    Julian Evitts (@Julestri)

    November 13, 2015 at 9:05 am

  3. […] Kerry Underwood: Commercial Litigation: Fixed costs coming in? […]


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