The extension of the fixed recoverable cost regime: impact on professional liability claims

This article was co-authored by Amy Childs, Solicitor Apprentice, Taunton.

The extension of the fixed recoverable costs (FRC) regime will impact professional negligence cases, with a value up to £100,000, which are issued on and after 1 October 2023.

For cases with a pleaded value between £25,000 and £100,000, FRC will be extended across the fast track and into a new intermediate track.

Requirements for intermediate track

Cases will be allocated to the intermediate track where:

1. The trial will be no longer than three days.
2. There are no more than two expert witnesses giving oral evidence on each side.
3. Witness statements are limited to thirty pages.
4. Expert reports are limited to twenty pages (the rules are not clear if this is a total, or per report, limit. We anticipate that claimants will argue that twenty pages is not enough, to ensure a case is allocated outside of the intermediate track).

There are various exemptions. The most relevant for professional negligence cases will be where there are more than two defendants or the complexity of the case takes it outside of the regime.

Judges will have discretion to allocate more complex cases with a pleaded value less than £100,000 to the multi-track, so complex cases are not inappropriately captured by the FRC regime.

Bands

There will be four complexity bands for both tracks. These will be in ascending order of complexity. Professional negligence claims will fall into band four for fast track cases but this is not replicated for the intermediate track. FRC in band four represent a big jump up from the FRC in band three.

We suspect claimants will push for band four and many courts will be receptive to this. There will, however, be a battle between assignment to bands three and four on more straightforward cases.

Stages

There will be structured stages for fixed costs for both tracks. These will be:

Fast track	Intermediate track
1. Pre-issue. 2. Post issue - pre-allocation. 3. Post allocation - pre-listing. 4. At trial.	1. To service of defence. 2. From defence to case management conference/directions. 3. To inspection of documents. 4. To service of witness/expert evidence. 5. To pre-trial review/14 days pre-trial. 6. To date of trial. 7. At trial.

The date a case moves into the next stage will be the first date allocated, even if the directions are subsequently amended.

Additional heads of costs will be recoverable as a separate head including:

1. Counsel/specialist lawyer drafting statements of case.
2. Counsel/specialist lawyer advising in writing or in conference after service of defence.
3. Attendance of solicitor at trial.
4. Hand down of judgment and consequential matters.

The intermediate track does not include a stage for pre-issue. Rather, these costs will be assessed up to a maximum capped amount. Parties may opt to agree settlement at the fixed costs level to facilitate a swift conclusion.

There is no guidance for resolving disputes where a claim settles prior to allocation, or before a band is assigned. Parties should try to agree a band and track, but if that cannot be agreed, the dispute will fall to the court to determine.

A hearing date and decision are awaited on APIL’s judicial review which includes a challenge to allowing parties to contract out of the FRC regime.

Offers

The rules in relation to part 36 offers will be amended for both tracks.

Where a claimant beats their part 36 offer, they may receive a 35% uplift on the fixed costs, to the stages from the date of the expiry of the part 36 offer to trial.

Impact on professional negligence claims

Claimants will likely try to push the pleaded value of their claims over the £100,000 threshold to avoid the FRC regime applying. As claimants seek to avoid the regime, we may see an increase of claims being issued before 1 October 2023. We also anticipate an influx of claims served within the next four months.

Arguing it was unreasonable for a claimant to issue proceedings before 1 October 2023, simply to avoid fixed costs, will not be particularly strong or persuasive, unless the claimant issues in breach of the pre-action protocol.

There will be an ongoing incentive for claimants to issue due to the large jump in costs where a defendant serves a defence. Where claimants are currently happy to agree a standstill, they may now no longer wish to do so.

There will probably be an increase in calderbank offers, by both claimants and defendants, for unallocated and/or unassigned claims. This is because a calderbank offer allows a party to set out the offer for the damages sum, and costs calculated by reference to the track or band that they believe it should be allocated to. For defendants, this will allow some degree of cost certainty, and an offer for costs to be made on the sum at the lower stage, where there could be some allowance for disagreement between the parties.

Finally, the extension of the FRC regime will mean that defendants who are successful at trial will be unlikely to recover all the costs incurred in defending the claim.

Related items:

• Fixed recoverable costs update: judicial review and last minute consultation
• Civil Justice Council publishes its final report on costs
• Personal Injury Brief: latest decisions December 2022
• Watch this space: fixed recoverable costs are coming

Read other items in Professions and Financial Lines Brief - November 2023