Holistic costs review launched by the Civil Justice Council

The Civil Justice Council (CJC) Costs Working Group, set up at the request of Sir Geoffrey Vos Master of the Rolls, has been charged with taking a "strategic and holistic look at costs, particularly given the ongoing transformation of civil justice into a digital justice system". As part of the review exercise, the group has launched a consultation that will remain open until 12pm on 30 September 2022.

Key themes of the consultation

Although no specific proposals are being put forward at this stage, the four areas that the CJC Working Group is seeking comments on are:

  • Costs budgeting.
  • Guideline hourly rates (GHRs).
  • Pre-action protocols and the digital justice system.
  • Wider consequences of extending fixed recoverable costs.

Underpinning these topics are three ‘dimensions’ identified by the group, namely: digitisation, vulnerability and the economic significance of the civil justice system.

Costs budgeting

It has been around ten years since the costs budgeting rules were introduced in the Civil Procedure Rules. As such, the consultation asks respondents to reflect on the impact and effectiveness of the rules and consider: (i) whether costs budgeting should continue in its current form; (ii) whether it should be restricted in scope and if so how; (iii) whether it should be abolished altogether; and (iv) if costs budgeting is to be restricted or abolished, how an early focus on costs could nevertheless be maintained.

Guideline hourly rates (GHRs)

The GHRs have been reviewed and set by the Master of the Rolls since 2017. Most recently, the Civil Justice Committee undertook a review during 2020, publishing its consultation in January 2021. The CJC’s final report was published on 30 July 2021 which recommended an increase from the 2010 rates as set out below:

  Grade A Grade B Grade C Grade D
London 1115 £512 (25.2%) £348 (17.6%) £270 (19.5%) £186 (34.8%)
London 2115 £373 (17.8%) £289 (19.5%) £244 (25%) £139 (10.4%)
London 3116 £282 (13.7%) £232 (15.8%) £185 (11.9%) £129 (7%)
National 1 £261 (20.2%) £218 (13.5%) £178 (10.7%) £126 (6.8%)
National 2 £255 (26.78%) £218 (23.2%) £177 (21.3%) £126 (13.5%)

On 17 August 2021, the Master of Rolls confirmed that the CJC Working Group’s proposed rates were accepted and the new rates came into force from 1 October 2021.

The consultation clarifies that the task of the CJC Working Group is not a review of the GHRs themselves but rather to consider two broad questions: i) the purpose and effect of GHRs in the current interlocking landscape; and ii) if there is a place for GHRs in the future, what the right approach to reviewing GHRs over time should be.

Pre-action protocols and the digital justice system

On 15 November 2021, the CJC published an interim report for consultation on the subject of pre-action protocols (PAPs). The CJC Working Group’s final report for consideration by the Civil Justice Council is now imminent.

Against the background of a digital dispute resolution system, this new costs consultation seeks feedback on the implications for costs associated with civil justice of the digitisation of dispute resolution and the impact on costs of pre-action protocols and portals. The Working Group also question whether there is a need to reform the processes of assessing costs when a claim settles pre-issue and whether the distinction between contentious and non-contentious business should it be retained.

Wider consequences of extending fixed recoverable costs

On 28 March 2019, the government launched a consultation on the extension of fixed recoverable costs (FRC) in cases worth up to £100,000. The consultation sought views on a number of recommendations made by Sir Rupert Jackson in his ‘Review of Civil Litigation Costs: Supplemental Report Fixed Recoverable Costs’ published in July 2017, with the government aiming to take forward most of his recommendations.

In a long-awaited update, the MoJ announced on 6 September 2021 that the proposals to extend FRCs will indeed be introduced. According to the CJC, the implementation of these changes is underway and as such, it is not the purpose of this new consultation to examine that work. Rather, the consultation asks whether there are any other costs issues arising from the extension of FRC and if so, whether an extended form of costs capping should be introduced for particular specialist areas.

CJC conference

On 13 July 2022, a conference was held by the CJC as an opportunity to discuss the themes of the consultation. Stakeholders from all sectors of the civil justice system attended, and strong and opposing views were expressed particularly in relation to the continuation, abolition or revision of the costs budgeting process. A show of hands did, however, indicate a majority in favour of retaining costs budgeting, perhaps unsurprising given its clear benefit to promoting certainty for both insurers and claimants. There was a general consensus among attendees that GHRs have a future in the post-fixed costs extension legal landscape, but differing views as to the methodology for review.

Next steps

The CJC will be hosting a number of webinars and smaller events in September. The consultation closes on 30 September 2022, after which the Civil Justice Council will publish its report by the end of 2022.

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