On 9 March 2015 the Ministry of Justice announced what was, at that time, a radical change to the fee structure of issuing fast or multi track valued claims. Gone were the fixed fees for bands of claims, and in their place was a 5% charge on all claims over £10,000, with a maximum fee cap of £10,000. By way of simple comparison, under the old regime the maximum fee required for a claim of more than £300,000 was £1,920.00.
Just over a year later, on 21 March 2016, the MoJ announced further increases, including:
- An increase from £280 to £355 for possession claims;
- An increase from £155 to £255 for applications made on notice; and
- An increase from £50 to £100 for applications made without notice and applications made on consent.
As a result, we are now in a situation where the cost of getting into and getting out of litigation has increased at the same time that courts are placing greater emphasis on costs management and alternative dispute resolution.
These increasing costs beg the question: why should you bother with litigation at all? Even those outside the legal profession are unlikely to have missed the headlines decrying the government’s actions, claiming quite rightly (to an extent), that the increase in fees would mean preventing access to justice for some sections of society.
The argument about preventing access to justice, however, is only part of the story. The big, bold headlines miss the nuances of reality; it is true that the increase in upfront costs means some may baulk at issuing valid claims, but it also means that others will equally hesitate before issuing vexatious claims (or counterclaims, as the case may be). The Court system is a juggernaut dealing with thousands upon thousands of matters on a daily basis, and anyone with even the briefest of encounters with the system knows that something needed to change. While increasing costs might seem like a default answer to the problems we currently face, one hopes that in a few years’ time we will start seeing the payoff with a vastly improved judicial system.
The truth though, is that most Claimants, whether they be individuals or corporate entities, care more about their own individual issues rather than the macro-economic concerns of the country as a whole. With that in mind, here are a few reasons why business should continue as usual.
- As the name suggests, J&P Credit Solutions provide “credit solutions”; the overarching aim is, and always has been, to ensure our client’s successfully recover the debts owed to them on a commercially viable basis. In considering whether or not those debts have been successfully recovered one must look not at individual cases, but at the entire book of debts we are instructed on. For example, of 100 cases we are instructed on only maybe 10 will become disputed, and of those 10 only a further 2 or 3 will actually go to trial. To properly compare the costs of litigation to the payoff received you have to look to the 100 cases, and not the 2 or 3 which go to trial. Litigation is not simply the process of going to trial, but includes all of the work done in advance, to obtain payment without ever issuing a claim at all.
- Our clients do not issue claims lightly; that was the case before the costs were increased, and that remains the case now. When we do, the costs should not be considered a waste of money but rather an investment in a favourable outcome. Of course, as a claim progresses, clients can rely on us to continue advising on the merits of a claim; and more importantly, on when the risk of loss outweighs the potential benefits to be gained.
- Continuing on from the point above, we as solicitors have a duty to advise and keep clients informed of costs. This is a general obligation and standard predates the court’s imposition of strict rules in that regard. Clients should be able to rely on their solicitors to advise them when even the most watertight of cases becomes uneconomic to pursue. The best solicitors are those who advise not just on the law in a dispute, but also on the economics and business implications of pursuing the dispute; what this means is that the majority of disputes should settle before going to trial.
- If a case cannot be settled, there are still plenty of avenues by which a conclusion can be reached economically: judgments in default following applications for unless orders and summary judgment applications where appropriate in particular. Again, good solicitors will know when, and when not, to make the necessary applications.
- Particularly relevant to the credit solutions clients is that they have obligations to third parties, whether that be shareholders or tax payers, to take steps to prevent bad debts from accruing and subsequently being written off. Litigation not only has the potential of allowing those debts to be recovered, but sets a precedent which shows that clients will not simply let go of debts owed to them.
In the last couple of years the Court costs of litigation have increased exponentially, far in excess of inflation or any other measure of growth. But while this means that costs have recently come under the spotlight, it would be incorrect to suggest solicitors did not monitor and consider costs implications before. What clients must always bear in mind when considering litigation is, firstly, that if they succeed they will most likely recover a fair chunk of the costs incurred (subject to assessment by the Court); and secondly, that their solicitor should always keep them informed of the claim and the costs- from the beginning when considering whether to pursue the action, to the very end when considering methods of enforcing judgment (and everything in between, be it settlement, interim applications, trial or discontinuance).
So in answer to the question posed by the title; client’s should not feel priced out of litigation and should know that their solicitors will make sure their money is well spent and effectively utilised.