Planned expansion of the Fixed Recoverable Costs scheme

One of the key upcoming changes set to affect dispute resolution in 2022 is the planned expansion to the fixed recoverable costs (FRC) regime.

FRC regimes set out the legal costs a successful party will be able to recover from the unsuccessful party at different stages of the litigation process.

The current regime predominantly applies in low-value personal injury (PI) claims and undefended monetary claims, but new Government proposals will mean the use of FRC will be significantly expanded.

At present, the Government is working towards implementing the proposed changes in October 2022, with the changes set to affect claims where the cause of action (such as the accident or the debt accruing) takes place post-implementation.

Expansion of FRC to the fast track

Under the proposed changes, all fast-track civil claims valued between £10,000 – £25,000 would be subject to FRC. Each claim will be assessed and placed into one of four bands, depending on their complexity.

The proposed bands are as follows:

The legal costs a party can recover under the FRC will depend on the banding and the stage the proceedings come to an end and will be a mixture of a fixed figure and a percentage of damages awarded. For claimants, the percentage will apply to the amount recovered, and for defendants, it will apply to the value as set out in the Particulars of Claim.

Extension of the fast track

The fast track itself will also be expanded to include Intermediate cases, valued between £25,000 and £100,000 in damages. These intermediate cases will also be subject to banding according to complexity in the following way:

The parties will be allowed to challenge the band the claim is allocated to, but there will be penalties if the party is unsuccessful – £150 for fast track, and £300 for intermediate cases.

Uplifts and escape

The Government are also planning to allow uplifts on the costs awarded in certain circumstances. This would include cases where one party has behaved unreasonably (a 50% uplift), where there are additional claimants on the same set of facts (25% per claimant) and a London weighting (12.5%).

Parties will also be allowed to escape the proposed FRC in exceptional circumstances, under the existing process.

The new FRC regimes are being implemented with a view to increasing the certainty around costs in these proceedings, as well as ensuring costs remain proportional to the issues at hand. While the impact of such changes remains to be seen, the Government have indicated it may consider further expansion of FRC regimes in future.