Top ten tips on the new Fixed Costs Regime

Get your legal dispute on the right track

From  1 October 2023, a new fixed recoverable costs regime (“FRC”) is being introduced  to almost all civil claims. This will be the first time that commercial disputes with a value of £25,000 or more will be subject to fixed costs. Fixed costs means that the amount of costs that can be recovered by the winning party from the losing party in court proceedings will be subject to a “cap”.  There are pros and cons to the new regime and only time will tell of its real impact. However, the time to take notice of the changes is undoubtedly “now”.

There are currently three “tracks” to which a claim can be allocated at court, namely the small claims track, the fast track and the multi-track.  The allocation to a track has an impact on the level of costs that can be recovered from the losing party. Allocation is governed by court rules and takes into account various factors such as the value and complexity of the claim. The new FRC introduces a new fourth track, namely the Intermediate track, for claims with a value of between £25,000 and  £100,000.

In addition to the new  Intermediate track, the new FRC regime introduces complexity bands  for the existing fast track and the new  intermediate track cases. This means that your recovery of legal costs will now not only depend on the track allocation but also on how your case is categorised within the new complexity bands. This is likely to result in spin off litigation with regard to interpretation of the new rules whilst this new regime is bedded into the legal system. This is an additional cost and degree of uncertainty that can potentially be avoided if you act now.

Here are our Top Ten Tips for anyone with existing or potential claims with a value of between £25,000 and £100,000 to take on board before the new FRC come into force:

  • Review any potential disputes: If you are aware of a dispute that you need to address;  take urgent legal advice on whether to issue proceedings before the new regime comes into force.
    • Already instructed solicitors on a dispute? Take urgent advice on whether you should issue proceedings before these new rules come into force.
      • Power to the Defendant? Note that the Defendants in proceedings will now know what costs they are exposed to and this could cause them to either drag their feet or settle more quickly. 
        • Are you about to settle a dispute? Before you settle a dispute with a value of between £25,000 and £100,000, consider what amount of costs you wish to incorporate into that settlement as after 1 October 2023, you may be faced with the other side insisting that you cannot recover in excess of the FRC amount.
          • Advice on Complexity Bands: Take early advice on which complexity band your claim falls into as this affects the amount of costs that can be recovered / that you may be liable to pay.
            • Seek agreement on Complexity Bands: Try to agree the complexity band with the other side before the issue of proceedings to avoid the costs of a court application on this issue.
              • Contract Terms and Conditions: Review your contract terms and consider whether or not you and your suppliers/customers would be interested in contracting out of the FRC provisions. This is currently permitted but may change in the future.
                • Costs Budgets: There is no requirement for Costs Budgets in the new FRC. This is potentially  a costs saving for parties but only time will tell on the impact of this.
                  • Part 36 Offers: There are inevitable changes to the costs consequences on Part 36 offers (a specific type of settlement offer that can be made in commercial disputes) that could affect the pressure level to settle in the FRC.
                    • Lupton Fawcett Dispute Management Team will be happy to help you to get on the right track and advise you on your options before the FRC comes into force.
                    • The impending introduction of the new fixed costs regime in October is poised to bring significant changes to how legal costs are managed and billed. It’s crucial for legal professionals and businesses alike to stay informed and adapt to these changes promptly. If you have any questions or concerns about how this new regime might affect your specific legal matters, don’t hesitate to reach out to our expert Dispute Management Team.



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