Understanding Fixed Recoverable Costs: An Expert Guide

September 15, 2023, By

Starting 1st of October 2023, civil litigation claims valued up to £100,000 will be subject to Fixed Recoverable Costs (FRC). Legal matters often involve intricate terminology. The term “fixed recoverable costs” may initially seem intimidating; however, it’s a straightforward concept aimed at streamlining legal processes.

What are Fixed Recoverable Costs?

Fixed Recoverable Costs refer to the legal expenses that a ‘winning’ party is entitled to recover from the opposing party at various stages of the litigation process, from the initial pre-issue phase to the conclusion of the trial. This replaces the former more ambiguous and negotiable cost-recovery systems.

How are they applied?

FRC will apply to most cases allocated to the fast track and the newly introduced intermediate track.

  • Fast Track: Designed for claims up to £25,000, this track aims for resolution within a one-day trial, limiting evidence to two areas of expertise, each represented by a single expert witness per party.
  • Intermediate Track: This fresh category is for claims valued between £25,001 and £100,000. These cases should be resolved within a three-day trial and should involve no more than two expert witnesses for each side.
    The courts will sort cases into a “complexity band,” ranging from 1 to 4 in ascending order of complexity. Higher bands equate to increased fixed costs.

Advantages of FRC

One of the main goals of introducing FRC is to streamline the calculation and reimbursement of legal expenses. The process could become complicated without such a system, often spiralling into further disputes and escalating costs.

Benefits to consider:

• Transparency: Parties can clearly see the potential costs involved.
• Cost Control: With defined parameters, cost spiralling is minimised.
• Swift Resolutions: The new system aims to speed up the decision-making process.
• Enhanced Access to Justice: FRC lowers the financial entry barrier for claimants.
• Predictability: FRC improves both sides’ ability to gauge potential costs, assisting in trial versus settlement decisions.
• Budgeting: Parties can better anticipate financial commitments, thereby facilitating more effective budget planning.
• Focus: By reducing the negotiation around costs, both parties can concentrate on the core issues of the case.

Challenges and pitfalls:

Despite its apparent advantages, FRC is not without its challenges.

• Transitional Uncertainty: A period of adjustment will be inevitable as all stakeholders adapt.
• Case Uniqueness: A one-size-fits-all approach may not be appropriate for cases with unique or complex attributes.
• Risk of Rushed Resolutions: There’s a concern that the new system may encourage quicker but less thorough resolutions.
• Access to Justice: The impact on marginalised groups who may find legal recourse less economically viable remains unclear.
• Data Gaps: Current data lacks the quality and recency to definitively support the levels at which FRCs are set.

In summary, Fixed Recoverable Costs bring a new layer of simplicity and predictability to the reimbursement of legal costs. While the system is designed to make the legal process more accessible and understandable, achieving the optimal balance between fairness and predictability is still an area for ongoing discussion.

Next steps

If you’re wondering how this updated legislation about Fixed Recoverable Costs could impact your organisation, we at Slater Heelis are equipped to provide expert support on this matter.

To speak with one of our skilled solicitors, please contact us at 03301113131 or fill out our online contact form here.