The extension of fixed recoverable costs is due to come into force in October 2023, and will cover civil and commercial claims valued up to £100,000, as announced in April 2023.

The new costs reforms will be applicable to all civil litigation claims, with a few exceptions. The regulations establish a predetermined set of costs that a successful party in a civil case, valued up to £100,000, can recover. The purpose is to provide greater certainty and transparency for both litigants and solicitors whilst reducing overall litigation costs.

New tracks under the Fixed Costs extension

The new fixed recoverable costs regime consists of two tracks: the fast track and the intermediate track.

The intermediate track is designed for claims that are unsuitable for the small claims track or the fast track. The small claims track covers claims valued up to £10,000, whilst the fast-track handles claims valued up to £25,000. Claims falling between £25,000 and £100,000 will be assigned to the intermediate track.

Under the intermediate track, the court establishes a case timetable and ensures compliance with it. The court can issue orders related to document disclosure and the use of experts. Trials are limited to three days, and each party is allowed to present oral expert evidence from a maximum of two experts.

Implementation Criteria

Implementation criteria for the extension of fixed costs are determined based on the type of action:

• In personal injury claims, the new rules apply only when the cause of action arises on or after 1st October 2023.
• In disease cases, the new rules are implemented if a letter of claim has not been sent before 1st October 2023.
• In general civil claims, including commercial cases, these new rules apply to cases filed on or after 1st October 2023. 

Complexity bands and recovery amounts

Legal costs within the intermediate track are fixed and determined based on a table that considers the complexity of the case and the time required for resolution.

The allocation and assignment of cases will be outlined under Part 26 of the Civil Procedure Rules. The government’s website provides draft changes, and CPR 26.14 specifies that when a claim is allocated to the fast track or the intermediate track, it must also be assigned a complexity band unless Section VIII of Part 45 applies (Noise Induced Hearing Loss claims).

Different complexity bands for the fast track and the intermediate track are outlined in tables under CPR 26.15 and CPR 26.16, respectively.

• Complexity band 1 includes claims where only one issue is in dispute and the trial is expected to last no more than one day.
• Complexity band 2 covers less complex claims with multiple issues in dispute.
• Complexity band 3 encompasses more complex claims that are not suitable for band 2.
• Complexity band 4 includes the most complex claims, such as personal injury or clinical negligence claims with serious legal or factual issues.

The amount of fixed costs recoverable by claimants varies at each stage of the case, depending on the complexity band to which their claim belongs. For example, Stage 1 costs for a claim falling within complexity band 3 of the intermediate track amount to £6,400 plus 8% of the damages awarded.

How Annecto Legal can assist?

We are working with law firms to see how best to respond to the new costs landscape. Traditionally, due to the high cost of disputes, we have only been able to assist on matters where over £250,000 is at stake. If you have a dispute you would like assistance with, please make contact, and explain the key facts.

Funding for commercial disputes is about finding the best way to manage the financial risks of litigation. Annecto Legal assists with commercial litigation funding and ATE insurance, with access to a panel of specialist providers. If you do not have a legal team on board, we can also help you get the right representation to give your case the strongest chance of success.

Clients can transfer the costs and risks of their case using commercial litigation funding and insurance and put themselves in a position of strength to negotiate the best settlement possible, or go to trial if necessary.

We deal with a variety of legal cases including assistance with breach of contract solicitors, professional negligence solicitors, fraud, banking litigation and can even help if you’re suing a solicitor or looking for commercial dispute resolution.