Changes to the fixed recoverable costs regime
The fixed recoverable costs (FRC) regime, which sets the amount of legal costs the winning party can claim from the losing party in civil litigation, was extended in October 2023. The FRC regime now applies across the fast track and includes a new intermediate track for simpler cases valued up to £100,000.
The FRC regime introduced significant changes and the Civil Procedure Rules Committee together with the Ministry of Justice have made further revisions to those rules (which come into force this month). Anybody providing in-house legal counsel to higher education institutions or involved in civil litigation for their organisation needs to make sure that they understand the FRC regime and these latest changes.
We’ve set out in the table below the main features of the FRC regime and the further revisions.
FRC regime
There is a new intermediate track to cover less complex claims valued at more than £25,000 but not more than £100,000 where the trial should last no more than three days. The intermediate track also has four bands for complexity, but with different criteria. Where non-monetary relief is sought, the claim will not usually be allocated to the intermediate track unless the Court considers it to be in the interests of justice.
The Court has discretion to allocate more complex cases valued at under £100,000 to the multi-track to avoid them inappropriately falling within the FRC regime.
The FRC regime will cover a wide range of claims that higher education institutions face including general commercial claims for breach of contract, property claims (including claims for monetary relief such as claims for commercial rent arrears and terminal dilapidations claims), personal injury and discrimination claims.
The FRC regime should give parties much better visibility as to recoverable costs which in turn will inevitably inform decisions about whether to pursue/defend a claim. However, the courts approach to allocation and assignment of a complexity band currently remains a mystery.
Parties will only have visibility once decisions are reported. Once there is enough case law to predict the court's approach then litigants can expect greater certainty around costs, enabling them to carry out a better cost/benefit analysis at the outset.
Practically speaking, when assessing the impact of the new FRC regime, parties should also consider whether to amend their dispute resolution clauses to include any future disputes being expressly referred to arbitration and/or expert determination rather than to court.
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