The Lord Chief Justice’s 2015 annual report has bemoaned the soaring costs of justice. Rosie Ioannou of litigation funders Vannin Capital, shares her thoughts on the report’s findings - are fixed fees the way forward?

In the introduction to his 2015 annual report published last week, the Lord Chief Justice, Lord Thomas, has made clear that ‘our system of justice has become unaffordable to most’.

In his report, Lord Thomas makes a number of observations in the context of the costs of civil litigation. Many of those in practice will acknowledge that these observations reflect their day-to-day experience. They certainly reflect ours. They also stand as an important reminder of the central importance of costs to today’s litigation landscape:

‘Control over the costs of civil litigation continued to be of the greatest importance. The Jackson review reforms have now bedded down. It appears that there is an improvement in costs management by judges and in costs behaviour by parties. There was sustained emphasis on the need for proportionality between the costs of a case in relation to the value of the claim. However, costs issues continued to be the subject of dispute between parties, and to generate litigation in their own right.’

Yes, it may be trite to say, but as a litigation funder, the costs of litigation are of central importance to us. Too often, we choose not to fund meritorious claims because the cost of bringing them, as budgeted by the instructed lawyers, is in no way proportionate to the level of damages in dispute.

It has been said to me on more than one occasion by in-house lawyers at large international organisations that, despite the undoubted quality of the English court system and the lawyers that practice here, they now choose to litigate their organisation’s disputes in other jurisdictions across the globe because the costs of bringing claims in the English High Court cannot be justified. This is something that needs to be addressed and remedied if London wants to remain the premiere international centre for dispute resolution that it currently is.

‘The judiciary has constantly pressed for the widespread adoption of fixed recoverable costs. This was one of the core recommendations in the Jackson review’s final report, but its application has thus far been restricted to a small number of areas of litigation (such as road traffic accidents). The judiciary strongly supports the application of fixed recoverable costs across the range of fast track cases, and in the lower reaches of the multi-track. This would help to ensure that litigation costs are reasonable, proportionate and that all parties can proceed with greater certainty. The judiciary hopes that the Government will give this proposal favourable consideration.’

We are increasingly seeing innovative and forward-thinking lawyers and law firms acting on a fixed fee or other alternative fee arrangement. Such fee arrangements are increasingly being demanded by clients. However, this is not happening often enough.

Litigation funding is one of a number of ways to limit an individual client’s exposure to cost risks. While we acknowledge that funding is not appropriate in every case, it is (alongside other alternative fee arrangements, including fixed-fee billing) something that should always be considered and, as appropriate, discussed with every client before they issue a claim.

‘Court fees are another aspect of the cost of litigation. The judiciary made extensive submissions in relation to the succession of significant fee increases which have been proposed and largely implemented. Civil justice was the main focus for large increases in fees (particularly a fee based on 5% of the value of a claim, up to £10,000 at present, although the Government is consulting on a cap of fees of “at least” £20,000). The impact of these fee increases is still being assessed by the Ministry of Justice but the judiciary, whilst accepting the decisions by Parliament to increase fees, remains deeply concerned about the effect on access to justice.’

We have commented before on the significant increases in court fees in 2015 and the impact that this will inevitably have on access to justice on the Vannin blog.

While funding can to some extent alleviate the negative impact that the rise in court fees will have on access to justice, we do not claim to be knights in shining armour; funding is not appropriate for every meritorious claim. Sadly, this means that the rise in court fees will still result in legitimate and strong claims not being brought and access to justice will continue to be denied. The inevitable conclusion of this, as Lord Thomas has rightly said, is that ‘our system of justice has become unaffordable to most.’

Rosie Ioannou is senior counsel at Vannin Capital.