Dramatic Court fee rises set to change the litigation landscape from 9 March. What effect will this have on the business world?
The recent announcement that Court fees are set to rise has much of the legal and business world talking. Is litigation doomed? Are the new fees prejudicial towards those without access to piles of cash? Moorfields provides their opinion on the impact on the market and how this might affect individuals and SMEs.
On 9 March, the Government intends to dramatically increase court fees. The table of comparison below has been provided by the Law Society.
|
Value of Claim |
Fee now £ (paper) |
New Fee £ |
Increase in fee £ |
% Increase |
|
20,000 |
610 |
1,000 |
390 |
64% |
|
40,000 |
610 |
2,000 |
1,390 |
228% |
|
90,000 |
910 |
4,500 |
3,590 |
395% |
|
150,000 |
1,315 |
7,500 |
6,185 |
470% |
|
190,000 |
1,315 |
9,500 |
8,185 |
622% |
|
200,000 |
1,515 |
10,000 |
8,725 |
576% |
|
250,000 |
1,720 |
10,000 |
8,280 |
481% |
Why?
Increased fees are designed to raise millions of pounds a year to help the government cover the cost of funding the court service in England and Wales.
Some say the extreme hike is to prevent ‘ambulance chasing’ ‘where there’s blame there’s a claim’ epidemic, whilst others will say it will stop frivolous claims being issued and thereby provide more Court time to hear genuine claims.
What does this mean?
- As well as affecting those who have been genuinely injured, the increases may leave small and medium-sized businesses saddled with debts that are due but unable to afford to recover.
- The Society has pointed out that many solicitor firms currently underwrite their clients’ claims, but the new fees mean it is unlikely they will have the resources to cover the cost.
- It is likely that this will result in a surge in claims being issued prior to the deadline.
Recent Employment tribunal fee increases have caused a massive decrease in the number of employment claims being issued. Even though these new court fees are still recoverable from the losing party, we would expect the number of cases issued in the UK courts in the coming months to be similarly reduced. Dispute resolution lawyers may be more persuaded to look to mediation or other forms of ADR to seek resolutions for their clients rather than issue legal proceedings, particularly where the value is considerable. Whilst third party funders and ATE insurers may offer funding solutions, this new hike does seem to be a further hurdle firmly placed in the path of those seeking access to justice.
Opinion
The Law Society, other legal professional bodies and judges have condemned the changes as a threat to access to justice. The Law Society last week issued a pre-action protocol letter as the first step to obtaining a judicial review of the increases. The letter has been signed by the Bar Council, Chartered Institute of Legal Executives, the Commercial Bar Association, Action Against Medical Accidents and representatives of claimant and defendant lawyers.
Some say that the government appears to be on a mission to turn the courts into a profit centre, amounting to a flat tax on those seeking justice. Parties who wish to bring claims, for example those whose lives have been turned upside down by life-changing injuries or those companies who have suffered bad debts through no fault of their own may no longer be able to afford to access the courts to seek financial compensation.
If you wish to discuss creative options to recover funds from debtors, please call us on 020 7186 1144.
Author
Ben Stanyon
Tel: +44 (0) 20 7186 1174
About Moorfields
Moorfields is one of the UK's leading independent firms of restructuring and insolvency specialists. Our highly skilled teams include restructuring professionals and licensed insolvency practitioners who provide leadership, experience and high quality advice to companies and their stakeholders in financially distressed situations
View all Our News