Will large increase in Court fees result in less litigation?
From 9 March 2015 the cost to litigants in bringing civil claims before the Court will substantially increase for most claims as follows:-
- The fee for claims from £1 to £9,999 will remain unchanged;
- The fee for claims from £10,000 to £199,999 will be 5% of the value of the claim;
- The fee for claims of £200,000 and above will be fixed at £10,000 (previously capped at £1,920).
The Government’s decision to make these changes has received widespread criticism and the Law Society is considering a challenge to the new fee structure.
The main impact is likely to be felt by SME businesses due to the increase in the cost of bringing claims in the £10,000 to £199,999 range.
It has been reported for some time that the Court system is overburdened and litigants have been encouraged to settle disputes outside of the Courts using Alternative Dispute Resolution such as mediation. When I have used mediation it has helped me to understand the strength of my side of the case and how the other side is presenting its case. This was particularly enlightening on one case which if it had gone to Court could have gone against me as Liquidator.
We have seen many cases where the costs of litigation can cause an insolvency of the business not just due to the claim but also the legal costs on both sides. The costs can be claimed from the defendant if the claim is successful and assuming the defendant can settle the costs.
Although the Law Society is obviously not in favour of the increased cost and possible reduction in the amount of claims brought through the Courts, the increased fees could act as brake to ensure litigation is the best course of action.
I suspect that the number of claims will not reduce significantly as the two sides will probably be entrenched in their respective positions and only a ruling by an independent party will satisfy the parties’ desire for justice.