Increase in court fees could spell the end of mid-sized litigation claims

The government has announced that it will raise the fees for bringing claims to court to bring in an estimated £120m per year in additional income to the treasury.

In its response to a consultation on “enhanced” court fees the government has decided that the fee to issue a claim to recover more than £10,000 will rise to 5% of the value of the claim, up to a limit of £10,000. The current system of fees for these cases ranges from £455 to a maximum £1,920, meaning that in higher value cases the fees will increase by over 5 times.

The new fee structure is due to come to effect before October 2015, subject to parliamentary time being available to bring it in.

What does this mean for litigators and the clients they represent?

The drastic increase in the costs in court fees is likely to discourage small to medium businesses and individuals from litigating.  It is also likely that it will cause an increase in claimants representing themselves in order to attempt to cut down legal costs; this in turn lead to more delays in the court system.

Defendants will also be more wary of claims as the increased costs will be a factor to consider when deciding whether to dispute a claim in the first stages.  We expect that defendants in smaller claims will be more likely to settle before proceedings are issued, or to seek alternative forms of dispute resolution.

There is likely to be a rush claims, especially the larger ones, being issued before the new fees come into effect.  This will put pressure on defendants to try and settle quickly, but may also be a problem for claimants who have issued early to avoid fees, who find that the 4 month deadline for serving is reached before the normal pre action correspondence has been completed.

Once the new fees have come into force, they will affect the risk of taking a claim to court; costs are of course always an issue, but a substantial increase in the up front costs makes proceedings a less attractive prospect if there is any scope for settlement.  It remains to be seen how much defendants will take advantage of this, both in holding out in pre action correspondence in the knowledge that the financial commitments for the claimant is high, and in forcing lower settlements.

Robert Johnson, Head of Dispute Resolution London, commented: “ If you have a claim, it may be that you should progress it sooner rather than later for a variety of reasons but  to reduce avoiding the substantially increased court fees. “

If you wish to discuss this topic of require any information on the services that we offer please contact, Robert Johnson, on 0207 822 4106 or email Robert.johnson@healys.old-website.shout-loud.co.uk.