“Fixed recoverable costs will have a significant impact on our ability to continue to do legal aid work.”
As legal aid housing lawyers, we are used to fighting for the right to continue to do the work we do and to represent some of the most vulnerable in our society; we are pros at this now. But as we enter the post-COVID world, we are greeted with yet another battle, one more challenging than ever: fixed recoverable costs (FRC).
What are FRC?
In England and Wales, the winning party is generally entitled to recover its costs from the losing party. Where the winner is legally aided, the loser will be liable for the costs, thereby eliminating or reducing the need to make a claim to the Legal Aid Agency (LAA). At present, save for some exceptions to counsel’s fees in fast track cases, the winner’s reasonable costs are recoverable from the other party and are not ‘fixed’. Those costs are at ‘inter partes rates’ (or costs paid by the other party, usually at private rates), which are significantly higher than legal aid rates. The wider benefits are twofold: legal aid providers are sustained by the higher fees, which in turn subsidise further legal aid work; and the public money is preserved.
The proposal in the Ministry of Justice’s (MoJ’s) report, Extending fixed recoverable costs in civil cases: the government response
(September 2021) is that FRC will prescribe figures for the legal costs that can be recovered by the winning party at different stages of litigation, from pre-issue to the court hearing, thereby reducing the cost liability faced by the losing party. The government argues that not only does this give the parties certainty as to the likely level of legal costs at the end of litigation, but it also discourages litigation because of the known risk of not recovering the entirety of the costs spent (para 1.4, pages 7–8).
The legal aid sector argues that the introduction of FRC will have a significant impact on our ability to continue to do legal aid work. Many providers will be unable to survive on such rates alone and will close, impacting particularly badly on vulnerable groups. The government’s response to these concerns was that they were put ‘in general terms, without detailed evidence – including as to what levels of FRC they considered would be more appropriate’ (para 3.8, page 25). This position was repeated at all stages leading up to, and including, the September 2021 report.
The likely impact on housing legal aid
The provision of free legal advice in housing is essential to ensuring that people live in adequate accommodation, that vulnerable families are not evicted and that the law is followed by private and social landlords. Without this, local authorities will face an avalanche of homelessness applications and the court service will grind to a halt. Free legal advice would be unsustainable without the ability to recover reasonable costs (as opposed to FRC) in possession and other housing cases in relation to successful defences.
These assertions, we would argue, are obvious and devoid of the need of statistical evidence. However, the government’s entire response has been on the basis that unless we, the housing sector, provide it with ‘concrete’ (para 24.3, page 79), ‘statistical’ (para 22.1, page 78), ‘detailed evidence’ (para 3.8, page 25) that housing cases are not suited to FRC, they will be subject to this regime because there is no good reason why they should not be.
This is what we do know:
The sector is highly sensitive to changes in its funding. The number of providers of specialist housing legal advice has fallen dramatically since the introduction of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO). The number of housing and debt provider offices fell from 537 in April 2012 to 397 in September 2021 (Hansard Written Question UIN 51685
, 20 September 2021; answered 23 September 2021).
4.There has been no increase in legal aid rates since 2007. As has been explained previously in this magazine by the Legal Aid Practitioners Group:
In October 2007, the fixed fee for community care legal help cases was £290. The hourly rate for preparation and attendance in civil certificated cases was £70 in London and £66 outside (Community Legal Service (Funding) Order 2007 SI No 2441 Schedule Tables 1 and 10(a)). These fees were subject to a 10 per cent cut in 2011 and have not been adjusted since. If the contracts contained mechanisms to uprate fees in line with the RPI, the rates would have increased by 2019 to £406, £98 and £92 respectively … These increases would have done nothing more than ensure that fees kept up with the rising cost of delivering services, which, according to the RPI, cumulatively increased by anywhere between 40 and 50 per cent in those 12 years. Without that mechanism, lawyers are being continuously asked to provide the same level of high-quality service for, in real terms, an ever-decreasing fee
(July/August 2020 Legal Action
5.There are few incentives left for legal aid providers to continue to provide a service. Legal aid rates are significantly lower than the market private rates charged by high-street firms and work on these rates alone would be unsustainable.
On 24 September 2021, Islington Law Centre wrote to Lord Wolfson giving some examples of the impact that FRC will have. It analysed figures in its cases involving recovery of inter partes costs from opponents and found that under FRC Band 3,1See Extending fixed recoverable costs in civil cases: implementing Sir Rupert Jackson’s proposals, MoJ, 28 March 2019; closed 6 June 2019, para 3.2, pages 13–14 for the bands. See also para 5.1 and table 1, pages 16–17.
recovery of profit costs would only be between 31 and 38 per cent of the costs recovered under the current costs regime. It even argues that perverse incentives will occur whereby the legal aid provider may decide not to pursue inter partes costs because payment, even at paltry legal aid rates, will outstrip FRC.
The way forward
The government has ample illustration of the effect that LASPO has had on the legal aid sector and it is clear that FRC will simply accelerate the decline in its current form. It is for the government, faced with further closures of legal aid providers, to conduct a review of the likely impact that FRC will have on the sector; it should not be for the legal aid sector, which has limited financial means to do so. An independent analysis is, however, what is needed to meet the government’s ‘case’ that it has not been provided with ‘detailed evidence’ and it will, ultimately, be for the sector to provide. The first step you can take is to complete HLPA’s survey on the impact of FRC on the housing sector