Encouraging Mediation in Civil Cases: The Benefits Amidst Fixed Recoverable Costs
The recent case of Churchilll v Merthyr Tidfyl highlighted the power of the Court to stay cases for mediation. On top of this, fixed recoverable costs provide an incentive to resolve cases early on.
Fixed recoverable costs (FRCs) have become a staple in low-value personal injury cases, and as of October 1, 2023, they extend their influence to most civil cases valued up to £100,000. While FRCs provide upfront certainty regarding maximum legal costs, they may fall short of covering the unpredictable actual costs of a case.
With FRCs expanding to all civil cases in the fast track and a new intermediate track (cases valued between £25,000 and £100,000), practitioners dealing with cases within this range face limitations on the recoverable costs. This fixed-figure approach prompts solicitors to carefully consider the cases they take on and the funding agreements with their clients.
In this landscape, parties are strongly encouraged to settle disputes. Claimants achieving judgments at least as advantageous as their formal settlement offers are entitled to a 35% cost uplift. Proposed changes to Part 36 CPR increase financial incentives for accepting settlement offers, promoting settlement before trial.
Additionally, Part 45.13 CPR empowers the court to penalize unreasonable behavior by parties, potentially reducing fixed costs by 50% or uplifting them by 50%. This serves as a deterrent, fostering better behavior between parties. Exceptional circumstances provisions allow for flexibility if parties can demonstrate a need to depart from the FRC regime.
On the intermediate track for cases valued between £25,000 and £100,000, fixed costs include an additional fee for mediation or joint settlement meetings. This £1,200 or £1,500 fee underscores a tangible reason to mediate, as it aligns with the capped costs recoverable under FRCs.
In essence, the evolving legal landscape emphasizes the value of mediation. With cost caps and incentives for settlement, engaging in mediation not only aligns with the changing dynamics of civil litigation but also presents an opportunity for effective, efficient, and mutually beneficial resolution.