Authors:Marina Sergides and Simon Mullings
Last updated:2023-09-18
“Fixed recoverable costs are capable of driving providers out of the sector.”
Marc Bloomfield
Description: HLPA
This month, we are writing once again about the Ministry of Justice’s (MoJ’s) proposed fixed recoverable costs (FRCs) regime. You can find our last article on this subject at November 2021 Legal Action 16.
In brief, it is proposed that in civil cases allocated to the fast track, the winning party will continue to recover the costs of litigation but those costs will now be fixed. Regardless of how many hours have been spent to conclude the case, the winning party will be limited to prescribed, fixed amounts. The prescribed amounts are considerably less than the inter partes costs we would normally expect to recover on the current standard basis and that are paid at hourly rates. We fear that these changes will bring about circumstances where, almost unbelievably, the fixed costs would be lower than the hours charged at legal aid rates.
It is an indicator of how concerned we are about FRCs that we return to this subject once again. The extent of the threat to the sector and to access to justice is hard to quantify in detail, but there is little doubt that the cohort of specialist legal aid and other housing lawyers, already on its knees from the Legal Aid, Sentencing and Punishment of Offenders Act 2012 and barely present in some parts of the country, is at risk of further depletion.
We must act. It is vitally important that we make it clear that access to justice in the housing field is threatened by these proposals. And justice for renters, borrowers and leaseholders could not be more important than at the current time.
Possession proceedings are opening up and huge rent deficits built up during the pandemic are a significant driving force. The media and the Housing Ombudsman are highlighting the poor condition of rented housing and remediation in the cladding scandal may be moving in a more optimistic direction (the word ‘may’ doing some very heavy lifting here). But there is still much to do in the legal arena to ensure that just outcomes are reached. Those who do work to try to combat rogue landlords, such as the organisation Safer Renting, report with regret a large increase in their workloads.
At the same time, the renters’ reform agenda slouches on alongside proposed reform to possession proceedings. There are consultations on a new early advice service in possession proceedings (now closed) and intentional homelessness decision reform for those fleeing domestic abuse, as well as proposals to make it easier to remove perpetrators from tenancy agreements, and more. We have said it before, but housing law is ‘having a moment’.
We don’t presume to say that lawyers are the only stakeholders in these issues, but they are, and will continue to be, needed to ensure that justice and the rule of law are maintained. Without being able to enforce them, protections are meaningless.
We think Housing Possession Court Duty Scheme providers are at risk, as are organisations and firms that litigate cases for tenants (such as those faced with serious, health-threatening disrepair). And yet England and Wales desperately need more providers to protect housing rights.
FRCs are capable of driving providers out of the sector. Decision-makers, including ministers and civil servants, must be made aware of this. We are concerned that those in power fail to understand the extent to which the legal aid sector, and housing law in particular, works in an ecosystem – each individual activity that an organisation undertakes being reliant on the sum of activities. Loss-making activities paid at low rates are supported by the possibility of litigation that can attract inter partes costs.
This is actually an extremely virtuous funding model. Work that is of great value to individuals and society, but which cannot sustain an organisation alone, is subsidised by successful litigation in which the landlord has to pay the legal costs. Take, for example, a landlord who has failed to repair a property that places a tenant at risk of harm and is ordered to pay the legal costs arising from their liability. Not only is the tenant lawyer rightly paid for successfully bringing the claim, but they are also able to subsequently undertake low-cost-value, but high-social-value, work. The set-up is cost-neutral to the public purse also. It is a ‘polluter pays’ model that is threatened by FRCs.
We have heard declarations from government that it shares concerns about sustainability in the legal aid sector and much of our engagement recently with civil servants has centred on this point. But we have had to point out, time and again, that FRCs are fundamentally antithetical to sustainability in our sector.
We are therefore seeking assistance from those at the front line of housing law access to justice and who will be affected by FRC changes. Working with our friends at the Legal Aid Practitioners Group, the Law Centres Network and Shelter, we have issued a sample questionnaire for housing practitioners to tell us about their organisations and provide figures on 10 of their cases (anonymous of course) that would be subject to FRCs under the new proposal. The data we gather will then be independently audited and will form the centrepiece of submissions that we will make to ministers.
We have little time. FRCs are with the Civil Procedure Rules committee and its sub committees now, and it is understood that October 2022 is the MoJ's aim for implementation. By the time you read this we hope to have the data submitted and we will be looking to share our submissions.