Real Time Analytics

Court fees hike increases cost of litigation

A consultation paper issued by the Ministry of Justice titled Fees in the High Court and Court of Appeal, closed on 7 February 2012.

Government wants to abolish subsidy for litigation

In essence, the Government has decided that the present method of Court funding whereby approximately 80% of the cost is borne by the parties themselves and approximately 20% is borne by the taxpayer is unsustainable and should be altered. It wants 100% of the costs paid by the parties, subject always to certain fee remissions to protect those who simply cannot afford to pay but who still need access to justice. In 2010/11 for example 162,048 fee remissions were granted at a total value of £24.7m.

In monetary terms, the current cost of running the civil and family courts is around £612m a year. Of this amount, approximately £491m is funded through court fees with the remaining £121m, funded by the taxpayer as part of the Ministry of Justice’s spending settlement.

Maximum fee to increase to £10,000

By 2014/2015, it is the intention to raise the Court fees to more accurately reflect the true cost of hearing cases, differentiated by the level of Court in which the hearing is held and the value of the case. Previously the maximum cost of £1,670 was reached for a case exceeding £300,000 but the maximum cost of £10,000 now being proposed is for cases exceeding £1m, for example.

The government’s response to the consultation paper is due by 7 May 2012. It is clear that the cost of litigation will increase making mediation and other alternative methods of dispute resolution commercially more attractive propositions to litigants. If clients perceive the costs of litigation to be too high they will not instruct solicitors to help them. Firms can adapt to ensure they have the skills and experience in alternative dispute methods to offer affordable options.