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Making the courts pay
Cilex Journal – June 2014

Mark Smulian reports on whether the courts should pay their own way and what impact the new fee hikes might have on users

The legal profession may have briefly felt a warm glow when courts minister Shailesh Vara said in April: "We have one of the best legal systems in the world and we are making sure our courts are properly resourced.

"What he went on to say froze any smiles. "These fee changes will make sure hardworking taxpayers are not having to subsidise those using our civil courts."

The changes in question saw fees payable for civil actions of many kinds increase as Mr Vara sought to cover the 610m running costs for civil courts in England and Wales reached in 2012-13._He essentially shifted the courts to a full cover recovery basis so that the 100m of this total that formerly came from taxpayers will in future come from litigants' fees.

Fees were unchanged for adoption and child contact applications and for divorce financial arrangements, and actually fell for applications to take children into care, from 5,475 to 2,055.

There was also a general welcome from family lawyers for Mr Vara's dropping of the 75 fee for domestic violence injunctions.

That though was the extent of the good news. Fees to apply for judicial review rose from 60 to 135, while those for permission to appeal leapt from 215 to 680 and money claims moved to sliding scale capped at 1,920.

Compensation claim fees for sums between 5,000 and 10,000 increased from 245 to 445, and then on a scale to claims for 300,000 and more, at which point the fee would be capped at 1,870._Firms that deal with affected cases were alarmed, citing the danger of lack of access to justice and, perhaps less high-mindedly, the danger of diminishing business as litigants were deterred by paying the higher fees upfront.

Law Society president Nicholas Fluck was quick to denounce the changes.

He says: "Court fees are reaching levels which will deter individuals from seeking legal remedy to their problems."

"The Law Society does not accept the premise that fees should be set at a level to recover the costs of the courts handling a case, and in some cases charging more than cost recovery. This is a further indication that access to justice is being eroded."

Mr Vara said the higher fees would cover the former subsidy, a position that at least has some logic to it. Opponents of the fee increases have though been unable to come up with an alternative way of setting them, other than arguing that they should be 'lower'.

A Law Society spokesman said the state should bear a larger proportion of providing the court service to the public, but had "no specific ratio in mind between the cost to the state and the cost to the court user".

Higher fees deter people from seeking justice, the society fears, citing the 75% fall in the number of cases taken to employment tribunals since fees of 1,500 were introduced for this formerly free service last year.

Self-defeating?

Steve Hynes, director of the Legal Action Group, which campaigns on access to justice issues, says: "We are worried that it does restrict access to justice though pleased they dropped the charge for injunctions in domestic violence cases."

Mr Hynes continued: "They talk about paying for courts through fees, but taxpayers are users of the courts service too and expect to be able to use it for small claims, debts, personal injury and so forth."

Mr Hynes thought the higher fees might even be self-defeating for the Ministry of Justice (MoJ), since if the number of cases taken fell at anything like the rate seen in employment tribunals "it may fall off so far that courts may not be viable."

He adds: "There has to be an element of cross-subsidy from the state to ensure there is a sustainable court service available around the country."

Rachel Knowles, a solicitor and teaching fellow at the University College London's Centre for Access to Justice, says: "There has been a decrease in employment tribunal cases since last year when the fees went up. Our students work with the Free Representation Unit as part of their course and they have seen this."

I don't know how they should be set, but I can't see the justification for cost recovery as even those who win will have had to pay upfront."

Nick Hind, an associate solicitor in the personal injury department of law firm Bennett Griffin, speculates that the fee increase "appears to be yet another plank in a concerted effort by the MoJ to deter and discourage claimants from exercising their legal rights, or to at least make it financially punitive to do so".

Mr Hind says personal injury claimants already have to pay for success fees and sometimes the shortfall in costs recovered from a losing defendant.

"The huge increase in court fees will now put greater pressure on a claimant to purchase a policy of legal expenses to cover the cost of disbursements, but the policy premium is an additional cost that must be borne from damages," he says.

"The alternative however would be the claimant either funding disbursements from their own pocket or finding a lawyer willing to underwrite the cost.

"The likely long term consequence is that claimants will be priced out of issuing claims, or at least will be very shy of doing so, and will simply accept low offers to settle."

Landlord and tenant litigation solicitor Emma Somerset, of Hampshire firm Pain Smith, says: "We have seen a drop in cases. Landlords have no option but to issue claims for possession and when someone seeks to be rehoused by a local authority it will almost certainly want to see one.

"This is an increase cost for a landlord from 100 to 150, so it's a big percentage rise if you have several of these cases and larger landlords will have numerous cases at any one time."

Ms Somerset says: "It's very difficult to arrive at what the true cost of a court is, at the least the courts should improve their service if they are getting increased revenue."

Arif Khalfe, an associate solicitor in commercial disputes and debt recovery for law firm Simpson Millar thinks firms may see a reduction in work as litigants' cash flow is burdened by paying the higher fees upfront, making them less willing to take action.

Mr Khalfe admits it is "difficult to set a court fee as there has to be one, but they should definitely be lower for small cases as it does reduce access to justice".

Affordable?

The MoJ saw these objections coming, and sought to bolster its position in justifying the higher fees by commissioning market research from Ipsos-MORI on the role of court fees in affecting users' decisions to bring cases.

This found that those bringing civil and family cases to court "typically felt that court fees were affordable, and they would not have been deterred from starting court proceedings if court fees had been set at the higher levels".

Litigants were "motivated by a number of factors to use courts, often emotionally based. Court fees were not a key factor most participants considered when deciding to take their case to court".

If this is right then the flow of cases will be little disrupted. But if the Law Society and concerned lawyers are right, there will be fewer cases brought and more people will be unable to secure justice.