Fixed Costs in Civil Litigation: What the Extended Regime Means for You

On 1 October 2023, the extended fixed recoverable costs ("FRC") regime came into force, fundamentally changing the economics of civil litigation in England and Wales. Introduced by amendments to CPR Part 45, the new regime means that most civil claims valued at up to £100,000 are now subject to fixed costs at every stage of proceedings. For anyone considering issuing or defending a claim, understanding which track your case falls into, what costs you can recover, and what your exposure will be is now essential to making sensible litigation decisions.

The October 2023 reforms: what changed

Before October 2023, fixed costs applied mainly to lower-value fast track claims (generally up to £25,000) and to specific claim types such as road traffic accident claims under the portal system. Most claims above £25,000 were allocated to the multi-track, where costs were assessed on the standard basis and could be substantial.

The Civil Procedure (Amendment No. 2) Rules 2023 extended the fixed costs regime significantly by creating a new intermediate track for claims valued between £25,000 and £100,000, and by expanding the scope of fixed costs on the existing fast track. These changes are set out in CPR Part 45, Section VI (for the intermediate track) and the updated provisions in Section V (for the fast track). Only claims valued above £100,000 now proceed to the multi-track with costs assessed in the traditional way.

The fast track: claims up to £25,000

The fast track continues to apply to claims valued at no more than £25,000 that can be tried within one day. Under the extended regime, fast track fixed costs are prescribed at each stage of the proceedings. The key figures for a successful claimant in a fast track case are as follows.

For pre-issue work (the letter of claim and pre-action protocol stage), fixed costs are relatively modest. Once proceedings are issued, the fixed costs increase at each stage: issue and statements of case, allocation and directions, pre-trial preparation, and trial. At trial, the fast track trial advocacy fee depends on the value of the claim. For claims up to £3,000, the trial advocacy fee is £810. For claims between £3,000 and £10,000, it is £1,215. For claims between £10,000 and £15,000, it is £1,620. For claims above £15,000 (up to £25,000), the fee is £2,025. These figures are set out in CPR 45.38 (Table 12).

Including all stage costs from issue through to trial, a successful claimant in a fast track claim worth £20,000 might recover total fixed costs in the region of £5,000 to £8,000, depending on the stage at which the case concludes. This is often significantly less than the actual solicitor's costs incurred.

The intermediate track: claims from £25,000 to £100,000

The intermediate track is entirely new and represents the most significant change introduced by the October 2023 reforms. It applies to claims valued between £25,000 and £100,000 that are not allocated to the fast track and that the court considers suitable for the intermediate track. Claims on the intermediate track must normally be capable of trial within three days and must not require more than two expert witnesses per party.

Within the intermediate track, claims are assigned to one of four complexity bands:

Band 1 covers the simplest cases, such as straightforward debt claims, enforcement of contractual payment obligations, and claims where the facts are largely agreed. Band 2 covers cases of moderate complexity, including breach of contract or tort claims where there is a factual dispute but the issues are relatively contained. Band 3 is for more complex claims requiring more extensive disclosure or a single joint expert, including some construction disputes and professional negligence claims. Band 4 is reserved for the most complex intermediate track cases, including claims requiring separate party experts, multiple witnesses, or where the legal issues are less straightforward.

The fixed recoverable costs for the intermediate track are set out in CPR 45.44 (Table 14). At trial, the total fixed costs (including all stage costs from pre-action through to trial) are approximately as follows: Band 1, around £12,000 to £18,000 depending on claim value; Band 2, around £18,000 to £28,000; Band 3, around £25,000 to £40,000; and Band 4, around £35,000 to £55,000. These are the maximum amounts recoverable. The actual figure depends on the claim value and the stage at which the case resolves.

How costs accrue at each stage

Under both the fast track and intermediate track, fixed costs are calculated on a cumulative stage-by-stage basis. The stages are: pre-action and initial work; issue of proceedings and statements of case; the case management conference and directions stage; pre-trial preparation (including disclosure and witness statements); and trial. A case that settles after the case management conference but before trial will attract lower fixed costs than one that proceeds to a full hearing.

This staged structure has a direct impact on settlement strategy. If you are a defendant, the costs exposure ratchets up at each stage, creating an incentive to settle earlier rather than later. If you are a claimant, you need to be realistic about the gap between your actual legal costs and the fixed costs you will recover. In a Band 2 intermediate track case that settles after directions but before trial, the fixed costs recovery may be around £15,000, even though actual costs incurred could be substantially higher.

The escape clause: CPR 45.24

The fixed costs regime is not entirely rigid. Under CPR 45.24, a party can apply for costs above (or below) the fixed amount if there are "exceptional circumstances" making it appropriate to do so. The court may also depart from fixed costs where a party has behaved unreasonably, for example by failing to engage with pre-action correspondence or by pursuing hopeless arguments that increased costs unnecessarily.

However, "exceptional circumstances" is a high bar. The whole purpose of the regime is to create certainty, and courts are reluctant to undermine it by granting escape clause applications routinely. In practice, the escape clause is likely to be confined to genuinely unusual cases, for instance where a claim proves to be far more complex than anticipated at allocation or where one party's conduct has been particularly unreasonable.

What this means in practice

The extended FRC regime has fundamentally altered the economics of civil litigation. A claimant who wins at trial will recover fixed costs, not their actual costs. If your solicitor's bill for a Band 2 intermediate track case is £35,000 but fixed costs recovery is only £22,000, you bear the £13,000 shortfall. This makes it essential to consider the economics of a claim before issuing proceedings, and to seek realistic advice about the likely costs exposure at each stage.

For defendants, the regime creates more predictability. You can estimate your maximum costs exposure at the outset and factor that into settlement decisions. A defendant facing a £60,000 claim in Band 2 knows that even if they lose at trial, the costs liability is capped at the fixed amount rather than running to an assessed figure that could be significantly higher.

Pre-litigation negotiation, mediation, and other forms of alternative dispute resolution have become even more important since October 2023. Resolving a dispute before proceedings are issued avoids costs exposure altogether. If you are considering a civil claim, or have received one, understanding where it sits within the fixed costs framework should be one of the first questions you address with your legal adviser.