England: judges criticise plans to raise legal fees by up to 622 per cent
Top judges have said that plans to increase fees for those wanting to bring lawsuits in the commercial court by up to 622 per cent could damage businesses and also endanger London’s position as a global centre for litigation.
The Ministry of Justice (MoJ) intends to raise £120 million in additional income for the courts system by increasing court fees for claims in excess of £10,000.
These new fees will be based on 5 per cent of the claim’s value – with a cap of £10,000 for claims of £500,000 or more.
But calculations by the Civil Justice Council, which comprises judges and court users, indicate the fee attaching to a £190,000 legal claim will increase by 622 per cent – going from £1,315 to £9,500.
The fee for a £150,000 claim will increase from £1,315 to £7,500.
Lord Thomas, lord chief justice of England and Wales (pictured) as well as six senior judges said in a response to a MoJ consultation on the issue that the fees would have a “disproportionately adverse impact on small and medium enterprises”.
They added much commercial work may move elsewhere, stating: “There are fears that the increase in fees could trigger commercial work moving elsewhere. To illustrate this, the fees proposed are 25 to 100 times greater than those payable in New York.”
Adam Marshall, executive director of policy and external affairs at the British Chambers of Commerce, described it as “astonishing” that the government was looking to implement the fees.
He said: “We remain concerned that a lot of companies in supply chains could be dissuaded from using the courts to resolve long running late payment disputes.
“At a time when the situation seems to be getting worse not better, restricting access to one potential remedy is not encouraging.”
Alistair MacDonald QC, chairman of the Bar Council, said: “Cashflow is the lifeblood of small businesses and many end up having to pursue late payments and other debts through the court system.
“Imposing a 5 per cent fee may well make many small businesses think twice before making that claim and will certainly strengthen the hand of late payers.”
Law firms based in the UK have benefited significantly from London being the preferred location for multi-billion pound court cases.
A study by Westminster University and Portland Communications stated that, in 2012, 68 per cent of litigants in the commercial court were from outside of the UK.
These cases have generated large fee income. For example late Russian oligarch Boris Berezovsky’s £6.5 billion lawsuit against Chelsea football club owner Roman Abramocivh generated estimated legal costs of £100m.
The MoJ said about 90 per cent of claims would be unaffected by the fee increases.
Justice minister Shailesh Vara said: “Court fees are not a decisive factor when people choose to litigate as they represent a small fraction of the overall costs of litigation.
“We are confident London will retain its position as the preferred legal centre for the world’s leading businesses.”