Brenda Li from The Keith Jones Partnership talks about how proposals for further rises in court fees could affect SMEs
The Justice Minister has recently announced proposals for a further rise in court fees. The Keith Jones Partnership Solicitors recently campaigned against the dramatic increase in court issue fees which took place in March this year where court fees were increased by as much as 622%! There are now proposals to double the maximum court issue fee for money claims to rise from £10,000 to £20,000! Fees are currently payable on 5% of the value of a claim up to a maximum fee of £10,000.
The Law Society has said that the plans are "tantamount to selling justice like a commodity". The Law Society president, Johnathan Smithers has gone on further to say that it would "cripple" individuals and small businesses trying to recover money owed to them.
The proposed further increase in Court fees have been dubbed a “barrier to access to justice” for SMEs who need to litigate. For those who cannot meet the cost, that barrier could mean they go out of business. The Court fees hikes appear to be grossly unfair. The Keith Jones Partnership will actively campaign against this and some of the points we are proposing to put to the Justice Minister are as follows:-
- We understand that the Courts are not losing money and they are breaking even. If this is the case, then how can any hike in fees be justified?
- The issue of legal proceedings is not an expensive process at all. All the Court does when issuing a claim is stamp a copy of the Claim Form, log the claim onto the system and send out the claim by post to the Defendant. How can a fee of £20,000 possibly be justified for such a simple process?
- The Government have determined that an appropriate fee for a solicitor carrying out all of the pre action work necessary and drafting the Claim Form and Particulars of Claim is just £100. Given that the Government have decided that £100 is an appropriate fee for all of the work involved in this, we would again ask how it could possibly be justified for the Court to charge £20,000 to simply stamp, log and serve a claim.
- Following on from this point, we can see a real difficulty in claims settling and thereby far more may well go to Trial. At the start of any legal proceedings, we make every effort to negotiate settlements for our clients. If immediately upon issue, the Claimant has had to pay out up to £20,000.00, then the prospects of settlement will be significantly diminished.
- When a client comes to us, they are already substantially out of pocket as they have been kept out of monies owed to them by the debtor. We can envisage that, in these circumstances, many SMEs will struggle to raise the Court fee required and we have no doubt that some would not be able to pursue a legitimate debt and even have to go out of business.
- We are convinced that there will be a knock on detrimental effect on the economy. We have already seen an increase in insolvency proceedings being issued instead of legal proceedings as it is now generally a cheaper option when trying to recover an outstanding debt. This means more businesses end up in liquidation, rather than entering into long-term instalment arrangements that can be put in place where county court proceedings have been instigated.
The Ministry of Justice is currently conducting a consultation and we invite you to give them your views on this very important issue.
The MoJ consultation will close on 15 September 2015.