Chair David Bailey-Vella sets out the key issues facing the costs world in 2026
The coming year is likely to see pressure to extend fixed recoverable costs (FRCs) beyond their current limits, as well as focus on the spiralling costs of group actions, the chair of the ACL has predicted.
Looking at the year to come, David Bailey-Vella said the extension of FRCs in October 2023 to most money cases worth up to £100,000 “was only the beginning”.
The Civil Procedure Rule Committee is in the middle of an ‘interim implementation stocktake’ – which asks among other things whether the current exemption for housing disrepair claims should be removed – while later this year the Ministry of Justice will begin a full post-implementation review of the FRC regime as a whole.
“There is going to be political and judicial pressure to extend fixed costs into more mid‑value claims,” said Mr Bailey Vella. “From an outside perspective, there can seem little downside to introducing FRCs, but ministers need to bear access to justice in mind when setting their levels – and the need to uprate them regularly in line with inflation.
“More FRCs will widen the gap between fixed‑costs litigation and complex, bespoke litigation across the legal profession. They will also inevitably lead to more deductions from damages and more solicitor-client disputes – and for Costs Lawyers, more instructions directly from lay clients.”
Group litigation is an increasing feature of the legal landscape – the ACL has recently launched a special interest group for the growing number of members working in the field – and he said this was likely to lead to more aggressive scrutiny of their costs, as well as funders’ returns; last year, the Competition Appeal Tribunal (CAT) said people bringing collective actions should always instruct costs specialists to assist them with scrutinising their lawyers’ fees.
“It is clear that the courts, and the CAT in particular, is concerned by the extremely high level of costs that claimants are generating when measured against the outcomes they are achieving. We can expect judges to use their powers liberally to scale back spending they view as excessive – as we have already seen to dramatic effect in the diesel emissions litigation.”
He continued: “More generally, the trend is for more adverse costs orders for poor conduct in disclosure, AI misuse, or procedural mis-management, as well as greater emphasis on tying the proportionality of costs to litigation behaviour, and not just quantum. There are also strong signs of increased judicial appetite for issue‑based costs orders.”
Other issues to look out for include the Civil Justice Council consultation on reform of the costs provisions in the Solicitors Act 1974 – a very welcome development – and increased use of the costs budgeting ‘lite’ pilots, Mr Bailey Vella went on.
Of course, Costs Lawyers will be at the centre of all this and he foresaw “a widening gap between costs professionals who can navigate AI, budgeting reform and complex litigation, and those who cling on to out-of-date practices”.
He continued: “That’s not to say the foundations of a Costs Lawyer’s expertise have changed dramatically but the litigation landscape is shifting quickly and the opportunities to use that knowledge are mushrooming.
“As another example, I am seeing solicitors asking costs experts to model firm-wide costs risk, not just case‑level risks. Our role is much more central to law firms’ operations than it used to be.”
This perhaps explained why the ACL was seeing record numbers of students applying to qualify as Costs Lawyers – alongside the impact of the Mazur ruling.
Mr Bailey Vella concluded: “Like our members, the ACL aims to be at the centre of the action as an active stakeholder in the justice system. Our unique perspective is a valuable resource and we hope to see that translated soon into Costs Lawyers being allowed to apply for judicial appointment.”