Ministers have been urged to abandon plans to extend fixed recoverable costs to housing cases after being handed hard data to show the potentially catastrophic impact.

The Ministry of Justice plans to extend the fixed recoverable costs regime next April. However, earlier this month the department announced it would delay extending the regime to legally aided housing possession cases by two years after practitioners raised concerns about delivery and sustainability.

Practitioner groups and charities say the exemption should apply to all housing cases, telling ministers in a letter that fixed costs in housing disrepair counterclaims, standalone claims and unlawful eviction claims will hit organisations the most.

The letter, which was also sent to the House of Commons justice select committee and all-party parliamentary group on legal aid, is signed by the Housing Law Practitioners Association, Legal Aid Practitioners Group, Law Centres Network, Shelter and Generation Rent.

The organisations commissioned a report from Hawke Legal, a costs consultancy, to examine the impact of fixed recoverable costs on housing providers. Analysing data from 131 housing cases as well as organisations’ financial data, Hawke Legal found that legal aid rates would be higher than fixed recoverable costs in 43% of legal aid housing cases. The average income of a law centre or private practice firm doing legal aid work would fall by at least 20%.

‘It appears likely that the reduction in viability caused by FRCs would lead to solicitor firms and not-for-profit organisations closing their housing departments,’ Hawke Legal said. ‘This in turn would reduce economies of scale, so that central overheads would not be able to be absorbed by other departments. This could lead to some legal aid providers ceasing to practice altogether.’

Hawke Legal's report was sent to the government, which shows no signs of backing down. A spokesperson for the ministry said: ‘Fixed recoverable costs will enhance access to justice by helping parties to plan their litigation more effectively with a more informed view of a case.’

For instance, the department said, parties can consider whether it is appropriate to litigate, what costs may be recovered or paid to the winning party, and how work on a case can be more proportionate.

On the possession exemption, the ministry said it distinguished legally aided housing possession claims from other types of claim as the legal aid client is uniquely the defendant. However, practitioner groups question this assertion, pointing out that a family living in a home unfit for habitation or facing unlawful eviction has no choice but to litigate.

 

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