Fixing Lawyers' Fees Ex Ante: A Case Study in Policy and Empirical Legal Studies

The relationship between legal fees and damages is fundamental to the way litigation is funded in most countries. In jurisdictions where fee shifting is the norm, the means by which courts regulate recoverable costs (i.e., the plaintiff's fees), and the extent to which they are proportional to damages, is of central importance. This article explores a recent case study from the United Kingdom involving the introduction of procedural rules designed to build an explicit and transparent degree of proportionality into the determination of legal costs. In October 2003, the Department of Constitutional Affairs in England and Wales announced the introduction of the “Fixed Recoverable Costs Scheme for Low Value Road Traffic Accident Claims.” This established a set of fixed costs that successful lawyers could recover from losing defendants in such cases. The Fixed Recoverable Costs Scheme was based closely on research undertaken by the authors for the Civil Justice Council and the current article describes the process that brought this about. In so doing, it provides an explicit example of empirical legal studies having a direct impact on policy. We were also asked to provide some basic evaluation of the scheme two years later and the article also shows how the scheme was operating, including some of the behavioral changes it apparently induced. We argue that some of these were predictable at the time the scheme was being designed and that the total experience allows us to consider ways the interaction between empirical legal studies and policy can be improved in the future.