Cost benefits

In the many articles North West Mediation Solutions has published highlighting the benefits of mediation as an alternative to proceeding through the courts, the cost benefits have never been placed at the top of the list - now may be the time to do so.

The government's proposal to substantially increase some civil court fees came into effect on 9 March 2015. There are currently two possible caveats in that, first, this is subject to the outcome of a further debate in the House of Lords, and, second, the Law Society has criticised this move and sent a pre-action protocol letter to the Ministry of Justice.

The new fees will be calculated at 5 per cent of the value of a claim, replacing the previous fixed fees. A claim with a value of £45,000 previously fell within the £15,000 to £50,000 bracket, and therefore attracted a court fee of £610. However, after 9 March 2015, the same claim will attract a court fee of £2,250 - a substantial increase.

Fees for claims of less than £10,000 are unaffected by these proposals and will continue to depend on which bracket the claim falls into.

The government's reasoning behind the changes is that 90 per cent of claims issued fall below the £10,000 limit, and therefore the majority of claimants will be unaffected by the changes.

The oft-stated criticism that mediation is an expensive extra step is the usual argument against taking an alternative or additional step if proceedings have commenced. In view of the proposed increases, however, the fees charged for mediations involving disputes in the range of £50,000 - £200,000, which represents the majority of the matters mediators deal with, would:

• Show a saving of between £750 and £8,250 if the mediation course was taken, as opposed to litigation; or

• If litigation has already commenced, the additional fee pales when compared with that already paid for the issue fee, and, of course, the dispute is more likely to end in settlement (for example, our firm's average settlement rate over last four years is 80 per cent).

These statements are, I accept, based on the current proposed figures, but there's no doubt that, whatever the decision of the Court of Appeal or the Law Society's action, court issuing fees are likely to increase.

 

Peter Whitman is the director of North West Mediation Solutions

 

Fee comparison:

 

Claim value	Current fee for issuing at court	Proposed fee for issuing at court	Likely fee for a two-party mediation
More than £300,000 or an unlimited amount	£1,920	£10,000	£2,375  per party
£250,000.01 – £300,000	£1,720	£10,000	£2,375 per party
£200,000.01 – £250,000	£1,515	£10,000	£1,750 per party
£150,000.01 – £200,000	£1,315	Between £7,500- £10,000	£1,750 per party
£100,000.01 – £150,000	£1,115	Between £5,000 - £7,500	£1,750 per party
£50,000.01 – £100,000	£910	Between £2,500 - £5,000	£1,750 per party
£15,000.01 – £50,000	£610	Between £750 - £2,500	£1,250 per party
£10,000.01 - £15,000	£455	Between £500- £750	£375 per party