Businesses in Basildon, Southend and the rest of south Essex that are planning legal action through the courts against another party face huge increases in fees, warns an expert with Essex legal firm Birkett Long.

Claire Wiles, an Associate solicitor in the firm’s Basildon office who specialises in commercial litigation and dispute resolution, said the increase in the court fees now payable is significant. 

The largest jump has been for those wanting to bring a £190,000 claim to court.  This fee has risen overnight by 622 per cent from £1,315 to £9,500. All claims are now attracting a fee worth 5 per cent of the value of the claim.

Even a relatively small claim of £20,000 will attract an increase of 64 per cent from £610 up to £1,000 and Small to Medium-sized Enterprises (SMEs) with limited funds could find themselves in a David and Goliath situation. 

Claire said: “It makes the ‘big guys’ almost bullet proof and with such huge increases, any firm that wants to bring a case has got to be really serious.” 

Whilst a successful party will be entitled to recover some of its legal costs at the conclusion, they still have to pay the fee initially.  Even with a good case the initial outlay could be a block to smaller businesses.   

She said going forward it is vital that commercial organisations, no matter how small, ensure their contracts with others are watertight.

“The disputes I see regularly are about breach of contract and defective works and non-payment of money owed, but a well-drafted contract can do much to reduce the likelihood of these occurrences.”

Whilst litigation using the courts can be expensive, this is not the only way to resolve a dispute and the team at Birkett Long regularly advises clients on alternative means of resolving their disputes. 

She said: “If you have a dispute then take early advice from a solicitor to help you negotiate a settlement early and avoid taking your claim to court.” 

The courts are keen that parties explore settlement such as mediation rather than litigation Whilst there is still a cost associated it is likely to save you a great deal more in the long run. 

Claire says the legal profession has criticised the Ministry of Justice for moving too fast on the new rules as lawyers were given less than one month’s notice that the rule would take effect in the first week of March.

She said: “The massive fee increase means there will be some who simply can’t afford to take legitimate claims to court because the cost is too great and it could force some smaller businesses under.

“The legal profession believes that the new rules will have the impact of reducing the amount of SMEs taking their claims to court by half.”

People wanting to bring personal injury or clinical negligence claims are also affected by the fees.