Fixed costs have not made costs expertise less important
The extension of fixed recoverable costs was intended to create greater certainty. Since October 2023, the regime has reached most civil money claims worth up to £100,000. Further expansion is already being debated, including whether the current exemption for housing disrepair claims should remain.
The Association of Costs Lawyers expects pressure for fixed costs to move into more mid-value claims, alongside greater judicial scrutiny of group-action spending, litigation conduct and deductions from damages. It has also reported that firms are increasingly asking costs specialists to model firm-wide exposure, rather than simply calculate recovery on individual matters.
This is the paradox of fixed costs. The amount recoverable may become more predictable, but the commercial consequences of poor matter management become more severe. A firm operating within a fixed-costs environment needs to understand, before significant work is undertaken:
- Which matters are economically viable.
- How much fee-earner time each stage can absorb.
- Where disbursement and expert-cost exposure sits.
- Whether a case is being handled in the correct complexity band.
- When settlement remains commercially preferable to continued litigation.
- What deductions or solicitor-client disputes could arise at conclusion.
The costs specialist is therefore required earlier, not later. Their value increasingly lies in preventing margin leakage rather than documenting it once it has already happened.
Litigation funding has become a governance issue
Third-party funding adds another layer. On 9 July, the Solicitors Regulation Authority published new guidance for firms using or arranging third-party litigation funding. The guidance extends well beyond the wording of an individual funding agreement. It addresses financial stability, board oversight, conflicts, referral interests, fee-sharing, client understanding, confidentiality, privilege, sanctions and financial-crime exposure.
It also makes clear that funders must not influence staffing, settlement or wider financial decisions in a way that compromises the firm's independence or its duties to clients. This is no longer an arrangement that can sit solely between the litigation partner and the funder. It affects the firm's:
- Governance.
- Cash-flow forecasting.
- Staffing model.
- Risk appetite.
- Matter reporting.
- Settlement process.
- Regulatory responsibilities.
That inevitably increases the value of professionals who can translate legal activity into reliable financial information. A technically strong Costs Lawyer who understands budgeting, funding structures, recovery risk and the commercial behaviour of complex litigation is becoming part of the firm's control environment.
Consolidation is exposing the economics of claimant work
The timing matters because investment and consolidation are accelerating across many of the practice areas where costs are most commercially sensitive. During 2026, the market has already seen:
- Fletchers acquire Freeths' 42-person Clinical Negligence and Court of Protection teams.
- Fletchers acquire specialist Court of Protection firms EMG Solicitors and JE Bennett.
- Express Solicitors acquire personal injury businesses Aegis Legal and the Sorrymate brand.
- Further investment across healthcare, employment, conveyancing and regional legal platforms.
These are not simply acquisitions of lawyers and files. Investors are acquiring work in progress, recovery profiles, operational systems, client-acquisition channels and future cash flows. That places the costs function directly inside the investment thesis.
A clinical-negligence or Court of Protection practice may hold technically excellent matters, but it can also carry lengthy case cycles, significant disbursement exposure and substantial work in progress. A personal injury, credit hire or housing practice may offer scale, but its profitability depends heavily on allocation, process, settlement behaviour and cost recovery. A commercial litigation team may handle higher-value matters, but that brings more complex budgeting, funding and detailed-assessment exposure.
The question for an acquiring firm is not simply how many files have been bought. It is what it will cost to conclude them, what is realistically recoverable, and whether the right people are in place to protect the value. The SRA's own review of acquisitional growth warns that staff departures, poor integration and insufficient understanding of acquired practice areas can undermine both financial stability and client service. Costs talent is part of that integration risk.
The role itself is dividing into two markets
Legal costs experience is no longer a precise enough hiring requirement. The market is separating into two increasingly distinct talent pools.
The first supports volume and fixed-costs operations. These professionals need strong process discipline, accurate file management, an understanding of fixed-cost stages and the ability to work efficiently across larger caseloads.
The second supports complex and bespoke litigation, including high-value Clinical Negligence, catastrophic injury, Court of Protection, commercial disputes, public inquiries and group actions. Here, firms need professionals capable of:
- Drafting complex bills and statements of costs.
- Preparing and managing costs budgets.
- Drafting points of dispute and replies.
- Conducting negotiations and detailed assessments.
- Advising on proportionality and recovery strategy.
- Assessing funding and disbursement exposure.
- Working directly with partners, clients and funders.
- Identifying commercial risk before it reaches the end of the matter.
The two groups are not interchangeable. A candidate who has worked successfully within a high-volume fixed-costs environment will not automatically be prepared for a technically autonomous complex-litigation role. Equally, a senior specialist accustomed to individually managed, high-value files may not be suited to a process-led volume operation. The strongest appointments begin with an honest assessment of the firm's caseload and commercial model, not a generic job description.
What should firms change?
The first change is timing. If the costs team only becomes involved when a matter settles, it is being asked to explain the economics rather than influence them.
The second is reporting. Costs specialists should have a structured line into departmental leadership, finance or operations. Their insight into budgeting, WIP, recovery and recurring file-handling issues can inform much wider decisions.
The third is role design. Firms should decide whether they need:
- Technical production capacity.
- Strategic costs advice.
- Complex inter partes capability.
- A department leader.
- An outsourced consultancy relationship.
- Or a hybrid structure combining internal oversight with external delivery.
Trying to cover all of these requirements through one broadly defined Costs Draftsperson vacancy usually creates a weak shortlist and an eventual mismatch.
The final change is recruitment strategy. The most valuable costs professionals are rarely differentiated by job title alone. Their value sits in the type, complexity and recency of the work they have personally handled. That requires deeper market mapping than a vacancy advertisement can provide.
What should Costs Lawyers ask before moving?
Candidates should be conducting their own commercial due diligence. Five questions are particularly revealing:
- At what stage does the costs team become involved in a matter?
- What proportion of the caseload is fixed-cost, complex inter partes or solicitor-client work?
- Will the role provide genuine file ownership and negotiating authority?
- How are performance and bonuses measured: recovery, billing, throughput, quality or a combination?
- Is technology being used to improve judgement and efficiency, or simply to increase volume expectations?
The answers reveal whether the firm sees costs as a professional specialism or a production line. That distinction will determine the role's autonomy, progression and long-term value.
The NMG view
Legal costs has historically been one of the least visible specialisms in the profession. Commercially, it is becoming one of the most important. Fixed recovery, funded litigation, tighter client scrutiny and investor-backed consolidation all require firms to understand the economics of their matters earlier and with greater precision.
The firms that recognise this will build costs capability into case strategy, operational planning and leadership decisions. Those that continue to treat it as an end-of-file exercise will discover problems only once the work has been completed and the margin has already disappeared.
The question is no longer whether a firm needs costs expertise. It is whether that expertise has enough authority and arrives early enough to change the outcome.
NMG Recruitment maps and appoints Costs Lawyers, Costs Draftspersons and departmental leaders across specialist consultancies, national practices and in-house costs teams. We also support strategic hiring across Clinical Negligence, Litigation, Court of Protection, Credit Hire and related claimant and defendant practices. If the economics of your caseload have changed faster than the structure of your team, we welcome a confidential discussion.