Articles
‘Hot Coffee’, ‘Fixed Costs’ and the Quiet Price of ‘Reform’
Thursday 7th May 2026
Sonny Welsh
There are some legal stories that take on a life of their own. They stop being legal cases and become cultural shorthand. In the United States, few examples are more famous than the so called ‘McDonald’s hot coffee case’. For years, it was repeated as the ultimate example of a claim gone mad. A woman spills coffee on herself, sues McDonald’s, and walks away with millions. It became a punchline, a political weapon, and a convenient symbol for those who wanted to argue that ‘Civil Justice’ had become excessive, irresponsible and in need of urgent restraint.
The documentary ‘Hot Coffee’, released in 2011 and directed by former lawyer Susan Saladoff, set out to challenge that narrative. Rather than treating the case as a joke, the film used it as the entry point into a wider discussion about ‘Tort Reform’ in the United States, corporate influence, damage caps, mandatory arbitration, judicial elections and the gradual narrowing of ordinary people’s ability to obtain redress through the courts.
The documentary follows people whose cases were not frivolous, not opportunistic and not exaggerated, but whose access to justice was limited or removed by reforms presented to the public as common sense.
The real facts of the coffee case were very different from the myth. Stella Liebeck was an elderly woman who suffered serious burns after coffee spilled in her lap. The case was not simply about warm coffee, minor discomfort or opportunism. It involved evidence about the temperature at which the coffee was served, the severity of the injuries, the medical treatment required, and the way the claim had been portrayed publicly. The documentary’s power lies in showing how easily a serious civil claim can be reduced to a slogan when there is a political or commercial interest in doing so.
That is why ‘Hot Coffee’ still matters. It is not really a film about coffee. It is a film about language. It is about how words such as “frivolous”, “excessive”, “compensation culture”, “runaway costs” and “reform” can be used to change public opinion before the public has been allowed to understand the facts. Once that framing takes hold, it becomes much easier to reduce rights, limit damages, cap recoverable costs or move disputes away from open courts. The reform is then sold as fairness, when in practice it may make justice harder to obtain for the very people the system is supposed to protect.
That same tension can be seen, in a very different legal culture at home in England and Wales. We do not have the same jury driven civil damages environment as the United States. We do not have US style punitive damages in ordinary Civil Litigation. We do not have the same political theatre around elected Judges. But we have had our own long running debate about ‘Civil Justice’, ‘Costs’ and ‘Proportionality’. For many years, the language has been familiar. Litigation is too expensive, costs are disproportionate, defendants need certainty, insurers need predictability, and the system must be controlled. Those concerns are not imaginary. Civil litigation can be expensive. Costs can become disproportionate. Parties do need to understand their potential exposure. The question is, however, did costs reform have a legitimate purpose?
The problem is what happens when the solution becomes so rigid that it starts to affect the viability of proper representation.
‘Fixed Recoverable Costs’ are the clearest example of this. In simple terms, Fixed Recoverable Costs limit the amount of legal costs that a successful party can recover from the losing party. The policy argument is straightforward. If everyone knows in advance what costs are recoverable, parties can assess risk more clearly, settlement may be encouraged, and satellite disputes about costs may be reduced.
The Law Society describes Fixed Recoverable Costs as setting the amount of legal costs that the winning party can claim back from the losing party, giving certainty in advance about the maximum amount the losing party will have to pay. On paper, that sounds attractive. Certainty is not a bad thing. Proportionality is not a bad thing. Efficiency is not a bad thing. The difficulty is that civil claims are not always predictable simply because they fall below a particular financial value.
A claim worth £20,000 may involve difficult liability issues, vulnerable clients, poor disclosure, multiple experts, disputed causation, complex rehabilitation evidence or a defendant who fights every point. A claim worth £75,000 may be life changing for the claimant, even if it is categorised as modest in litigation terms. The value of the claim does not always reflect the amount of work reasonably required to pursue it properly.
That is where the comparison with ‘Hot Coffee’ becomes important. In the United States, Tort Reform was often promoted through extreme examples. The public was encouraged to believe that the system was full of undeserving claimants and inflated awards. In England and Wales, Fixed Costs have often been justified through a different but related frame. The idea that recoverable costs are too high, that claims need to be controlled, and that fixed figures will bring order to the system. Again, there is a kernel of truth, but the danger is the same. Once reform is framed mainly around controlling lawyers’ costs, the human reality of the claim can disappear from view.
The extension of Fixed Recoverable Costs from 1 October 2023 was a major development. The Ministry of Justice confirmed that FRC would be extended across the Fast Track and introduced in a new Intermediate Track for simpler cases valued up to £100,000 in damages. The reforms also created complexity bands and staged tables of recoverable costs.
That change matters, because £100,000 is not a small claim for most members of the public. For an injured person, an employee, a tenant, a consumer, a small business owner or a bereaved family - a claim below £100,000 may be extremely significant. It may represent lost earnings, future care, professional negligence, serious disrepair, a disputed contract, or the difference between financial recovery and financial ruin. Yet the economics of running such claims have been fundamentally altered.
The central access to justice problem is simple. If the recoverable costs are fixed at a level, that does not reflect the work required, the shortfall has to fall somewhere. It may fall on the solicitor, who is expected to do more work for less recovery. It may fall on the client, who may have to pay unrecovered costs out of damages. It may fall on the case itself, because a solicitor may decide that the claim is too risky or uneconomic to take on. Or it may fall on the quality of representation, because the case is forced through a process designed around fixed stages rather than the actual demands of the dispute.
This is not an abstract concern. Litigation is labour intensive. Proper case preparation takes time. A solicitor must take instructions, review documents, advise on merits, correspond with the opponent, consider limitation, plead the case, deal with disclosure, instruct experts, analyse evidence, prepare witness statements, consider offers, advise on risk, comply with directions, prepare for trial and protect the client throughout.
Costs specialists and costs draftsmen then have to navigate the consequences of those steps when costs are assessed, disputed or fixed by rule. If the recoverable amount is too low, the system does not magically become cheaper. The work either becomes unpaid, compressed, avoided or transferred to the client.
That is the quiet price of reform. It is rarely presented honestly. The public hears “fixed costs” and may assume that lawyers are simply being prevented from charging too much. What the public may not hear is that ‘Fixed Recoverable Costs’ are not necessarily the same as the actual reasonable cost of doing the work. Nor are they necessarily the same as the solicitor’s contractual charges to the client. A successful claimant may win the case, recover damages, and still face a gap between what the losing party must pay and what it actually cost to bring the claim. For people of ordinary means, that gap can be decisive.
This is where ‘Access to Justice’ becomes more than a slogan. Access to justice does not simply mean that the court door is technically open. It means that a person can realistically bring or defend a claim, obtain advice, understand the risks, secure representation and have their case prepared properly. A system can preserve the theoretical right to sue while making the practical route so unattractive, underfunded or risky that many people cannot use it. That was one of the central messages of ‘Hot Coffee’. Rights can be reduced not only by abolishing them, but by making them too difficult to enforce.
The reforms in England and Wales also sit against a wider background. Civil Legal Aid has been significantly restricted since LASPO, and the National Audit Office has reported on the Government’s management of Legal Aid in England and Wales, including the reforms introduced by LASPO in 2013. For many civil claims, ordinary people do not have a realistic public funding option. Conditional Fee Agreements, Damages Based Agreements, After-The-Event Insurance have therefore played a crucial role in making litigation possible. If recoverable costs are squeezed too far, one of the remaining practical routes to justice becomes narrower.
This is why the language of ‘proportionality’ must be handled carefully. Proportionality is essential. No one can sensibly argue that costs should be unlimited or that a defendant should face wholly disproportionate exposure on a modest claim. But proportionality should not be confused with artificial simplicity. A case is not straightforward merely because the damages are below £100,000. Nor is a claimant’s need for justice reduced because the financial value of the claim falls into a fixed band. The system must control excess without punishing genuine complexity.
The Fixed Recoverable Costs Regime tries to address this through tracks, complexity bands and staged allowances. Practice Direction 45 contains detailed tables for the Fast Track and Intermediate Track, including staged amounts and percentages of damages. In the Intermediate Track, the tables are divided into complexity bands, with different recoverable figures depending on stage and band. That structure is more sophisticated than a single flat cap. It recognises that not all cases are the same. But the question remains whether the bands and figures are sufficiently responsive to the reality of litigation.
In practice, the danger is that the argument moves away from what work was reasonably required and towards where the case can be placed within a grid. The dispute then becomes less about the actual conduct of the litigation and more about categorisation. Was it band 2 or band 3? Was it truly intermediate? Was it exceptional? Was the conduct unreasonable? Does a particular disbursement fall within the rules? Those questions matter, but they also show that fixed costs do not eliminate complexity. They relocate it.
There is also a behavioural issue. Fixed costs can create incentives. A well resourced defendant may know that the claimant’s recoverable costs are limited and may be less concerned about causing additional work. The rules do contain provisions for unreasonable behaviour, including potential increases or reductions in Fixed Recoverable Costs, but those mechanisms are themselves limited and require argument. If a defendant takes every point, delays disclosure, contests liability aggressively or makes the litigation more burdensome - the claimant’s solicitor may still be operating within a fixed recovery structure. The pressure is then obvious.
That pressure is particularly acute where the claimant is vulnerable. Vulnerable clients often require more time, more explanation and more careful handling. Cases involving language barriers, trauma, disability, mental health issues, cognitive difficulties or serious financial stress are rarely ‘standard’ from a practitioner’s perspective. Yet fixed costs can treat them as if they are.
There is a broader cultural point too. ‘Hot Coffee’ showed how ‘Tort Reform’ can change public attitudes before it changes legal rules. If people are persuaded that claimants are generally opportunistic and lawyers are generally the problem, then restrictions on civil justice become easier to sell. In England and Wales, the phrase “compensation culture” has performed a similar function. It suggests that claims are inherently suspect, that people are too quick to sue, and that the system needs to be protected from the public rather than made available to them.
But most people do not bring claims lightly. Litigation is stressful, slow, uncertain and intrusive. Claimants often come to solicitors after something has already gone badly wrong. They may have lost money, suffered injury, been dismissed, been let down professionally, or faced a refusal by a larger organisation to engage properly. For them, the claim is not a business model. It is a last resort.
That is why reforms aimed at controlling cost must be judged not only by whether they reduce recoverable costs, but by whether they preserve meaningful representation. A cheaper system is not necessarily a fairer system. A predictable system is not necessarily an accessible system. A streamlined system is not necessarily a just system. If cases become uneconomic, if damages are eroded by unrecovered costs, if solicitors withdraw from certain areas of work, or if only the simplest claims remain commercially viable - then the public has not gained a better justice system. It has gained a narrower one.
The concern now is whether the balance has shifted too far. The extension of FRC to most civil cases up to £100,000 represents a major structural change. It affects not just the end of the case, but the decision whether to take the case on at all. Solicitors do not assess only whether a claim has merit. They also assess risk, funding, proportionality, likely work, client expectations and recoverability. If the economics do not work, meritorious cases may never reach the court. Those invisible cases are difficult to measure because they disappear before proceedings are issued. But from an access to justice perspective, they may be the most important cases of all.
The existence of the 2025 Fixed Recoverable Costs Interim Implementation Stocktake is therefore significant. The Civil Procedure Rule Committee, in conjunction with the Ministry of Justice, launched an evidence gathering exercise on the operation and effectiveness of the extended FRC regime, inviting responses from users and potential users of the civil justice system, including legal professionals, businesses, individuals, representative organisations and advice agencies. That stocktake is an acknowledgement that implementation must be tested against reality. The question is not whether fixed costs look tidy in a table. The question is whether they work fairly in live litigation.
For claimant solicitor firms, and those who deal daily with the practical mechanics of recovery, the issue is already familiar. The work still has to be done. Evidence still has to be gathered. Opponents still dispute liability and quantum. Procedural rules still have to be followed. Clients still need advice. But the recovery landscape has changed. The result is a constant tension between doing the case properly and doing the case within a recoverable framework that may not fully reflect the work required.
For defendants and insurers, fixed costs bring obvious advantages. They provide certainty, reduce exposure and allow claims to be reserved and handled with greater predictability. Those are legitimate interests. No serious discussion about civil justice should ignore the burden of excessive or uncertain costs on paying parties. But justice cannot be designed only around the comfort of the paying party. The system must also ask whether the injured person, the wronged consumer, the tenant, the employee or the small business can still obtain competent representation on realistic terms.
That is the lesson ‘Hot Coffee’ offers to England and Wales. Reform should always be examined by looking past the slogan. In the United States, the slogan was that ‘Tort Reform’ would stop frivolous lawsuits and runaway verdicts. But the documentary showed that the people most affected were often those with serious, life altering claims who found the courthouse door narrowed after the fact. In England and Wales, the slogan is different. It is about proportionality, certainty and controlling costs. Those are reasonable aims. But the test is the same. Who benefits, who loses, and what happens to the ordinary person when the reform meets reality? After all, where are all the lower insurance premiums for the general public?
There is also a danger in treating legal costs as if they are separate from justice. Costs are not an administrative afterthought. They are part of the machinery that allows rights to be enforced. A right that cannot be funded is a fragile right. A remedy that cannot be pursued is, for many people, no remedy at all. When recoverable costs are reduced or fixed without sufficient flexibility, the effect may not be dramatic or immediate. There may be no headline moment. Instead, the impact is gradual. Fewer firms take on difficult claims. More clients are told the case is not commercially viable. More deductions are made from damages. More litigants in person struggle through a system they do not understand. More wrongdoing goes unchallenged because the cost of challenge is too high.
That is why the debate should not be framed as lawyers resisting reform. It should be framed as a question about the type of civil justice system we want. Do we want a system that is efficient, but still human? Do we want proportionality that allows for complexity? Do we want certainty for defendants without making legitimate claims uneconomic? Do we want ordinary people to have real access to representation, or merely the theoretical ability to issue a claim?
The answer should be obvious. Costs reform should control abuse, not restrict justice. It should discourage disproportionate conduct, not punish careful preparation. It should provide predictability, but not at the expense of fairness. It should recognise that the value of a claim is not always the same as its importance, and that modest damages do not necessarily mean modest work.
‘Hot Coffee’ remains powerful because it reminds us that civil justice can be weakened in plain sight. It does not always happen through the abolition of rights. Sometimes it happens through caps, limits, funding restrictions, procedural hurdles and public narratives that make genuine claimants look undeserving.
‘Fixed Recoverable Costs’ may have a place in a modern civil justice system. But they must be watched carefully, reviewed honestly and adjusted where they undermine access to justice. The public should not be asked to accept that a cheaper system is automatically a fairer one. The real measure of reform is not whether it reduces the bill at the end of the case. It is whether a person with a genuine claim can still find someone willing and able to fight it properly.
At Smart Legal Costs, we see first hand how costs rules affect the practical running and recovery of civil claims. The detail matters. The figures matter. The rules matter. But behind every costs regime, is a bigger question. Whether the system still allows ordinary people to obtain justice in the real world, not just in theory. Fixed costs should have never become a quiet barrier between the public and the remedies the law says they are entitled to pursue.