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Costs Budgeting – Time for change

News | Tue 5th May, 2015

Having at first hand experienced the heated battle of CCMCs, in which costs draftsmen and (usually) junior Counsel joust in front of a Master on the level of costs incurred thus far and those yet to come, it seems that change might be in the air.

Lord Justice Jackson is preparing a speech / paper on costs budgeting, to be finalised by mid-May. He is looking, amongst other matters, at the circumstances in which the Court should decline to carry out costs budgeting (because of a concern at the delays being caused to listing generally by the new regime) and at whether there should be some sort of provisional costs budgeting exercise on paper.

You will no doubt remember Ian Miller’s prediction on this very ‘blawg’ that costs budgeting was likely to be reformed or abolished in 2015. He may well yet be right. Claimants have got very good at shoehorning as much cost as possible into the “incurred” box, which is impossible to challenge, and Defendants have got very good at getting future costs disallowed on the basis that incurred costs are already too high. None of this makes for better value for the lay client, and only adds to the costs of litigation.

The Personal Injury Bar Association has helpfully listed the other issues which those involved in the costs budgeting regime face:

“(1)    The long listing delays caused by the new costs budgeting regime.

(2)    The waste of money and time in budgeting cases through to the end of trial especially where liability has been admitted, quantum is relatively modest and it is highly likely that the case will settle without a trial after the exchange of expert evidence.

(3)    The interplay between incurred costs and future estimated costs.  This is causing huge uncertainty and ought to be further clarified in the Rules.

(4)    The extent to which hourly rates and times should be scrutinised at the budgeting stage.  Again, this is causing huge uncertainty and different courts are taking very different views.

(5)    The difference between a costs management order being made and costs budgets being exchanged without a costs management order.   If costs budgeting is dispensed with altogether, then the other party has no costs information at all, because costs budgets have replaced the old estimates.” 

Given all this, it is hard to imagine that there will be no change to the current system. We await Lord Justice Jackson’s pronouncements with interest…

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