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Costs budgeting is here to stay – with a few tweaks

May 19, 2023

Costs budgeting is here to stay – with a few tweaks

If lawyers can bear to cast their minds back a decade to April 2013, cost budgeting was one of the most unpopular elements of the Jackson reforms. The judiciary were ill-prepared, and practitioners despaired at the sudden burden of extra work right at the start of cases. Frankly, it was all a bit of a shambles.

Since then, the regime has settled down considerably. And while it is still unlikely to win any popularity contests within the profession, a review published by the Civil Justice Council last week found that ‘overwhelmingly, and somewhat surprisingly’, lawyers had given ‘favourable’ feedback on budgeting, albeit while also recommending some ‘significant tweaks’.

So the CJC review recommended that costs budgeting should survive – but at the same time, the report accepts that ‘one size does not fit all’. It suggests that a more ‘tailored’ approach could be adopted, to suit different work types and / or venues where the litigation is conducted. This approach would involve further input and some piloting from a few court centres, to ensure that any changes had a ‘sound evidential base’ before wholesale implementation.

The three areas identified by the report where a different costs management regime should be piloted are:

  1. Personal Injury and clinical negligence work (covered by qualified one-way costs shifting (QOCS))
  2. Claims progressing in the Business and Property Courts
  3. Other specialist work

For QOCS personal injury claims, the CJC identified a ‘clear case’ for at least considering whether to modify the usual approach to costs budgeting. That is because in general, defendants’ costs are less likely to be paid by the claimant in QOCS cases. So a majority of the CJC recommended piloting a new approach in which defendants will no longer need to file a full budget in QOCS cases. Instead, they will only need to supply the Precedent H front sheet to the claimant and court. The court would still have the power to direct the defendant to produce a full budget, however.

The CJC also recommended piloting a tailored approach for Part 7 cases in the multi-track that are valued up to £1 million. Given the forthcoming October extension of fixed costs for most civil claims worth up to £100,000, this budgeting pilot would largely relate to claims between £100,000 and £1 million. These claims are considered most at risk of incurring disproportionate cost; but are not of high enough value to warrant full scale budgeting.  The pilot would test the benefit of a ‘costs budget light’ proposal in terms of saving both court time and the parties’ money. One question yet to be dealt with is whether this approach could or should be applied only in the County Court, or in the High Court; particularly District Registries. Meanwhile a majority of the CJC supported including PI claims in this approach, but that was not unanimous.

In the Business and Property Courts (BPC), the CJC review again recommends piloting a lighter touch regime, which would apply to cases valued at over £1 million that would be subject to budgeting today (and cases below that threshold would be subject to the pilot discussed immediately above). The CJC suggests that claims that are handled from the Rolls Building would be suitable for such a pilot; and potentially one of the regional BPC centres should also be invited to operate it.

The CJC also recommends that judges who operate specialist lists, such as for mesothelioma and for media and communications claims, and those in charge of specialist proceedings such as High Court Senior Masters for multi-party litigation, are approached for their views on more bespoke practice arrangements for conducting budgeting; taking into consideration the specific consultation responses that it received relating to those practice areas.

When it first announced the remit of its review, the CJC specifically stated that one option on the table was the complete abolition of budgeting. But in the consultation responses, only one claimant and two defendant clinical negligence respondents favoured the approach of abandoning budgeting altogether. In my own view, I think many lawyers will have been wary about calling for budgeting to be scrapped in their consultation responses, because abolishing budgeting could end up paving the way for an even broader extension of fixed costs – which would be considered a worse option, certainly for claimant lawyers.

So there will now be some tweaks and improvements to recognise that in such a diverse range of cases, one budgeting size does not fit all. But overall, costs budgeting has proved its worth; and following last week’s report, we now know that it is here to stay.


May 19, 2023

Insights