A practical guide to budgeting post-April

Just as things appeared to be settling down, a new set of budgeting rules came into force on 6 April 2016. For practitioners, the most important change is around the times for filing the precedent H form.

Where a claim is valued at less than £50,000, precedent H will now need to be filed with the directions questionnaire. For cases valued over £50,000, a precedent H must be filed 21 days prior to the costs and case management conference (CCMC).Once the precedent H has been served, parties will have seven days before the first CCMC to file an agreed budget discussion report. It is worth noting the word 'agreed' here, which now clearly puts the onus on parties to deal with the budget discussion report collaboratively and not to leave it until the very last minute. This should not be treated as a procedural task, rather one that requires significant input from both sides.

The introduction of the budget discussion report will have a signification impact on CCMCs going forward. Both parties are required to set out agreed figures, along with any disputed figures and reasons, if applicable. Practitioners are encouraged, but not required, to use the template report format.

Practitioners should take this as a clear steer from the court that it expects parties to have used their best endeavours to pre-agree as much of the precedent H as possible, to avoid taking up already stretched court resources. Failure to do so is likely to lead to criticism at the hands of the court and, at worst, some form of sanction.

Reduced burden

Despite the changes, the burden on practitioners for completion of a full precedent H has arguably been reduced: in cases where the value of the precedent H is under £25,000 or the claim is valued at less than £50,000, only the front sheet of the precedent H needs to be completed and filed.

That said, it would be wise for practitioners to still do their workings on the full precedent H, but only present the front sheet, so they are properly prepared for the CCMC and can respond to any probing into their budget.

A further welcome reduction to the burden on practitioners in relation to costs management is the disapplication of the costs management rules for cases involving children, and for most cases involving parties with severely impaired life expectancy. The former is governed by the Civil Procedure Rules and the latter by practice direction 3E.

Hourly rates

The position in relation to the setting of hourly rates has been further clarified by the addition of a paragraph to the practice direction, which makes it clear that 'it is not the role of the court in the cost management hearing to fix or approve the hourly rates claimed in the budget'.

How this will fare in reality is yet to be seen, but prior to the April changes there was a real divergence in approaches, which one hopes will now disappear.
I would very much encourage practitioners to push back
where the court appears to be considering hourly rates, referring to the practice direction.

The final key amendment relates to the preparation of any bill of costs. The amendment now requires that the bill prepared for detailed assessment is produced to reflect the phases of the budget, and it must also be split between pre- and post-April 2013.

The rationale for this is to allow the court and the parties, when assessing or attempting to agree costs, to have clear points of reference between the approved or agreed precedent H and the costs to be assessed on a phase-by-phase basis.

This latest amendment to the rules represents a pragmatic approach to streamlining the costs budgeting process and is a positive step forward in reducing the burden on practitioners.

Yet, the importance of precedent H should not be underestimated, and there is a real need for practitioners to monitor work in progress (WIP) against the budget as the case progresses. Unfortunately, three years after the introduction of costs budgeting, I see little evidence of this happening. Varying a budget is possible when done in a timely fashion, but if you are not aware of your WIP you will be unable to successfully apply for a variation.

James Barrett is a council member of the Association of Costs Lawyers @CostsLawyers www.associationofcostslawyers.co.uk