Cost budgeting reforms: 'The good and the bad

The Civil Procedure Rule Committee has already approved several of the recommendations of the sub-committee, chaired by Mr Justice Coulson, which has been tasked with identifying improvements to the costs-budgeting process. These are likely to be introduced sooner rather than later.

For the purposes of this article, I am going to focus on two of the reforms that would have the most significant implications for lawyers.

Longer window

The first of these is the proposal that costs budgets should be filed and exchanged 21 days before the case and costs management conference (CCMC). This would only apply to cases exceeding £50,000, with cases below that threshold having their budgets filed with the directions questionnaire (cue the usual debate on quantum of a claim, particularly if applying a monetary value is opaque).

At face value, this is a sensible proposal. It allows for a longer period of reflection, debate, and agreed amendment in advance of the CCMC. This can only be a good thing – in principle. In reality, however, it is arguable whether a longer period will be effective. In my experience, litigants and their lawyers often leave this process until too late anyway, and a longer window is unlikely to lead to a change in behaviour.

Second, an earlier exchange of budgets will necessarily mean that the budgets are both more out of date and based on less knowledge of how the parties expect the litigation to pan out. I am not particularly looking forward to preparing a budget in circumstances where my client has even less of an idea of the proposed directions from their perspective, let alone a likely vacuum of knowledge of the opponent’s proposals.

It seems most likely that ?there will be a longer period of increased debate over budgets. There does not appear to be any amendment to the practice direction on prescribed costs ?for budgeting, and no doubt ?a healthy proportion of the 2 per cent allowable (following exchange) will be utilised in ?this increased period on what would normally have been case management decisions: what further pleadings are envisaged, how much witness evidence there will be, what expert evidence is required, how long the trial will be, and the dreaded contingencies. Will all such issues be considered for the purpose of budgeting rather than case management?

To file and serve a budget at an earlier stage, surely case management decisions will need to be made earlier, too. The similarly inevitable amendments to the suggested approach to the case are, in turn, likely to lead to an increased need to amend and update the budgets during the negotiations. By the time the CCMC comes about, nearly a month’s worth of work will have been incurred that was only estimated at the time of filing/exchange. 

Budget discussion form

The second reform of particular note is for an agreed budget discussion form to be filed no later than seven days before the CCMC. This aims to focus minds on the phases that are agreed, together with a summary of any areas in dispute. One would hope that such a document, in draft form, could begin doing the rounds at an early stage and do away with the ten-page letter exchanges on budgets that we are seeing in advance of the CCMC. 

There is no doubt that this a regularly adopted approach, probably a result of budgeting’s relative novelty, has led to some significant and opaque correspondence that, in turn, has led to difficulties for practitioners and the court in identifying the actual issues to be decided. If half a lever-arch file of correspondence can be replaced with a simple form, this can only be a good thing for litigants, practitioners, counsel, and, most importantly, the court.

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