Costs budgeting: anyone for Marmite?

On 13 July 2022, the Civil Justice Council (CJC) held an invitation- only costs conference in Mary Ward

House, London. Mary Augusta Ward CBE was a social reformer and novelist. She was also an anti-suffragist who became founding president of the Women’s National Anti- Suffrage League. But her zeal for reform and the location of Ward House in Bloomsbury – scene of many an intellectual debate – made it a fitting venue for the CJC conference.

My primary interest in attending lay in ensuring the meeting supported a robust regime of sanctions for failing to engage meaningfully in pre-action [A]DR. The need for an early sanction was not lost on the Master of the Rolls, who gave the keynote speech. (I will return to the topic of PAP reforms following the publication of the PAP Review, likely to be this autumn.)

Love it or hate it?

Next up for discussion was that perennial Marmite topic: costs management. The question being: “is the game worth the candle?” Funnily enough, this was the  question posed in Lord Justice Jackson’s (as he then was) Final Report on Civil Litigation Costs in 2009 (p414). His conclusion was that it was. In reaching this conclusion, his Lordship was supported by some heavyweight players, including the Commercial Litigation Association (of which I was chairman at the time) and the Law Society of England and Wales – whose response was drafted by me (as a member of its Civil Justice Committee) and which was in due course endorsed by the Law and Policy Board (as it was then known) of the Law Society.

I had committed to costs management as a tool for improving the client experience by ensuring my former firm was founded on these principles from our beginning in April 2003. Hourly rates for our commercial litigation niche practice were published on the firm’s website and budgets were published for model cases in all three tracks. These were the most frequently visited pages of the firm’s site.

At the same time as we introduced costs management into our practice, Professor John Peysner, District Judge Lethem (as he then was) and HHJ Brown (as he then was) were other powerful advocates for the use of budgets in civil litigation – especially where big costs were going to be racked up.
John Peysner’s now famous parallel with a construction project was often employed during these times to illustrate the common sense rationale for costs budgeting.

A lively debate

Given my involvement in the development of costs management, I looked forward to the debate about it at the conference. To lead the debate the CJC had brought together an impressive panel including such heavyweight litigators as David Marshall (past chair and current member of the Law Society’s Civil Justice Committee), Brett Dixon (chair of the Civil Justice Committee) and Richard Langley (Hon Treasurer of the London Solicitors Litigation Association (LSLA)). The session was chaired by Master Kaye (also a past president of the LSLA) with contributions from the floor by myself, David Greene (yet another past president of the LSLA), HHJ Lethem, Professor Dominic Regan and Kerry Underwood, among many other expert contributions.

I was surprised to hear abolitionist views still being expressed from those such as Richard Langley on the panel – and by others from the floor. The great merit of costs budgeting is that it lends the practice of civil litigation a degree of transparency which can be lacking – and which is welcomed by lay clients and in-house counsel alike.

The key questions

As I pointed out in my brief remarks from the floor, costs budgeting accords with the best of Bentham’s utilitarianism and helps meet the three questions all clients want answered: ‘Will I win? How long will it take? How much will it cost?’ Anything which helps render the answers to those questions easier to provide, with greater certainty, can only help bring lawyers more work.

The arguments of the abolitionists remained what they were well over 10 years ago: it is too time consuming, it costs too much to do, the courts do not have the time or the skills required to understand budgets. In contrast, the revisionists in the room argued for a thoughtful reappraisal of the requirements, HHJ Lethem making characteristically insightful proposals for reform.

A good humoured and expert debate ensued – rounded off by Master Kaye inviting a show of hands as to whether costs budgeting should be abolished or reformed. I was too nervous to watch the vote, but Master Kaye assured me afterwards that the overwhelming majority was for reform.

Conclusion

This conference was the first opportunity to engage with the costs review. Two online seminars are planned for the autumn, with the deadline to make written responses being 22 September 2022 at noon. The Costs Working Group’s page on the CJC site is found at judiciary.uk/related-offices-and- bodies/advisory-bodies/cjc/working-parties/ costs. It will be interesting to see how costs budgeting fares under this latest review.

A significant consideration is the extent to which fixed recoverable costs (FRC) for claim values up to £100,000 will make costs budgeting otiose for those claims – and likewise, if FRC is extended to claims up to £250,000 in due course, as some consider likely. I believe it is clear from the conference that the boat of blank cheque litigation long ago sailed to a watery grave.

The Women’s National Anti-Suffrage League enjoyed a brief flourish before being brought down by its ideas collapsing in 1918, after a mere 10 years – whereas the CJC celebrates its 25th anniversary next year. A quarter century spent relentlessly advocating reforms, continually supporting fierce debate and bringing the like-minded together – how very Bloomsbury…

Tony Guise is the director of DisputesEfiling.com. He is also past president of the London Solicitors Litigation Association: DisputesEfiling.com Twitter: @CloudArbitrator; linkedin.com/in/tonyguise