Costs management roll out will lead to cost increases

As of the beginning of this month, new practice direction 51G allows judges to make cost management orders requiring litigants to draw up a detailed costs map for their case before the first case management conference.

Writing in next week’s Solicitors Journal, Bircham Dyson Bell head of litigation Richard Langley (pictured) says costs would be likely to rise “not so much from completing the new form HB as due to having to map out the case in so much detail at the outset”.

At present the new rules only apply in the mercantile and technology and construction courts but, Langley says, cost budgeting will “in time become as much a part of the litigation culture as summary assessment and CFAs have over the past ten years”.

According to Langley, the initial pilot should be seen as a step towards the wider roll out of costs budgeting in multitrack cases.

To be successful the pilot will also need to get judges on side. While district judges are broadly supportive, circuit judges were sceptical.

In their submissions - described in Lord Justice Jackson’s report on civil litigation costs as “the most elegant and forceful attack on the whole concept of costs management” - the council of circuit judges said judges did not have the business skills to manage costs like “litigation projects”.

“Judicial productivity would be likely to fall as fast as morale if we are required to do this work,” they said.

Jackson LJ responded at the time that both lawyers and judges had to change their mindset. Much as there was a culture that costs were for specialist costs lawyers and costs judges, in too many cases costs were “the most important single issue, sometimes towering above all else”. It was “simply unacceptable”, he said, for judges and practitioners to regard costs as an “alien discipline”.

For Professor Dominic Regan, the new rules also put law firms in danger of “huge losses”.

Regan, who will be speaking at an Association of Costs Lawyers event later this week, says that “much greater emphasis and scrutiny will be placed on firms to produce detailed and accurate budgets at the outset of a case” and that “failure to do so may result in huge losses for firms”.

Much as clients may appreciate their lawyers to be clearer about anticipated costs, law firms are not necessarily equipped for this exercise, Regan suggests, and they could find themselves exposed if they fail to employ specialists or skill up.

(Dominic Regan will be speaking at the Association of Costs Lawyers on Friday 14 October in London. For details, go to Association of Costs Lawyers)