Getting a handle on costs management

A colleague recently reminded me of a quote from a deputy district judge that, for me, sums up the current state of affairs. She said: “I may seem radical, but I am one for dealing with cases fairly.”

It might just be me, but it
is frightening that there is at
least a perception, if not an expectation, that since the Court of Appeal’s decision in Mitchell, your client’s case might not
be dealt with fairly. Add that to
a pre-existing inconsistency in applying costs management and it is no wonder that many costs lawyers’ daily lives are being taken over by budgets and skirmishes over costs at the
case management stage.

The Court of Appeal has gone some way to redressing the litigation balance in the ‘holy trinity’ of relief from sanction cases of Denton, Decadent Vapours and Utilise, although it didn’t go as far as to say Mitchell was wrongly decided. In view of the tight deadlines relating to costs budgets and the possibility that breaches will imperil court dates, nobody can afford to
relax just yet.

Teething problems

The Association of Costs Lawyers’ white paper Costs Management: The First Year highlights some inconsistencies and teething problems experienced by the judiciary and practitioners
alike when dealing with costs management since April 2013. Those issues may now become more widespread.

Practitioners with cases
worth between £2m and £10m, and those with cases in the commercial court, are not looking quite as smug now as they have done over the last year: the 72nd update to the
civil procedure rules, which came into force on 22 April, has introduced costs management into their worlds.

An amendment to CPR 3.15(2) at the same time also now makes it more difficult to escape costs management as “the court will make a costs management order unless it is satisfied that the litigation can be conducted justly and at proportionate cost in accordance with the overriding objective without such an order being made”. Previously, the rule read more as if it was entirely optional at the whim of the judge.

However, anecdotal evidence suggests that parties and judges are becoming more adept at handling the process. You can’t teach experience.

The fog around the new definition of proportionality is turning into no more than a heavy mist. And the ‘light touch’ advocated by experienced costs judges is becoming more common in place of the mini detailed assessment, which many costs management conferences have descended into.

However, there is still a lot of work to do before costs management operates anything like Jackson LJ’s vision.

Once the trauma of agreeing or setting the litigation budget
is complete, the difficulty of managing the litigation within that budget remains if you want to recover those costs from the opponent at the end.

Most case management systems should have been updated by now to allow for time recording by phase, task and activity so that each piece of work done can be recorded against the correct budgeted phase. Work done against budgets needs to be regularly monitored by phase as overspend in one phase cannot be moved to another phase where there is still credit.

Time recording has become more important than ever. Sympathy for the error message PEBKAC (problem exists between keyboard and chair) will be short lived if it costs the client or the partners money.

What I call ‘budget certainty’ is also important. Securing fixed fees from experts, agents and counsel at the budget stage will help enormously in managing the overall spend.

I am also aware of firms capturing data regarding costs incurred in different types of litigation, which may help
in more accurately predicting what the next one will cost.

This is very time-consuming,
of course, but we all have to get used to it. SJ

Jon Lord is a costs lawyer and a committee member of the Association of Costs Lawyers