Time to revisit the Jackson exemptions
By Sue Nash
Exemptions from costs budgeting rules based not on the nature of the claim but on its value are a sensible compromise, says Sue Nash
The debate about where to cap the exemption to cost budgeting has caused much wailing and gnashing of teeth but a potential compromise suggested by Lord Justice Richards and Lord Justice Dyson - that the current exemptions are replaced by an exemption for all claims over £10m across all courts - might just hit the spot for now.
When the majority of the Jackson reforms were implemented in April 2013, cases in the Commercial Court and Admiralty Division were exempt from mandatory costs budgeting. This was in line with the original Jackson report when he accepted that the time was not right for mandatory costs budgeting in the commercial courts. This was followed by an exemption for all commercial cases with a value of over £2m, as a measure to avoid forum shopping.
These exemptions have, in my opinion, never sat with the principle of costs control espoused by the judiciary and adopted by the government. The anomaly whereby high-value clinical negligence and group litigation cases (where the costs can easily and considerably exceed £2m) are subject to mandatory costs budgeting whereas a commercial case with a value of £2.5m is not is inexplicable. To say that costs budgeting in high-value commercial litigation is inimical to the interests of commercial clients has always seemed to me to be missing the intention behind this central plank of the Jackson reforms.
Last year, a sub-committee of the Civil Justice Council was formed to examine the exemption for commercial cases. Needless to say, commercial litigators were united against the imposition of costs management to their cases and their views, quite rightly, were taken into account by the committee which reported to the Civil Justice Council in October last year. Jackson LJ's response was that the time for the exemptions has now passed.
What emerged is a recommendation from Richards LJ, the chair of the Civil Procedure Rule Committee, and Dyson LJ, Master of the Rolls, that the current exemptions be replaced by an all-encompassing exemption for all claims over £10m in any court.
Of course this is not the end of it - the implementation of this recommendation is being considered further and there is no guarantee that the MoJ will accept it. Assuming it does, I believe the exemption will be kept under review and that the limit could be extended further in future as all facets of the legal community become comfortable with the principles of costs budgeting and how they apply to their cases.
For litigators bemoaning their fate, the silver lining in the increasing predictability of potential costs recovery is that it will considerably aid business planning in terms of finance and resourcing. Clients will, I believe, also welcome this. There is also help at hand in the form of costs lawyers, recently described as the quantity surveyors of the legal world. While solicitors must 'own' their budgets, costs lawyers can help with the process of budgeting your case and assisting in the analysis of your opponent's budget. Many can also help monitor your budget spend to avoid exceeding budgeted costs.
Sue Nash is founder of Litigation Costs Services and costs budgeting software business Omnia Legal Services
omniasoftware.co.uk
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