Drafting costs budgets

A recent article in the New Law Journal by Richard Harrison questioned one of the common views of costs budgeting:

“It has been said many times that a piece of litigation is like a construction project. However, not many buildings are put up while trying to avoid the malign attentions of a wily demolition expert. The analogy to quantity surveyors in misplaced.”

One does not need to be quite so cynical about the motives of the other side to spot the flaw in the quantity surveyor analogy.

In a construction project, the client decides whether he wants a bungalow or a skyscraper. The architect designs the plans for that building. The quantity surveyor then works out how many bricks, tons of steel, etc will be required to complete the building to the design’s specifications and the estimated costs.

However, in litigation you do not know at the start whether you will end up with a bungalow (ie a matter settling shortly after the defence is filed) or a skyscraper (ie the matter will, several years later, conclude after a 10 day trial). Although the phases part of budgeting is meant to reduce the litigation down to defined stages (rather like building the foundations, putting on the roof, etc) the flaw is that the most parts of the budget do not easily shoehorn into defined stages.

A budget may have been set based on witness statements from 10 witnesses being allowed. However, if the matter then settles after only 4 witnesses have been interviewed, 2 statements fully prepared and 2 statements part prepared, the budget may be of only limited value even if the costs come in “on budget”. What assistance is the budget if the costs claimed, in this situation, are 70% of the amount set in the budget. To what extent should the court on assessment depart from the budget?

Costs lawyer and law costs draftsmen undertaking costs budgeting are not like quantity surveyors. They are more like Mystic Meg – ie making it up as they go along. However, unlike astrologers writing horoscopes, who hope the public will just remember the one time in a hundred when the prediction was uncannily accurate (and forget the numerous other times where it was not remotely accurate), those creating costs budgets may find clients tend to remember rather well those budgets that turn out wrong.

11 thoughts on “Drafting costs budgets

  1. Simon, I think this is the first time I have agreed with your line of thinking. I actually think that this post mirrors my thoughts in my posts the other days.

    Simply too many unknowns and at the end of the case the costs will still be disputed in any event. Therefore a pointless task

    I except its extra work for us, and on the larger budgets its an awful lot of work when you take into account the level of some of the past WIP you have to allocate to phases, but it is not time well spent that will produce savings at the end

  2. Exactly the point i made a few days ago on here i.e. what possible justifiable use or reliance can be made on Detailed Assessment (when trying to limit costs recovery) to the budget for which the last approved version prepared and approved two years earlier and which covered all eventualities on a case that then went shy of Trial by say 9 month!

    None i say

  3. Wrong, wrong, wrong!!

    If you can’t properly predict costs or contingencies, kindly leave the profession

    The courts get it, and have had less training than draftsmen

    Given the ACL latest benign rubbish about how only CLs should draw bills (plainly ignoring the fact Defendant CLs can’t) I propose a new representative body. Not draftsmen. Not ‘cost lawyers’ . Cost Management Experts

    Yes, the Association of Cost Management Experts has a nice ring to it…

  4. Anonymous (10.21) – it is guessing pure and simple, so let’s not dress it up. Please don’t kid yourself that just because you are a Costs Management Expert, you are any better than the rest of us. That said, i have never liked calling myself a Costs Lawyer, so anything that gets rid of that name would be great.

  5. I have just spent 3 hours in a room with a very experienced partner and very experienced Grade A discussing work involved on a serious and disclosure heavy case. In addition we have arrived at a 14 day quantum trial and 10 experts.

    Working out just what may and may occur at a pre CMC stage when you havent seen the othersides evidence / dont know what stance they will take??

    I plan for a reasonable position and what we can say is a reasonable stance to adopt. The potential for that to be way of the mark is however very real as the cases develops

  6. Why did the MOJ not decide on budgeting per stage ? i.e. budget to end of disclosure then back to court for a CMC where budgets to witness statements and experts reports are looked at. Some of my Defendant clients do not even have all of their insured’s papers when they prepare the Defence and the longer the stage that they have to guess, the bigger the guess !

  7. I’m really not surprised, that the “intellects” here are so busy being aloof and indignant , none of them noticed my Wiley comments about the Association of Cost Management Experts..

    I’m surprised it’s even a Runner…

    But still, you guys always did take yourselves too serious

    Happy weekend x

  8. I see that Anonymous has been released back into the community again. Damn social workers!! I hope he is tagged.

    Upon recently returning to Heathrow from a holiday abroad I was pleased to see the UKBA now has a dedicated fast track Entry Clearance channel for Costs Lawyers. About time too!!

  9. Nice to see Annon still doesn’t get it

    Somebody, please, put him out of his ignorance ……

  10. Annon
    Read the posts. Work out what the letters mean.
    Realise you are being wound up!!!

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