Revising costs budgets

Costs judge Master O’Hare writing in the New Law Journal on the subject of costs budgeting:

“In costs estimates considered by the courts in earlier years it was common for a percentage to be added to cover for contingencies. In the new regime there is no need for this sort of contingency to be claimed: each guess you make as to future costs will be an approximation which you will revise as the case proceeds.”

Once a budget is set you can revise away as much as you like but it may not do you any good. PD 3E para.2.6 states:

“Each party shall revise its budget in respect of future costs upwards or downwards, if significant developments [emphasis added] in the litigation warrant such revisions. … The court may approve, vary or disapprove the revisions, having regard to any significant developments [emphasis added] which have occurred since the date when the previous budget was approved or agreed.”

15 thoughts on “Revising costs budgets

  1. There has got to be some common sense on this issue.

    You try working out a budget on a serious cat case whereby the client has a serious head injury – the need for ad hoc conferences is all to real (eg crisis points in the care regime such as when the spouse leaves or client just has a breakdown).

    Given the number of experts involved and the potential for a number of such conferences then it is all to easy for a well thought out budget to be exceeded. Same goes for contact with Deputies and Case managers. You can budget for so much but at crisis moments your budget can be blown

    Therefore common sense has to be applied. However I can just see the argument that “this was fairly predictable and you should have budgeted for it”

    As an aside what is the general consensus of budgets in PI?

    To me, in my humble opinion, it seems a waste of time and generally just adding an extra layer of costs at the beginning of the litigation. We already have judgement saying that just because a budget is approved then you wont necessarily get paid that.

    At the end of the claim a paying party will simply say your budget provided for X, Y and Z and but you only did X under that phase so we will pay 1/3. A Bill will therefore still be required but owing to the need draw a bill in phases and cost differently the Bill will therefore take longer and cost more.

    Therefore yet further costs being incurred

    Equally there are some issues with the concept of the budgets. Claimant’s pretty much have to work on a kitchen sink basis that the matter will proceed to trial and that pretty much most unresolved aspects will remain contested to the bitter end. As such the Budgets are very high

    Conversely some Defendants are, it seems under budgetting. I have seem a nominal budget for a contested clin neg claim for a 3 day trial on which both breach and cauasation are in dispute. It included inter alia counsel £5,000 (3-day trial???)and expert evidence at trial (£1500??). In terms of ADR it was zero. Hello – its mandatory to consider?

    Now to me that is either inept or a deliberate attempt to mislead.

    Converseley some Defendants have done a proper job and when issues such as rates and the lack of any real incurred costs are taken into account then the budgets are fairly even.

    I just get the feeling, particularly given the lack of any judical consistency (london really is not keen), that this is just not a useful exercise.

  2. The more i involve myself in this budgeting process the more questions than answers there are.Whilst i can see an argument for a receiving parties recoverable costs being limited primie facie to the last approved Budget when the case ran to or close to trial because that way the last approved budget should one would hope an accurate reflection of the costs incurred.How on earth the court could in any way refer to the “last” approved budget when a case runs for say another year without a further hearing but still goes short on trial but by a year. Surely one would then still need a “realtime” schedule/Bill of costs which then defeats the exercise of the budget being the limit on ones recovery!

  3. You appear to be mixing up “common sense” with the rules. I agree common sense is a good idea. But the rule is perfectly clear.

  4. To the first poster – that is what your contingencies are for. If you read the rules and got involved in budgeting rather than moaning about them, you would have known this
    And why whinge now? The pilot scheme has been there working for ages. The draft PD outlining the requirements came out July 2012. The rules themselves have been in force for nearly 6 months
    This is just another example of lazy draftsmen and their solicitors thinking they could ignore the changes and now complaining because they don’t understand what to do

    Ps shocking grammar

  5. Anonymous @ 10.24 – well said.

    If you know what you’re doing, there’s no reason at all your budgets can’t be tight.

    Also, to the first poster: “a serious cat case”? Am I alone in wondering what happened to the poor maudlin feline?

  6. Fast giving up hope here – you try and engage in sensible discussion and you basically get hit with a barrage

    There is nothing lazy about not liking what is implemented. Its an opinion.

    I know exactly what has to be done. My point is on large PI claims whereby you can be looking at 5-day plus hearings, 7 or more experts and multiitude of scenarios then it is not that easy to set a budget, especially when there are a number of intervening factors at play that can change the course of the litigation at the drop of a hat

    from my on experience I dont like it, i havent come across too may people who do and my own experience is in line with Pete B that judges dont like either

  7. “Also, to the first poster: “a serious cat case”? Am I alone in wondering what happened to the poor maudlin feline?”

    Thank you for your valid input – proves my point that most people seem more interested having a pop at each other

  8. Cost budgeting- it’s just putting a bunch of figures in some boxes, making sure you file it on time. What’s so hard about that? You guys crack me up.

  9. Cant beat a bit of northern ver simplification…

    The point is the future costs are almost impossible to be accurate.

    I know solicitors have to keep monitoring them but as said above litigation can be very unpredictable and urgent critical work does tend to come out of nowhere on larger cases.

    Ok so in bog standard pi you will be probably be ok on most cases, but even these on occassion have a tendency to spiral out of control.

    So to make sure this doesnt happen every solicitor needs a team of costs lawyers on every case so that, if the solicitor so much as farts or picks his/her nose, it will be recorded by the costs lawyer and consideration will have to be given to what impact it could have on future costs.

    Perhaps they will then call a meeting with counsel and the client, why not throw in the experts an put every one up in a hotel for 2 nights.

    Going a bit off track but do you get my point? This is only going to increase costs and make costs lawyers richer (which i am in favour of) but i still cannot get my head around what the point of budgeting is as it will only increase costs!!!!!

  10. On a very recent Clin Neg catastrophic injury claim (quantum only) at the CMC the Judge approved the budget after making the appropriate amendments on the basis that it was “without prejudice to detailed assessment” and advised the parties that he expected the budget to be re-visited at EVERY subsequent hearing. Whatever the rules say, on the high value claims, the Judiciary are dealing with budgeting as they think best on a case by case basis.

  11. JP – what court please?

    The clin neg cases are some of the far harder ones to budget for. Not helped by some panel firms doing laughable budghets in reply

  12. The assumptions on the front of the precedent H are the key. You plan how you want the case to go and insert your figures. If the case goes off piste, you adjust your assumptions and your figures.

    A colleague attended a hearing recently where there were three parties all with varying time estimates for trial (3, 4 and 5 days). The judge said 5 was reasonable so the others adjusted/refined their figures during the hearing and amended budgets were filed once engrossed.

    Similarly my colleague expected expert evidence to be accepted by reports only whereas one of the parties wanted the experts to attend so additional fees for expert attendance were added. The assumptions were wrong therefore the figures were wrong and the judge allowed both to be altered. I thought this is the way the budgeting process was to work?

    The whole process is no different to giving costs estimates to clients which is required by the SRA. The requirements are to give estimates for the whole case with the information that you have. If you obtain further and/or different information, the estimates may have to change.

    As long as the estimates are adequately described (unlike in the Reynolds v Stone Rowe Brewer case) it is perfectly acceptable to change the estimate. Problems will arise if the fee earner is lazy and uses ballpark figures such as “£50k if the matter goes to trial”.

    I pity the fee earner who makes such a rookie error when, 5 years down the line, there are Part 20 claims littering the litigation, contested expert evidence, leading counsel involvement and a 10 day trial looming only for the client to say “£50k is all I’ve got and all you’re getting”.

    And so it goes with cost budgeting. Judges know that you don’t have a crystal ball but equally they expect you to spend some time thinking about the costs to be incurred and the path of the proceedings. There is a budget allowed for the costs budgeting which amounts to several hours – use them!

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