The statement of truth used to verify a costs budget will change from 22 April 2014 to:
“This budget is a fair and accurate statement of incurred and estimated costs which it would be reasonable and proportionate for my client to incur in this litigation.”
This amendment was presumably made to deal with some of the problems in-house lawyers experienced signing the old statement:
“The costs stated to have been incurred do not exceed the costs which my client is liable to pay in respect of such work. The future costs stated in this budget are a proper estimate of the reasonable and proportionate costs which my client will incur in this litigation.”
For in-house lawyers no actual payment is usually made.
However, this still leaves the problem of the distinction between inter partes costs and solicitor/own client costs.
Costs budgets are only concerned with what it would be reasonable for the other side to the litigation to pay if a costs order is made in favour of the party preparing the budget. It has nothing to do with what it is reasonable for the client to pay his own solicitor. Solicitor/own client costs have no place in a costs budget but the statement of truth takes no account of this, hence the wording “which it would be reasonable and proportionate for my client to incur”.
There has been some heated debate about whether solicitor/own client costs should be included or excluded in the budget. There are no doubt be grey areas, but what about, for example, costs relating to setting up funding? It may not be recoverable between the parties but should it be in the budget if it is a cost that will be incurred. (We’ll ignore for the moment those costs draftsman who continue to include such work in bills.)