Let’s take a look at the 5 main problems with Costs Budgeting:
1. It comes too early in proceedings
By the time it reaches the CMC, the claimant has frontloaded. This kind of defeats the purpose as you are then in a position where the Judge has to try and limit their costs going forward. It may be that the claimant is oh-so-well prepared they just need to tinker with a few things, and they are ready for trial.
Naturally, the Claimant has the issue of having to predict the future, which is not without difficulty. Likewise, the defendant is also expected to predict the future, as well as putting into place a strategy to defend the claim.
Litigation is not an exact science. While some items can be reasonably predicted, such as witness statements or expert reports, other items may prove difficult with disclosure being a major issue.
Assumptions and contingencies are great, but they are impossible to predict accurately.
- If you are against an intransigent opponent, then you have to predict just how out of control their behaviour may become.
- If you come up against an angelic opponent, there is a risk they may suddenly turn into Lucifer the moment your budget has been set.
Overall, take away from Reason 1, it takes place too soon.
2. It deals with hypothetical figures
It is based on names, grades and certain predictions of time. For example:
- What if a person leaves (or drops down dead) and cannot be replaced with an identical grade fee earner?
- What happens if your Barrister or Expert becomes conflicted out for whatever reason?
- What if the opponent drowns you in disclosure, in an underhand manner, but in a display of tactical masterclass?
Yes, you may seek to revise your budget, but really the changes to bring in costs budgeting were not designed to handle myriad variations to budgets. The inability to use a deficit on one stage to balance a surplus on another stage may lead to parties being “cute” with their explanations of work.
3. It takes up a lot of court time
Case management conferences are generally unnecessary. They normally only require 30 minutes, and regularly only ask the Judge to rule on one or two issues. It is not uncommon for parties to outline to a Judge that 90% of directions are agreed, but the parties cannot agree expert evidence (e.g. Claimant wants 4, Defendant wants 2) and then need a ruling.
Cost and Case management conferences last approximately 90 minutes. The Court may have issues with the Wi-Fi and there is a lot of fiddling with laptops to amend MS Excel spreadsheets.
While it is nice to make the Judge wait for you to amend your figures (it gets them back for “please talk at the speed of my pen“), the time spent on this is substantial. A number of courts have backlogs of cases.
The Judge is more likely to prioritise the pile of family cases, where he/she has to decide which parent will be awarded custody of a child. When they have to consider your case between 2 large companies, do not be surprised if they make clear they see it as a waste of their time.
I would estimate that about 1 in 200 cases used to make it to detailed assessment – with Costs Management Conference hearings it has now increased those figures as the costs there are subject to detailed assessment. Costs are taking up too much time. This is not a problem at the dedicated costs court, but these are not hearing the cases; these are taking place all across the country. It is not a good use of court resources.
4. You are dealing with the budgets of 2 sides – only one party will win
Ok, technically there can be multiple parties, but the bulk of claims are C v D.
All that time, and all that money… just to inevitably know that one side will win and the other side’s budget will prove to be completely and utterly irrelevant later on. Is it worth it?
5. Proportionality – looking at what a party may recover and what a party will receive at the end
So you have prepared the budget…
The Court has scrutinised the budget…
You come out with an amended budget…
Your client succeeds at trial…
There are Part 36 consequences…
Proportionality then bites. You may end up with a costs award that is very much out of kilter with the budget. The question then rears it head again: “Was it worth it?”
Lord Jackson, was it worth it?
Over and out.