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Costs Budgeting – Are You Prepared?

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April 2013 the court’s duty to manage costs in multi-track cases will be greatly enhanced by the introduction of costs management rules and supporting practice directions.

Costs management and costs budgeting will greatly affect the assessment of costs in most civil actions allocated to the multi-track and the penalties suffered by lawyers and their clients who fail to fully comply with the new rules and practice directions will be considerable.

At Goodwin Malatesta we provide a costs budgeting service that will maximise costs savings and recoveries for your clients.  We do this by uniting our legal costs expertise with the knowledge and experience of the lawyer conducting the case.

The key points of costs budgeting are as follows:

  • Excludes the Admiralty and Commercial Courts as well as cases initially valued in excess of £2,000,000 in the Chancery Division and TCC and Mercantile Courts;
  • Other than litigants-in-person, all parties are expected to exchange costs budgets and attempt to agree an amount for each other’s budgets;
  • The costs budget must be in the form of a Precedent H, unless the court orders otherwise;
  • Agreed or unagreed costs budgets must be filed with the court no later than 7 days before the CMC hearing;
  • Failure to file a costs budget will result in a budget being approved for court fees alone;
  • When costs budgets are not agreed, the court will approve a costs budget during a CMC hearing and make a Costs Management Order setting out the approved budget for each party;
  • A court will not approve a budget for work already undertaken but will make comments regarding those costs;
  • The courts are not compelled to make a Costs Management Order; but exclusions from the costs budgeting process are expected to be very rare;
  • The parties are required to monitor costs and if an approved costs budget is likely to be exceeded the opponent should be informed and an application made to the court to revise the budget;
  • The court may approve, vary or disapprove revisions depending on developments in the case;
  • Any standard basis assessment of costs will not depart from the agreed or approved costs budget for each phase of the case without good reason;
  • The reasonable and proportionate cost of costs budgeting is recoverable subject to a cap.  The fees for initially completing the Precedent H shall not exceed the higher of £1,000.00 or 1% of the approved budget.  All other recoverable costs budgeting work shall not exceed 2% of the approved budget.

Although costs budgets are not intended to be caps, the reality will be somewhat different.  Unless you can convince the court that you have good reason to depart from the budget set for each phase, you will not recover more than that amount!

It will therefore be vitally important to not only prepare and obtain the court’s approval for a realistic and justifiable initial budget, but also to monitor and revise that costs budget when needed.  Failure to do so will most probably result is considerable financial loss.

By bringing together our know-how and experience of estimating; budgeting and assessing legal costs with your expertise in civil litigation and knowledge of the issues in each case, we will maximise your clients’ costs savings and recovery.

We provide a full legal costs service for costs management and budgeting and this includes:

  • Preparation of costs budgets based on an assessment of the cost of each phase of the case;
  • Examination of opponent’s costs budgets for agreement or preparation of points of objection to be served and filed with the court;
  • Advocacy at CMC hearings to maximise your own costs budget as well as minimise your opponents;
  • Regular monitoring of accounting data and reporting on any predicted budget revisions;
  • Preparing and advising on revisions to costs budgets;
  • Maximising savings and costs recovery on detailed assessment.

This is a significant change to the costs management and assessment process and requires careful thought and preparation.  Failure to do so will be costly!

Please feel free to contact us if we can assist with your costs management and costs budgeting requirements.

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