Look out for a clampdown on costs

It’s fair to say that most litigators prefer to spend their time on the cut and thrust of litigation rather than compiling detailed calculations of what they expect their final bill to be.

But Lord Justice Jackson’s proposals for greater cost management by judges, likely to come into force next April, could put an end to that more relaxed approach. The new cost management scheme is being piloted in the Technology and Construction Court (TCC), and an early assessment of results, based on the first four months, has just been published. The gist of the findings is that it seems to be more popular with judges than it is with solicitors.

The pilot is designed to test how closely judges are able to manage costs, with parties required to complete and exchange a costs budget in a set format at the start of the case, which must be approved by the judge at regular intervals. The budget must be submitted in ‘Form HB’, which requires a fairly granular level of detail covering how costs have been allocated, and the apportionment of costs between fee-earners. The small number of solicitors who answered a questionnaire on the pilot said they found the form difficult and time-consuming, though they hoped it would get easier with practice.

On a basic level, Form HB seemed to have induced IT-rage in a number of lawyers, as it would often fail to download as a useable spreadsheet. One solicitor said they had found it ‘immensely irritating’ that they had been forced to type the whole form into an Excel document.

There was also concern over the level of detail required, with one lawyer taking six hours to complete the form (though most took two to four hours). Two solicitors who worked for insurance clients said that in practice their clients only ever wanted a total costs figure and never needed this level of detail; one of them added that it was normally possible to get a total incurred and estimated costs figure from claimant lawyers in one five-minute phone call.

So although the scheme’s raison d'être is to keep a lid on costs, there is a clear danger that the level of detail required could in itself push costs up; and the lawyers who responded warned that the form does need to be completed by a senior (and therefore more expensive) lawyer, tempting as it may be to attempt to pass that job on to the trainee.

One solicitor also felt there was a tendency for judges to try to restrict the budget by treating a case as straightforward, when it was not. He said that in handling a professional negligence case being brought against a law firm by a lender, the lender had adopted a ‘scatter gun’ approach and was not willing to narrow the issues in dispute, forcing the claimant to address all the issues. The solicitor felt it was just as important for judges to tackle this sort of difficulty as it was to focus on the costs budget itself.

So what did the judges make of the pilot? The initial feedback suggests they have found the procedure works well, without the need for improvements. One added that it was ‘crucial’ to educate parties and their solicitors that they must complete Form HB and file their costs estimates ‘straightaway’.

However, one judge did warn that the reason the pilot had worked so well in the TCC was that the same judge dealt with the case from start to finish. He expressed ‘severe doubts’ over whether the scheme could work without this judicial continuity. Of course, judges already have considerable weaponry at their disposal if they are intent on waging war on excessive costs. But at present, many lack the will to really get to grips with tackling costs.

Clearly the TCC judges who took part in the pilot have taken a keen interest, and believe the scheme is working. But whether the same approach will be adopted by the wider judiciary is another matter. If they don’t, very little will actually change; though solicitors can still look forward to Form HB.

Rachel Rothwell is editor of Litigation Funding magazine

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