Now that we are only two months from Jackson D-Day, solicitors are waking up to the prospect of costs budgeting.
Costs budgeting will require lawyers to think carefully about the likely costs of a trial at an early stage, submit budgets to the court for approval, and let the court know if the estimated costs change as the case progresses – or they will not be able to recover any increase on their original budget from the losing party. The rules will apply throughout the multi-track in the county court and High Court.
Last summer, a judge’s decision in Henry v News Group Newspapers, which related to a costs budgeting pilot established for defamation cases, sent shockwaves through the profession. At first instance, the claimant solicitors were denied an extra £300,000 of costs because they had failed to update their budget, as they were required to do under the pilot. This week, the Court of Appeal overturned that rigid enforcement of the rules, and allowed the firm to recover the extra costs because it considered that there was ‘good reason’ for exceeding the budget.
But at the end of the judgment, Lord Justice Moore-Bick was at pains to point out that this decision related specifically to the defamation pilot. He went out of his way to point out that, when the new costs budgeting regime comes into force across the board in April, a stricter approach can be expected. Moore-Bick LJ also highlighted that the new costs budgeting rules will impose ‘greater responsibility on the court’ for managing costs, and indeed he was critical of the hands-off manner in which the original judge had handled the costs budgets in Henry. But will judges be equipped and ready to meet their new obligations? One might imagine that the judiciary would have received extensive training to support them in the transition to costs budgeting. But, in fact, they will only be given a single day’s training.
The Ministry of Justice tells me that ‘all salaried civil judges’ will receive a ‘special day’s training… [which] includes working on some detailed and difficult costs budgeting exercises’. The senior judiciary will be given a shorter session, while deputy district judges and other fee-paid civil judges will not attend any sessions. That is on the basis that fee-paid judges will not normally be hearing high-value multi-track claims – although practitioners say that, at the moment, it is not unheard of for deputy district judges to be listed for case management conferences in multi-track cases.
Those on the ground have doubts that one day’s training is really enough for judges to get to grips with such a fundamental change. Iain Stark, chair of the Association of Costs Lawyers, worries that in essence, judges will simply be learning as they go along, which does not bode well for consistency of approach. He also points out that the final rules on cost budgeting have not even been published yet. So what is the training being based on?
Another issue is the extent to which judges will be savvy about the kind of costs tactics that may be played out under the new rules. For example, for one financially strong party, there might be an advantage in putting in a very low costs budget, to make the opponents’ figure – where the lawyer might be acting under a no-win, no-fee arrangement – look expensive, and likely to be rejected by an inexperienced judge. That would put a lot of pressure on one of the parties, and we are likely to see an increase in these kinds of costs tactics.
Although there are concerns that costs budgeting will frontload expense, ultimately it is about making the cost of litigation clearer from the outset, and that is an obvious benefit to clients. But it seems a shame that a little more investment could not have been made in giving judges fuller support on how to make this work in practice.
The reform itself might be sound, but – as with so much of the Jackson package – the way it is being implemented could have been done so much better.
Rachel Rothwell is editor of Litigation Funding, sister publication of the Law Society Gazette