New costs management rules coming in next April may lead to ‘ill-informed’ decisions on legal costs by judges, a high-profile judge has warned.
Mrs Justice Gloster, who was the trial judge in Boris Berezovsky’s failed claim against Roman Abramovich this summer, said that while she had ‘won the battle’ to ensure that the Commercial Court would be exempted from costs management, she was concerned about how it will operate elsewhere.
The new regime, recommended by Lord Justice Jackson as part of his civil justice reforms, will see judges taking a much more active role in managing legal costs. In particular, there will be greater emphasis on the costs budget submitted by lawyers at the outset of a case, which must be updated throughout.
The rules have been piloted in the Technology and Construction and Mercantile Courts, and will be extended to multi-track cases in all courts except the Commercial Court from April.
Gloster warned that judges must be ‘realistic’ about legal fees. Recalling her own time at the bar, she said there was a tendency for judges who had made a good living as barristers to become ‘kind of mean about what you guys are earning’ when it comes to the assessment of costs.
She said: ‘I think we have to take a realistic approach to what it costs to bring a case. I am very concerned that there will be ill-informed costs management. But I have only won this battle for the Commercial Court.’
Jeremy Morgan QC, a leading costs barrister at 39 Essex Street, said that judges had been receiving training on managing costs, ‘but how they will cope with it is another matter’.
Morgan noted that while solicitors are already required to perform costs budgeting, in practice it is not widely done.
‘It is done by those firms that work with funders or do a lot of conditional fee agreement work. But you would struggle to find solicitors serving small and medium-sized enterprises doing this… This will make them do it because there will be sanctions if they do not.
‘So there will be additional costs, because solicitors will be doing their job properly.’