City lawyers are at loggerheads with the senior judiciary over mandatory costs budgeting for high-value commercial cases.
A sub-committee of the Civil Procedure Rules Committee has consulted on whether the current exemption from automatic costs budgeting for cases in the Commercial Court, and cases worth more than £2m in the Chancery, Mercantile and Technology and Construction Courts, should now be removed. The committee said its preliminary view was the exemptions may be ‘unnecessary and inappropriate’.
Master of the rolls Lord Dyson (pictured) has indicated he is ‘anxious’ for the issue of the exemptions to be reconsidered, while Mr Justice Ramsey has publicly expressed a personal view that said there should be no exemptions.
Earlier this month, the City of London Law Society published a robust response to the consultation, outlining why it believes the exemptions must be kept.
CLLS cited ‘significant practical differences’ between the work in the Commercial Court and the rest of the court system. The Society’s litigation committee argued that there is no evidence that automatic costs budgeting is either needed or wanted in commercial litigation – a position supported by Sir Rupert Jackson – and said it would be expensive to implement.
‘It is often difficult to predict at the outset what shape complex commercial litigation will take,’ the response said. ‘What may start as an apparently straightforward case suitable for an application for a summary judgment can turn into a far more significant battle.’
The response suggested that costs budgets for high-value cases will take up considerable time at the case management conference, and will require parties to submit significant volumes of evidence. This may pose ‘difficult tactical questions’ for the parties and their lawyers, who may not wish to reveal details to the other side at an early stage in the proceedings.
The report added it is also ‘questionable’ whether judges are better able than commercial clients to determine appropriate rates for lawyers, or other costs involved.
The committee, chaired by Clifford Chance partner Simon James and comprising litigators from 18 City firms, also warned that the removal of the exemption could threaten the competitiveness of England and Wales as a jurisdiction for hearing international disputes.
The CPRC sub-committee, chaired by Mr Justice Coulson, finished its consultation last month and held two meetings with interested parties. A decision is expected in the autumn.