City lawyers are at loggerheads with the senior judiciary over mandatory costs budgeting for high-value commercial cases.

The City of London Law Society (CLLS), which represents 14,000 City lawyers, has called for the £2m exemption for Jackson costs budgeting rules to be retained.

The exemption was made in advance of Jackson reforms coming into force in April, but master of the rolls Lord Dyson has since indicated he is ‘anxious’ the issue is reconsidered.

A sub-committee of the Civil Procedure Rule committee has finished a consultation on why the new rules should not apply to specialist courts, having suggested the exemption may be ‘unnecessary and inappropriate’.

In a response published this week, 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 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 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 requirement may pose ‘difficult tactical questions’ for the parties and their lawyers, who may not wish to reveal these details to the other side or at the 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, also cited the threat to the UK’s competitiveness if rules are imposed on the commercial court in England and Wales.

It said parties from overseas have a choice between English and foreign courts and that automatic costs budgeting ‘potentially poses a risk to the international business of the commercial court’.

‘Any change would, indeed, potentially undermine the Ministry of Justice’s aim of promoting the UK’s legal services sector,’ added the response.

The CPR 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.