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This is a pilot that may well be attractive to litigants who want to know from the outset what their maximum exposure is to potential adverse costs if they lose. Claiming up to £250k in the knowledge that if you lose you face a maximum £80k liability to the other side may make pursuing a less than cast iron claim much more attractive than would be the case if the potential adverse costs liability is only known after proceedings have been issued and the CCMC has taken place. It may also have the benefit of making ATE insurance cheaper and more readily available.
Ironically dispensing with costs budgets is likely to achieve the primary aim of costs budgets; save significant costs.
However if the same costs cap applies, as the article suggests to all qualifying cases worth up to £250,000 it may also mean that a claim for say £10,001 will also be subject to the same caps and that presumably will mean that issues of proportionality may remain live. If that is correct parties will still be left with a lot of uncertainty as to how much of their costs will be recoverable. The uncertainty as to recoverability, if there is no budget beyond the capped figures for each stage of the claim, may be much greater than in cases where there has been a CCMC.
On a related point, thought may also need to be given as to the interaction of capped costs with the Part 36 regime. Will failing to beat a Part 36 offer be punished by removal of the cap as presently happens with budgeted cases when indemnity costs are awarded?
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