Better the devil you know – solicitors dislike budgeting, but it’s better than fixed costs

Bradbury: marriage of convenience

The costs management process has had a negative impact on litigation but it is still better than the prospect of fixed costs, research among both personal injury (PI) and commercial solicitor has shown.

However, commercial litigators thought that their clients would like greater use of fixed costs.

The poll by Just Costs Solicitors found that 65% of PI solicitors and 60% of commercial litigation solicitors at the UK’s top 200 firms were unhappy with costs management.

Commercial litigators complained about the lack of consistency in the judicial approach towards cost management.

“The lack of guidance as to what proportionate costs means and the fact many judges are still unclear on what basis they are supposed to review the parties’ budgets only heeds to heightens their concerns,” the survey said.

“The introduction of cost management process has only increased the cost of litigation in some litigators’ eyes. The need to comply with deadlines, or having to apply for an extension before the deadline expires, is seen as an accumulation to the cost of litigation, especially when the principal claim remains their main focus of litigation.

“The fact that given the process is coming up to its fourth year and only 17% say it has had a positive impact and 23% remain neutral, still questions if the fundamental procedure is working.”

The views were similar among PI lawyers, with just 10% saying costs management has had a positive impact.

Despite their misgivings, 90% of personal injury solicitors and 78% of commercial litigators preferred costs management to fixed recoverable costs.

The PI survey added: “There is also a possibility that legally complex cases, though low in value, will require an extensive amount of work to obtain a successful conclusion [that is more than] the allocated cost band would allow.

“This could ultimately result in litigators not taking on such complicated, low-value cases, preventing legitimate claims from being pursued.”

But 57% of commercial litigators believe their clients would prefer fixed recoverable costs, although only 33% of PI lawyers thought the same.

“Lawyers are trapped in a marriage of convenience with the costs management process,” said Phil Bradbury, head of costs management at Just Costs. “There’s no love or affection for the process, but it’s better the devil you know and they won’t be filing for divorce any time soon.”

The survey, which was completed by 146 PI solicitors and 155 commercial litigators from the UK’s top 200 firms, also found a difference between the two groups in how they complete their Precedent Hs, with commercial litigators far more likely to deal with them in-house (63%) – usually the fee-earner with conduct of the case does the work; by contrast, some 70% of PI lawyers outsourced the work to costs specialists.

The survey also sought views on the Excel-format Precedent H form. It found that deleted formulas/reformatting and limited contingents are the biggest frustrations with it.

It said: “Very little has been said about the practical difficulties associated with the Precedent H Microsoft Excel document… [These] impact upon the accuracy of the costs budget, and often requires a better-than-average understanding of Microsoft Excel.” These limitation could end up dictating preparation of the Precedent H, it suggested.

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