Judges spent 14 minutes approving budgets in costs management pilot

Getting the figures right: solicitors worried about the costs of costs management

Judges in the costs management pilot took an average of 14 minutes at the first case management conference to approve the parties’ budgets, it has emerged.

The final report on the pilot, run in the Mercantile and Technology and Construction Courts from October 2011 to 31 March 2013, said its findings suggest “that it is likely that the overall effect of costs management will be to bring down the total costs of the litigation”.

However, the short length of time spent considering budgets – given that they are likely to form the basis of the costs order in lieu of a detailed assessment – will be of concern to practitioners.

The large majority of judges were reporting on case management hearings and said that on average they spent around an hour preparing, of which 16 minutes was spent studying the budget – across all the judges the time spent on the budget varied from none to an hour.

The average hearing lasted 45 minutes, of which 14 was spent on the budget. Across all the reported cases, the variation was from no time to 75 minutes.

Over the course of the pilot 144 questionnaires were completed by judges and just 39 by solicitors and showed that the former were more enthusiastic about costs management than the latter.

The report said: “[Judges] generally seem to believe that the pilot encouraged proportionality of costs to the value of the claim, that the current scheme worked well and did not require much improvement. Other advantages included that it aided case management as well as controlling future costs.

“Feedback received from judges towards the end of the pilot was more critical in that the extra burden on case managing judges had become clearer, and that the costs management procedure adds significantly to time taken in case management. However, we would note that the majority of responses from judges came from a limited number of individuals and courts and accordingly any findings should be treated with caution.”

Solicitors’ views were more mixed, with particular concerns over the costs of the costs management process due to the time taken to comply with it. “This is despite the fact that the majority of respondents took between two and four hours to complete Form HB [the costs budgeting form in the pilot], and only seven out of 39 solicitors spent over five hours on the budget form.

“However, feedback from costs draftsmen and other sources has indicated that, in London at least, the process can take considerably longer, although this is not borne out by the questionnaires received under the pilot.”

Another concern was the difficulty of predicting costs accurately at the early stages of litigation.

“Having said this, solicitors interviewed seem to acknowledge that completing the budget form would become easier once familiarity with it increased… Most solicitors agreed that the pilot did assist with early attention to costs, that this allowed their clients better to understand their potential liabilities… and could also assist with settlement.”

The researchers suggested that some clients “might find to their surprise that their cost recovery is limited by a costs management order. However, many will no doubt welcome the importance now placed on the cost recovery implications and the increased information which provides for a better assessment of the settlement options during the proceedings, and generally more transparency about costs”.

The report was produced by the Centre for Construction Law at King’s College, London, led by visiting senior lecturer Nicholas Gould, a partner at City law firm Fenwick Elliott. The full report can be found here.