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Research reveals overspend in 89% of cases with costs budgets

Bradbury: "it's going to be a rocky road"

Costs budgeting: “It’s going to be a rocky road”

Lawyers are overspending in 89% of High Court and county court cases where costs management orders are made, research has indicated.

Just Costs Solicitors studied 120 of its cases where a breakdown of costs claimed (Precedent Q) was included and where the bill of costs was served after 1 October 2015.

This found that the total amount overspent across all the cases was £456,500, with the largest single amount being over £31,000. “Major overspends” were most prominent at the case management conference and ADR phases.

The type of case included personal injury, clinical negligence and commercial, and the size of budgets ranged from just under £30,000 to over £300,000.

Phil Bradbury, head of costs management at Just Costs, said: “This research shows there is a clear failure to comply with the CPR and keep within the ordered amount on a phase-by-phase basis.

“The costs management process is critical from both a financial and regulatory perspective but our research demonstrates the lack of understanding of the rules by fee-earners.

“It is still a common misconception that if you are within your total agreed budget figure, but out on a phase-by-phase basis, then you are fine to proceed with your case. The rules clearly state this is not correct and fee-earners are now being punished for not taking their approved Precedent H into consideration by individual phase.”

He said one way to stop the figures increasing was to invest in technology and case management systems which, although they could be costly, allowed firms to record time on a phase-by-phase basis and flag up any potential tipping points.

“However, it is obvious to us that firms are not carrying out phase auditing, something we strongly advise on a daily basis that our clients should be doing. Where a costs management order has been made, there is simply no hiding place in relation to agreed costs.”

He added: “It’s been an eye opener both for us and the client. It’s going to be a rocky road.”