Will budgeting survive latest costs review?

Things never stay still for long in the world of costs. Since the Jackson reforms will reach their 10th anniversary next April, it must be time to start tearing them up. Could costs management be the first victim? It is widely understood that most litigators viscerally despise costs budgeting; and it is an open secret that most judges quietly feel the same way.

For litigators, being forced to nail their colours to the mast in a process they consider inherently unpredictable, goes firmly against the grain. They detest spending so much time on budgeting, when most of their cases will settle well before they reach the courtroom. Yet they dare not cut corners in drawing up the budget, or leave it to the most junior staff, because any careless mistake or omission could turn out to be career-damagingly expensive.

What about our good friends on the bench? They yearn for the days when they could crack straight on with examining facts and law, without having to wade through the treacle of budgeting phases and tedious arguments over the sums allocated to counsel or experts, for example.

Last November, master of the rolls Sir Geoffrey Vos hinted at his own frustration with budgeting. At the Association of Costs Lawyers’ conference, he recounted that, having sat in on a costs and case management conference with a district judge in Birmingham, he was appalled to see the amount of time squandered on pointless budgeting arguments over small issues. The MR ominously remarked that it was ‘undoubtedly’ time for a review of the process.

And lo, at the end of June, a review by the Civil Justice Council’s costs working group, commissioned by the MR, was indeed announced. This will take a ‘strategic and holistic’ look at costs, focusing on four distinct areas of costs budgeting: guideline hourly rates; digital justice; pre-action protocols; and the consequences of extending fixed recoverable costs (FRCs). The consultation’s introductory text expressly refers to the prospect of budgeting being ‘abolished altogether’ as one possible outcome.

So now that costs budgeting has been hurled into the pit, is an angry mob gathering, baying for blood? Are litigators jostling to rain down the stones and kill off budgeting once and for all? Are the torches being lit, ready to set fire to Precedent H in a frenzied blaze? You might expect that lawyers would be jumping on this opportunity to rid themselves of the cursed budgeting regime. But, so far at least, the response has been rather more muted. At a recent CJC conference on costs reform, for example, delegates called for reform and improvement of the budgeting regime, rather than outright abolition. Lawyers have even acknowledged that there are benefits to budgeting, with clients on both sides given a much clearer idea of the costs they are facing – which can be a useful motivation to settle.

So why are many lawyers proving so coy at hastening the demise of a regime that causes them so much pain? Because it is the lesser of two evils. If budgeting goes, we will not be seeing a return to those halcyon days of unfettered costs. Quite the reverse. There is only one game in town now: fixed recoverable costs. An abolition of budgeting would simply make way for an even greater expansion of FRCs. This would be a perfectly convenient outcome from the point of view of the judges managing cases. But for the litigators on the receiving end of costs, it is the worst-case scenario – and one they are anxious to avoid.

So the senior judiciary may find that the CJC’s budgeting review, which closes on 30 September, does not ultimately yield quite the ammunition needed to justify sending costs budgeting to the firing squad. But if budgeting does remain, then the process will need more than just some tinkering around the edges.

The biggest practical problem with budgeting is also the hardest to address. Too often, judges managing cases are failing to truly grab the budgeting bull by the horns, and take control of it. Until they do that, the benefits of costs budgeting will never outweigh the burden.

Rachel Rothwell is editor of Gazette sister magazine Litigation Funding, the essential guide to finance and costs.

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