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Surviving Costs Management

Posted: in Civil Litigation Team, General, Negotiations and Advocacy, Training by Michelle Barron.

The pilot schemes have given rise to two significant reported cases. In Henry –v- News Group Newspapers LTD [2012] EWHC 90218 (Costs), the Defendant’s conduct was not a good reason to justify an overspend of nearly £300,000 where the Claimant’s solicitors had not given notice that the budget was being exceeded. Professor Dominic Regan reports that an appeal has been fast-tracked. However, it is difficult to see the Court of Appeal retreating on costs management.

In Safetynet Security –v- Coppage & Anor [2012] EWHC B11 (Mercantile), the successful Claimant put in a budget of £25,000 and was awarded £24,000, or a 96% recovery. However, the decision on costs is not a part of the published judgment and it may be the there was a penal element because the Defendants had run a wholly dishonest case.

So who will survive, and even thrive, under the new regime?

My answer is that those who do the basics well will prosper. Time recording, which Costs Draftsmen tend to emphasize ad nauseam, will be fundamental, both in terms of collecting data prior to implementation in order to set budgets, and afterwards, to ensure that accurate budgets are presented at all stages of the litigation.

The penalty for failure may be swingeing but the reward for compliance may be the accelerated recovery of a high proportion of costs, without a time consuming and expensive assessment process.

However the very advantages of budgeting may contain the seeds of its downfall. The temptation must inevitably be for Claimants to inflate their budgets both in the hope of avoiding the penalties

of Henry, as well as taking the benefit of Safteynet in securing an increased award of costs without the forensic scrutiny of a detailed assessment.

The temptation for Defendants must be to dispute the Claimant’s budget at every stage and with the costs of arguing about costs capped by the draft rules, it may be that Claimants run out of money to fight the issue.

How the Courts approach costs management will be central to its success. Dyson MR, in his keynote address to the Law Society, said that costs management was the key to the Jackson reforms

and it that would be essential for the Courts to give clear, consistent guidance on how it would work in practice.

Those with longer memories will recall that estimates were introduced by the CPR to enable the Court to manage costs. That idea foundered on the apathy of both the judiciary and practitioners alike. The fate of costs management remains to be seen.

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