Law students have little or no exposure to the issue of who ends up paying lawyers, but remuneration is just important to a firm as it is to a Client. Most Legal Practice Course providers will only cover the area of Costs briefly, some text books providing as little as a page on the process of commencing Detailed Assessment or preparing a Precedent H Costs Budget. As a recent LPC Graduate and as a Costs Draftsman, I have written about some of the Costs issues trainees will have to face when coming to litigation for the first time.
In any Civil Litigation matter the most basic rule is that the Costs of the case are paid by the losing party. In response to concerns that the costs of such litigation were becoming unmanageable and disproportionate to the sums being recovered by the parties, Sir Rupert Jackson’s reforms were intended to reduce these costs in a variety of ways. One such way was to instigate the need to prepare Costs Budgets and to provide the Court with a variety of powers to enforce these agreed figures on the parties.
Since April 2013 Costs Budgeting has been one of the key requirements of any Civil Litigation matter worth between £25,000 and £10 million in damages, as well as other complex matters allocated to the Multi-Track. The Costs Budgeting process usually arises around the initial Directions stage when the Court will require the parties to provide a detailed breakdown of the costs they have incurred, and importantly, the costs they expect to incur. The Court can instruct a party to prepare a Budget whenever it wants if it is deemed necessary. These Budgets will then be negotiated between the parties or approved by a Judge. The final outcome is such that the Budget will impact upon whether the winning party can recover all of the costs incurred throughout the length of the claim, or be solely limited to what is in their Budget.
There are a number of particular ways in which a trainee needs to be made aware of this, and how a Costs Draftsman can help curb potential issues.
First, knowing when a Budget is needed, whilst seeming simple, can wrong-foot inexperienced fee earners and have dire consequences should they get it wrong. The default position of the Court when a Costs Budget is late or not served is to assume a Budget was filed limited only to Court fees. The high profile Andrew Mitchell case was a prime example of this (although later case law pulled back slightly from this draconian position). Trainees need to read Court Directions carefully for references to Budgets and utilise their firms’ case management systems to ensure they will be ready and able to serve a Budget at the right time. Employing a Costs Draftsman early on in the proceedings for advice and guidance can assist in avoiding uncertainty over whether a Budget is needed.
Beyond this, trainees need to know that what they are filing complies with the requirements of the Civil Procedure Rules. For Budgets totaling less than £25,000, a simple one page front sheet will suffice, whilst anything above this figure needs a full document detailing hourly rates utilised and fees anticipated.
Second, a Trainee may be involved in the initial preparation of Budget or in instructing a Costs Draftsman to prepare the document. As a result, detailed knowledge of the case is going to be necessary. If you are not aware of a particular aspect of your case, such as an expert to be instructed or a certain witness to be interviewed, your budget may be significantly insufficient. Fail to address this and you could be losing money. A Costs Draftsman can help to draw out the information that is really needed and to assess the Costs needed.
Costs Budgeting should be treated as encouragement for Solicitors to get to grips with what is really going on in a litigated matter and decide what will actually be needed to bring the matter to a successful conclusion. Ideally, the Costs Budget should simply match the case-plan in place, whilst being flexible enough to deal with anticipated risks or challenges. A quality Costs Draftsman will make good use of the allowed Contingent Costs sections of your Budget to deal with those common uncertainties in litigation matters.
Further to the involvement in his/her own client’s Costs Budgeting process, a Trainee Solicitor may also need to be aware of what to consider when examining or challenging an opponent’s Costs. They need to consider the Level of the opponent’s fee earner, their use of Counsel and the use of Experts where unanticipated, for example
There are a number of issues to consider which will need to be addressed when negotiating figures with the opponent, either at the Costs Case Management Conference or beforehand usually but not necessarily exclusively through correspondence. It may be up to the trainee to give the initial verdict on the parties’ Budgets to his/her supervisor, or to draft documentation disputing the opponent’s costs.
Finally, once the budget is approved it is an important step in the litigation process. The Court expects Solicitors to pay attention to the level of costs they are incurring. Trainees should be keen to review any budget on a regular basis, consider the need to increase the figures when the budget turns out too low and be ready to return to the Costs Drafter should anything need addressing. Costs Drafters can prepare amendments to the Budget if instructed and also attend Application hearings and provide Advocacy.
Costs Budgets and their influence are still being explored within Civil Litigation in England and Wales, but what is clear is that those who deal with Litigation must get their heads around Budgets and Costs at an early stage. Progressive Costs firms seek not only to provide a full-service, but to enter into a commercial partnership with any firm we work with, to alleviate any gaps in knowledge and take the burden of Costs away from the firm.
Jamie Walsh is a Costs Draftsman at Alternative Costs. If you would like to get in touch to discuss how Alternative Costs can help your firm ask to speak to a member of the team on – 0844 822 0909 or visit the website – alternativecosts.com – for more details.