legal costs budgeting

26/06/2017

In April 2013, court reforms introduced the requirement on parties in court litigation to prepare costs budgets for the majority of court cases. This is a detailed process conducted at an early stage. A parties budget must be for the whole claim and must include costs already incurred and budgeted costs to be incurred.

Last week (21 June) the Court of Appeal gave its judgment in the case of Harrison v University Hospital Coventry & Warwickshire NHS Trust which considered the relationship between the costs budgeting requirements in litigation proceedings and the eventual assessment of the costs of the claim by the court. In essence, which of these has primacy.

The Court of Appeal decided;

1. Pre-budget costs already incurred can be reduced in a subsequent assessment,
2. Budgeted costs to be incurred are not open for a reduction unless the court considers that there is a good reason to do so, and
3. The entire costs claim can be considered by the court to ensure that they are proportionate to the underlying claim.

Commenting on the decision, Karen Elder, Partner in Beswicks dispute resolution team, said: “This decision brings welcome clarity and clients will now have a much clearer indication at an early stage of the relative costs figures and potential exposure which are essential ingredients in the commercial considerations of litigating a claim.  It is a shame that the court wasn’t able to provide guidance on what ‘good reasons’ for the reduction of cost to be incurred were, however, it is understandable that this test is very case-specific and generic application would not be helpful.

“The cost budget has to be right and the court hearing which decides it has become even more important. Since 2013, Beswicks litigation team has prepared and monitored numerous litigation costs budgets providing clients with the best possible visibility and certainty on the costs of litigation.”

Beswicks dispute resolution is a Legal 500 top tier practice. To find out more about how we can help you, or for an honest assessment of your case, contact me at Beswicks Legal on 01782 205000 or email karen.elder@beswicks.com