Important changes to English litigation costs — part 2 (costs management)

By Nick Cook

Much has been written about the current massive shake-up to the litigation costs regime, including the abolition of the recovery of lawyer’s CFA (no-win, no-fee) success fees from the losing party. However, another facet of the new costs rules will be equally, if not more, important to litigants — the introduction of costs management rules, also known as costs budgeting.

The idea behind costs budgeting is simple; in all ‘multi-track’ claims (generally speaking any claims worth more than £25,000) the parties’ solicitors will each have to provide a fairly detailed costs budget, which sets out the anticipated legal costs for every stage of the litigation process, and the assumptions on which the figures are based. The budget is to be provided to the Court and the other parties at an early stage in the proceedings — shortly after the defendant has served its defence, and before the initial ‘costs management conference’ (CMC), at which the Court sets down the directions to trial. At the CMC, the Court will have the power to approve or modify the parties’ costs budgets, which may or may not have been agreed between the parties.

This approval by the Court is where the new costs management regime bites: a party will not be permitted to depart from its initial Court-approved budget unless it has made a successful application to Court to amend its budget during the litigation, or unless there is ‘good reason’ to do so after the event…

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