Costs Budgeting – an Idiot’s Guide?

Costs Budgeting – an Idiot’s Guide?

Costs budgeting is now a reality for most Multi Track cases, however the process of preparing a budget is still developing, with some useful guidance being gleaned from the pilot already undertaken.

Our Law costs draftsman advises an accurate budget must be provided to the Court in the form of a completed Precedent H form, showing estimates of costs for each phase of the anticipated litigation. This is easier said than done and may prove to be a time consuming exercise, rendering it difficult to keep within the recoverable costs of £1000 or 1% of the budget.

Previous case law in the matters of Henry v NGN and Murray & Stokes v Neil Dowlman Architecture Ltd suggest that getting the budget wrong may have very serious consequences for the receiving party and the role of the Costs Lawyer is therefore of paramount importance.

Guidance from the Justice website shows which work should be included in the various stages of the case (go to http://tynyurl.com/ck7brna) When preparing the budget, however, it is necessary to consider all factors in order to produce a balanced budget. Consider the following three stage process:

1. How is the litigation is likely to proceed? For example, consider the number of witnesses, the level of disclosure, how many experts will be required and in what disciplines, will Counsel need to be involved;
2. Consider all aspects of the case, beyond the basic costs and hours likely to be billed. Attendances, drafting and travel are straight forward, but the more complicated issues of perusals, cancellation and rearrangement of appointments and chasing correspondence can all have a substantial impact on costs incurred;
3. Budget for contingencies, such as mediation, trial of preliminary issues or applications for disclosure against third parties.

Once the three stage process has been completed, review the forms carefully and check that the budget is realistic and proportionate. Only then should it be passed to the client and thereafter the other side. Any problems should be ironed out at this stage, before the other side has the opportunity to react.