Costs budgeting – success or failure?
Costs counsel Andrew Hogan gave a very interesting talk at this year’s Association of Costs Lawyers’ Annual Conference on costs budgeting.
The main theme of the talk was the absence of any objective criteria by which to judge whether costs budgeting has achieved its aims since being introduced. Although Andrew Hogan makes the point much more eloquently and in more detail, this is a problem I identified in a blog post when costs budgeting was first being introduced.
This is what I said back in October 2012:
“The aim of costs budgeting, that will be rolled out nationally from April 2013, is to control the level of costs that are incurred. There are a large number of unpredictable factors as to whether this aim will be achieved. However, let those make a couple of assumptions:
- Claimants’ costs are currently reduced, by agreement or assessment, very roughly by one-third (obviously this masks an enormous amount of variation).
- Come April 2013 claimants are able to produce accurate budgets that broadly reflect the level of costs that are currently incurred. (The likelihood of accurate budgets being produced is, of course, a very big assumption.)
If the judiciary hopes to limit costs to no more than the levels currently been incurred they would need to reduce the budgets submitted by claimants by an average of one-third.
In fact, if the aim of costs budgeting is to reduce the amounts allowed below current levels it would be necessary to go further than that one-third. Reducing the budgets submitted by an average of 50% would only produce a relatively minor reduction on current figures.
Are judges really going to routinely reduce budgets by this margin?
The danger is that judges may think they are being “jolly robust” reducing budgets by an average of 25%, and thereby avoiding the need for matters to proceed to detailed assessment, and conclude that costs budgeting has been a great success.
The difficulty is that I have not seen any suggestion that the judiciary will have any accurate yardstick with which to compare the budgets being submitted with what might be deemed a “reasonable” allowance under the current system.
I would certainly not suggest that the very small proportion of cases that proceed to detailed assessment are indicative of “average” figures, let alone “reasonable” figures, but at least that would represent a starting point. I have heard no suggestion that the time or resources needed to analyse the data from detailed assessment hearings is being spent to give judges a guide as to what to allow in the budgeting process.
How is success therefore to be measured? A reduction in the number of cases that proceed to detailed assessment cannot be an adequate guide if the costs allowed under the budgeting process exceed current figures.”