Posts made in February, 2019

New Precedent R costs budget discussion report

By on Feb 28, 2019 | 1 comment

A new Precedent R costs budget discussion report form has been produced that will come into force from 25 April 2019 (last page here). In terms of changes to the current version: The form now includes incurred costs. This may, in part, have been to avoid confusion as to what figures were meant to be inserted into the “Claimed” column.  I suspect the main reason was to emphasise that the court is meant to take into account incurred costs when considering the reasonableness and proportionality of all budgeted costs (as per PD 3E para.7.4). I am somewhat struggling to understand the final three columns on the form. Column K is presumably for the judge to insert the total that is being allowed for future budgeted costs.  Columns L and M appear to be designed, in part, for the judge to insert comments on the costs claimed/allowed.  This certainly makes sense in relation to commenting on incurred costs and is precisely what PD3E para.7.4 envisages.  It can also be very helpful if a judge makes comments on the reasoning behind the estimated costs allowed.  At detailed assessment, comments on the reasoning behind the figures allowed can greatly assist when determining whether there is a good reason for departing upwards or downwards from the budget.  However, columns L and K are split between “Time (hours)” and “Disbursements”.  This appears to run the risk of encouraging judges to focus on the “constituent elements” of the budget rather than, as per PD3E para.7.3, the “total figures for budgeted costs of each phase of the proceedings”. The “summary” box at the bottom of the form refers to “Post CCMC costs summary”. This appears to be predicated on the basis that the costs of the actual CCMC will be included under “Incurred costs”.  This may help solve the problem of where to include the CMC/CCMC work within Precedent H.  At the time the budget is completed this work (or at least the majority) will be estimated but by the time the budgets are actually approved will have been work that has been completed (and thus incurred).  Hopefully, the Guidance Notes to Precedent H will be updated to clarify this.    ...

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Costs of completing Precedent H

By on Feb 4, 2019 | 4 comments

The front page of the Precedent H form for costs budgets has a section at the bottom for completion of the costs of the costs budgeting process: Approved budget - Budget drafting 1% of approved budget or £1,000 - Budget process 2% - I routinely see budgets served where this part of the form has been completed, calculated by reference to 1% or 2% of the total of the budget as drafted (incurred plus estimated costs).  This is plainly incorrect. PD 3E para.7.2 states: “Save in exceptional circumstances- (a)    the recoverable costs of initially completing Precedent H shall not exceed the higher of £1,000 or 1% of the total of the incurred costs (as agreed or allowed on assessment) and the budgeted costs (agreed or approved); and (b)    all other recoverable costs of the budgeting and costs management process shall not exceed 2% of the total of the incurred costs (as agreed or allowed on assessment) and the budgeted (agreed or approved) costs.” The first point to note is that the 1% and 2% figures are caps.  There is no automatic entitlement to these amounts.  To get the full amount of the cap, it must be shown that reasonable work on the relevant task was undertaken that equals or exceeds the cap. Secondly, the fact that the part of the % that relates to incurred costs is calculated by reference to the amount eventually “agreed or allowed on assessment” means that at the time the budget is drafted (and at the time of the costs management hearing) it is completely unknown what figure will eventually be agreed or assessed in respect of incurred costs.  This will only be discovered at the conclusion of the claim once the other costs have actually been agreed/assessed.  It is therefore not possible to calculate the 1% or 2% figure at that stage as the amount used to calculate the figure has not yet crystallised. Thirdly, even in respect of the estimated future costs, at best it is simply wishful thinking to believe that because the estimated future costs are £x that this amount will be approved in full.  Any reduction by the court in respect of estimated costs will lead to a corresponding reduction in the...

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Just Costs gone (again)

By on Feb 1, 2019 | 4 comments

There exists something of a disconnect between how busy costs practitioners tend to tell you they are and what the market would suggest. Certainly, most costs lawyers and costs draftsmen would have you believe they are very busy and business is booming.  Sadly, the visible evidence suggests everything is not quite so rosy. Just Costs has just gone into administration (effectively for the second time).  This is reported to have led to 26 redundancies.  But to put this into context: Back in December 2016, it was explained that Just Costs had “consolidated” from four to two offices and reduced its headcount from 110 to 70. In October 2017, when they emerged from their previous administration, via a CVA, it was announced that this would save 46 jobs. A few weeks ago it was reported they had 33 staff. Legal Futures reported Nick McDonnell, a director at costs firm Kain Knight – and a director of the original Just Costs for two years to April 2017 – as commenting: “The changes to the legal costs industry continue to hit some costs firms very hard.  The issue isn’t so much attracting work but, particularly in the personal injury sector, there is an expectation to offer deferred payment terms. This can mean deferring payment on costs management and budgeting work, for example, for up to 12 months.  This significantly affects a firm’s cash flow and the administration of Just Costs Solicitors is the latest example of this.” Long established costs drafting firm Neat Legal Services went into administration in 2018. Cost Advocates was another casualty, ceasing to exist in 2017. There have been numerous other job losses, redundancies, department closures, office closures and (probably) forced mergers over the last few years. One of the online comments posted below the Law Society Gazette news report on this stated: “What you are basically seeing is the larger, badly run firms falling by the way side. Big is not beautiful any more and Just Costs was always a bad business model anyway. They will not be the last multi-office firm to go under this year. I am in the game and I hear rumours all of the time about other firms. This all started as...

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