All change: Are You Still Compliant?

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Nick Northrop National Costs Manager

Previously, it was commonplace for a Draftsman to prepare detailed Assumptions annexed to the Points of Dispute to assist the Court and the Advocate when attempting to assess the future work to be undertaken. It would appear now that the Court will adjudicate on future work without the benefit of those assumptions, which could be prejudicial to Claimant’s lawyers.

Some of the important changes are as follows:

  • In cases where the Claimant has a limited or severely impaired life expectancy (five years or less – i.e. cancer claims, mesothelioma, etc.) then the court will ordinary not carry out a Costs Budgeting
  • Part 8 Claim and Claims made on behalf of a child are also excluded from the regime
  • There is a New Precedent H that must be used.
  • In cases whereby the costs do not exceed £25k or the value on the Claim Forms is for a sum less than £50k, then you only need to file the first page of the Precedent H / Costs Budget.
  • Save in exceptional circumstances, the parties are not expected to lodge any documents other than Precedent H and the budget discussion report. So no Assumptions in a separate document where the costs are £25k or less and / or the value of the claim is £50k or less.
  • Assumptions:
    • The assumptions that are reflected in this guidance document are not to be repeated. Include only those assumptions that significantly impact on the level of costs claimed such as the duration of the proceedings, the number of experts and witnesses or the number of interlocutory applications envisaged. Brief details only are required in the box beneath each phase. Additional documents are not encouraged and, where they are disregarded by the court, the cost of preparation may be disallowed, and additional documents should be included only where necessary.
    • Written assumptions are not normally required by the Court in cases where the parties are only required to lodge the first page
  • Budget preparation: the time spent in preparing the budget and associated material must not be claimed in the draft budget under any phase. The permitted figure will be inserted once the final budget figure has been approved by the court.
  • When Costs Budgets are discussed with the opponent, then such discussions must be provided to the Court using Precedent R. Timescale for filing Precedent R is no later than seven days before the first CMC hearing.
  • Amendments are also made to the point at which a costs budget must be filed.
    • Cases with a valuation of less than £50k Costs Budgets must be filed with Directions Questionnaire
    • In all other cases, i.e. case valuation of £50k+, Costs Budgets have to be filed not less than 21 days before the first CMC hearing.
  • Parties must follow the Precedent H Guidance Notes in all respects
  • In cases where a party’s budgeted costs do not exceed £25k or the value of the claim as stated on the claim form is less than £50k, the parties must only use the first page of Precedent H.
  • Budget Discussions and use of Precedent R.

Having looked at these bullet points, are you happy that you are compliant? If not, could it have a negative impact on your costs recovery? In the current financial landscape, can anyone afford to be non-compliant or not get it right from the onset?

Another thing that appears to have slipped through the net was an amendment to CPR Part 47 Practice Direction Section 5.8 (8), which reads:

‘Where a costs management order has been made, the costs are to be assessed on the standard basis and the receiving party’s budget has been agreed by the paying party or approved by the court, the bill must be divided into separate parts so as to distinguish between  the costs claimed for each phase of the last approved or agreed budget, and within each such part the bill must distinguish between the costs shown as incurred in the last agreed or approved budget and the costs shown as estimated.’

This is very important. Those of us who are long enough in the tooth to know exactly what the Court means by ‘must’: there is no escape.

In turn this means that any settled case that has been subject to a Costs Management Hearing and a Costs Management Order that flows from the same, your Costs Draftsman will probably have to prepare a 23-part Bill of Costs (10 parts reflecting the costs incurred pre-14/13 [see Part 47 PD Section 5.8 (7)], 10 parts following 1/4/13, 1 part for preparing the Budget 1% cap or fixed fee of £1000 plus VAT, 1 part for Costs Management Work). The final part includes the costs associated with the drawing the Bill of Costs and the solicitor checking and approving.

Are you daunted by this? Well yes, you should be. This is not an easy process and it can be time consuming.

A word to the Defendant population out there. If you receive a 23-part Bill on the back of a Costs Management Order and the costs lawyer’s fee for preparing the same equates to 1 hour per £1000 of base profit costs, then please do not be shocked; have a go at preparing this type of Bill! If you do, I can assure you that you will no longer object to the Costs Lawyer’s fee.

Should you have any concerns or wish to discuss your internal Costs Management regime then please do not hesitate to contact Reuben Glynn who is happy to answer any questions you or your colleagues may have.

Nick Northrop is the National Costs Manager for PIC