Hello, and welcome to the sixth instalment of my series #askacostslawyer in which I answer questions asked by some of our amazing solicitor clients.
Today, we step into the world of the Precedent H costs budget and look at a question that comes up quite often:
“How would I prepare an accurate and realistic Precedent H costs budget for a costs and case management conference?”
In costs law, creating a realistic and accurate Precedent H costs budget for a Costs and Case Management Conference (CCMC) is a fundamental skill. Hopefully the following article will provide a comprehensive roadmap to crafting an effective costs budget that accurately mirrors the scope and demands of your case.
1. Understanding the Scope of Your Case
It may sound obvious, but the initial step in creating an effective costs budget is to fully understand your case's scope. Consider the case's nature, its complexities, scale, and potential challenges. By assessing factors like potential case value, volume of documents, and the need for expert witnesses, you will be able to create an accurate estimate of costs involved in the case management process.
2. Structuring Costs into Precedent H Phases
Your Precedent H costs budget needs to divide costs into various litigation phases. These phases encompass pre-action, issue/statements of case, disclosure, witness statements, experts' reports, pre-trial review, trial preparation, trial, and ADR/settlement. Understanding the tasks associated with each phase aids in accurate cost estimation. Further, you are required to partition your costs into 'incurred costs' and 'estimated costs' for added clarity.
3. Incurred costs
Make sure the incurred costs element of the budget is accurate. Don’t simply do a tally of time taken and add chunks to each phase. Cost the file as if you are preparing a bill of costs. That way, when a bill is finally required, most of the work will already have been done, and it will also mean that the pre-budget costs in your bill will precisely match the incurred costs in you budget. If you just do a quick tally for the purposes of the budget, the likelihood is that the final costs claim will be different from the budget which will expose you to challenges during the costs assessment process.
4. Time Estimation in Costs Budgeting
Accurate time estimation forms the backbone of the budgeting process for solicitors. Estimating the time required for different tasks related to the case can be complex. A thorough approach that considers your time and that of your support staff will yield more accurate results. This approach must include time spent directly on the case and indirect aspects like correspondence and consideration of prospects.
5. Factoring in Fees and Disbursements
Fees and disbursements related to your case should be included in your budget. These costs payable to third parties can include expert fees, court fees, and travel costs. Remember to include brief fees to counsel within the trial preparation phase, and state costs of interim applications separately, either within the appropriate phases or as contingencies.
6. Building Flexibility and Contingencies into your Precedent H Costs Budget
Considering the unpredictable nature of legal proceedings, your cost budget must incorporate flexibility. You must accommodate unexpected changes and costs for potential additional work, and sometimes these should be included as contingencies rather than in the main phases themselves. That said, the Guidance Note for Precedent H annexed to CPR PD 3D is clear that contingencies should only be included for work which is likely to happen, but which will not fit within any other phase.
7. Regular Review and Revision of the Costs Budget
The creation of a costs budget isn't a one-time task. Regular review and revision are key to maintaining an accurate and up-to-date budget, reflective of the latest developments in the case management process. If there is a “significant development” during the course of the litigation, the parties are now required to file and serve a Precedent T – a varied costs budget. That document should set out details of the significant development and the additional costs incurred in each relevant phase, broken down into constituent costs where possible and practical.
8. Assumptions in Your Precedent H Costs Budget
An effective budget includes detailed assumptions at the end of each phase, justifying the figures included. These assumptions offer an opportunity to explain your case specifics and can be crucial when the budget is reviewed or contested. They should not simply outline what is included, but also explain what is not included with confirmation that, if those excluded items later become necessary, further costs outside of the budgeted costs will be incurred.
9. Compliance and Timely Submission of the Precedent H Costs Budget
Adhering to the costs budgeting rules is critical, as non-compliance can lead to severe consequences. If your costs budget is not filed within the time limits set out at CPR 3.13(1), the budgeted costs will be limited to court fees only and you will not get paid. Ensure you comply with all relevant rules and submit your budget on time. For multi-track cases valued at over £50,000, a costs budget (Form Precedent H) must be filed and exchanged at least 21 days before the first CCMC. If the value of the claim is £50,000 or less, the costs budget must be filed with the directions questionnaire. If you miss those deadlines, you should file an application for relief from sanctions as soon as you realise your mistake.
Conclusion
Preparing an accurate and realistic Precedent H costs budget is a vital skill for effective case management. With a clear understanding of your case, structured cost segmentation, accurate time estimates, consideration of fees and disbursements and detailed assumptions, you can navigate this process with confidence. This comprehensive approach fosters transparency and predictability in the litigation process, benefiting all parties involved.
For a more in-depth discussion about this or any other costs-related topic, why not book a discovery chat with us by visiting our online calendar, and choosing a date and time for your free thirty minute discussion.