A survey carried out by the Association of Costs Lawyers (ACL), has revealed that just 2% of costs specialists have worked with solicitors that stick to their budgets. Of the 117 costs lawyers that were surveyed, 72% said solicitors ‘sometimes’ went over their budgets, with 22% saying this always happened.
It was suggested that this may be due to budgeting taking place too early in proceedings and it would perhaps be better to have the hearing later in the proceedings once the course of litigation is clearer, rather than the first case management conference.
Other areas of improvement suggested by the costs lawyers were that solicitors should be updating their budgets as the case progresses. However, 32% of those surveyed said they had never seen an application to update a budget, while only 18% reported that their number was increasing.
The standout finding from the survey was the concern had for the Court of Appeal ruling in the costs case, Sarpd Oil International Ltd v Addax Energy SA [2016] EWCA Civ 120, reported in edition 132 of BC Disease News. In this judgment it was suggested that the first case and costs management conference was the place to contest the reasonableness and proportionality of costs have already been incurred rather than just those to be incurred in the future. Previously it was thought that these should be left to detailed assessment at the end of proceedings.
Over a third of costs lawyers said the ruling had caused the first conference to be much more contested which, as a result, means that the amount of preparatory work has greatly increased.
Iain Stark, Chairman of the ACL commented on the findings of the survey and stated: ‘We are more than three years into costs budgeting and the reality is that – while it has been of benefit in some instances – it has not delivered in the way that was hoped. This is, at least in part, because many solicitors have still not properly engaged with the process, even though they risk court sanctions as a result’.
The alternative to the costs management regime is the fixed recoverable costs regime proposed by Lord Justice Jackson. We commented on these proposals in edition 164 of BC Disease News here.