Checklist issues to consider when completing costs budget. General comments

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1 Checklist issues to consider when completing costs budget This Checklist provides a range of questions which may arise when completing the costs budget and provides responses to assist you. Please note that text identified in red represents content available to subscribers. Our Precedent H (available to subscribers) is fully interactive and if you need to complete pages 2 onwards will automatically carry out all the calculations required on those pages and put the totals into page 1 for you. If you need to add additional lines for contingencies or fee earners the facility is also available to do this. General comments Question Do I have to complete a costs budget? Response If the matter falls within one of the current costs budgeting exemptions you do not need to complete a costs budget. For information on the exemptions see Costs budgeting--cost budgets and costs management orders - Do I have to produce a costs budget?. Can anyone complete the budget? Is there a specific form I have to use for the budget? Precedent H is a long form, do I need to complete all of it? During the pilot scheme many responses considered that a senior litigator should be involved in producing the budget due to the seriousness of the sanctions of underestimating the budget and the need for experience in being able to estimate the costs that would be incurred at certain stages of the proceedings, especially e-disclosure. Many solicitors instructed costs draftsmen to assist in producing the budget. Note: whilst using senior litigators and costs draftsmen will increase the costs of producing the costs budget, some of which will be recoverable if a CMO is made, they are more likely to provide more accurate assessments of the budgets required. Yes. This is precedent H. It must be in landscape format with an easily legible typeface (CPR PD 3E, para 1). There is no requirement for specific font or font size. If the budgeted costs do not exceed 25,000 there is no obligation to complete more than the first page of Precedent H (CPR PD 3E, para 1). Otherwise you need to complete the entire form. What is not clear is what happens if the budget subsequently exceeds 25,000 eg if there is a requirement for expert evidence after disclosure when there had been an assumption that no expert evidence was required. Whether a party will then need to complete a long form budget has not been addressed. Note: if the costs are around 25,000, such that one parties costs are slightly under whilst another are slightly over, there would seem to be a discrepancy in that only one party can see a breakdown of the other party's costs.

2 My case is complex, I cannot work out what the costs will be for the entire proceedings. What can I do? When dealing with a substantial case, CPR PD 3E, para 1 provides that the court may direct that a budget is initially limited to specific part of the proceedings eg budget up to the end of disclosure. The budget will then be required to be extended to cover the all the stages of the proceedings over time. There is currently no indication as when the court will give such direction. Given the limited time parties have to be able to complete a costs budget and file and serve it is difficult to see how an application could be listed and heard whilst still allowing time for completion to the extent required. Practical point: seek to agree with the other party the extent to which the costs budget should be completed and enter into a consent order as to what phases of the litigation the budget should cover in the first instance I have no idea where to start. How do I determine the costs already incurred? I have no idea where to start. How do I estimate the costs to be incurred? Is there a time limit for completing the budget? Does the budget need to be signed and dated? Do I need to show it to the other parties? See: Checklist--completing costs budget for incurred costs See: Checklist--completing costs budget for estimated costs Yes. It must be served and filed by the date stated in the courts notice following the Directions Questionnaires or if no time period is given not less than seven days before the first CMC. The budget must be dated. In addition it needs to be verified by a statement of truth. This must be given by a senior legal representative of the party (CPR PD 3E, para 1). The wording for the statement of truth is set out in CPR PD 22 and is 'The costs stated to have been incurred do not exceed the costs which my client is liable to pay in respect of such work. The future costs stated in this budget are a proper estimate of the reasonable and proportionate costs which my client will incur in this litigation.' Parties are encouraged to co-operate and seek to agree their budgets prior to the CMC at which they are put before the court. If the court makes a Costs Management Order and the parties have not agreed their respective budgets the court can review the budgets and make any appropriate revisions before recording its approval of those budgets. If the parties have agreed the budgets beforehand the court cannot make any revisions and will simply record the extent of the agreement.

3 Dealing with different parts of precedent H Assumptions Contingencies Pre-action What is the purpose of the assumptions section in Precedent H? What is the purpose of the contingency section in Precedent H? Pre-Action Protocol correspondence Investigating the merits of the claim and advising client Considering ADR, advising in settlement and Part 26 offers All other steps taken and advice given pre-action This is an important part of the budget. It explains to the other side and the court the assumptions on which you have based your estimates. If there is a later departure from the costs budget and approval of the court is required you can draw the court's attention to the assumptions to show that the additional costs to be incurred would have fallen within the assumptions made at the time of the budget. However, such assumptions must be reasonable e.g. in the defamation pilot scheme an approved budget provided for a junior counsel. Later senior counsel was considered necessary. An application to revise the budget was refused by the court and the client could not recover the additional costs of instructing a QC. This part of the budget should be considered in conjunction with contingent costs. This section should be used for anticipated costs which do not fall within the main categories set out in Precedent H. Examples might be the trial of preliminary issues, a mediation, applications to amend, applications for disclosure against third parties, applications re meaning in libel cases or use of a QC instead of junior counsel if issues develop such as necessitate use of a QC. Costs which are not anticipated but which become necessary later are dealt with in paragraph 4.7 of the Practice Direction. Setting out costs as a contingency will assist if later seeking to claim those contingent costs. In response to the Pilot Scheme two judges pointed out how important it is to flag up the contingencies in Precedent H and that flagging up contingencies also shows flexibility. Note: the court if asked to make a costs capping order can take into account contingencies when determining the rate at which to set the cap. If the proceedings are subject to costs budgeting and there are no contingencies within the budget it will be much harder to argue for them to obtain as a high a cap as possible. any work already incurred in relation to another phase of the budget e.g. disclosure or witness evidence

4 Statements of case CMC Disclosure Disclosure--compared to estimate in disclosure report Preparation of claim form issue and service of proceedings preparation of particulars of claim, defence, reply,. taking instructions, instructing counsel and any necessary investigations considering opposing statements of case and advising client part 18 requests (questions and answer) any conferences with counsel primarily relating to statements of case Include Completion of Directions questionnaires arranging a CMC preparation of costs budget for first CMC and reviewing opponents budget correspondence with opponents to agree directions and budgets, where possible preparation for and attendance at CMC finalising the order Obtaining documents from client and advising on disclosure obligation Reviewing documents for disclosure, preparing disclosure report or questionnaire response and list Inspection Reviewing opponent's list and documents, undertaking any appropriate investigations Correspondence between parties about the scope of disclosure and queries arising Consulting counsel, so far as appropriate, in relation to disclosure Does the estimate for disclosure have to be the same as the estimate set out in the disclosure report also due prior to the CMC? amendments to statements of case subsequent CMCs Applications for specific disclosure No. The estimate in the disclosure report has to be determined on the basis of standard disclosure. When dealing with the costs budget you may consider that this not the most appropriate form of disclosure and choose a different one from the disclosure menu. If you do this base your estimate on this disclosure method but make sure that in the assumptions section in Precedent H you specifically state that the disclosure estimate has been provided on the assumption that [X] form of disclosure will be ordered. If the court considers that a different method is more appropriate there is the ability to seek revision of the disclosure estimate you

5 Witness statements Experts reports PTR Trial preparation Trial Identifying witnesses Obtaining statements Preparing witness summaries Consulting counsel, so far as appropriate, about witness statements Reviewing opponent's statements and undertaking any appropriate investigations Applications for witness summaries Identifying and engaging suitable expert(s) reviewing draft and approving report(s) dealing with follow up questions of experts considering opposing experts' reports meeting of experts (preparing agenda etc) Bundle Preparation of updated costs budgets and reviewing opponent's budget Preparing and agreeing chronology, case summary and dramatis personae (if ordered and not already prepared earlier in case) Completing and filing pre-trial checklists Correspondence with opponents to agree directions and costs budgets, if possible Attendance at the PTR Trial bundles Witness summonses, and arranging for witnesses to attend trial Any final factual investigations Supplemental disclosure and statements (if required) Agreeing brief fee Any pre trial conferences and advice from Counsel Pre-trial liaison with witnesses Solicitors' attendance at trial All conferences and other activity outside court hours during the trial Attendance on witnesses during the have provided. A failure to set out the basis on which the disclosure estimate has been made could result in an inability to revise the estimate. arranging for witnesses to attend trial (including trial preparation) obtaining permission to adduce expert evidence. This should be included in the CMC phase or as a separate application assembling and/or copying the bundle as this is not fee earner work assembling and/or copying the bundle as this is not fee earner work Counsel brief fee and any refreshers Preparing for trial Agreeing brief fee

6 Settlement How do I deal with any interim applications that may arise? I cannot possibly foresee what they are going to be. How do I deal with disbursements? trial Counsel's brief fee and any refreshers Dealing with draft judgment and related Applications Settlement negotiations, including Part 36 and other offers and advising the client Drafting settlement agreement or Tomlin order Advice to the client on settlement (excluding advice included in the pre-action phase). CPR PD 3E, para 10 provides that 'if interim applications are made which, reasonably, were not included in a budget, then the costs of such interim applications shall be treated as additional to the approved budgets'. There is an argument that if you knew the application was going to be made at the time you complete the budget then it may be considered by the court to have been unreasonable not to include it within the budget. You may wish to include it as an assumption or as a contingency. eg assuming a specific disclosure application will be required as part of the disclosure stage. The main disbursement is counsel's fees. Any other disbursements will need to be identified and explained within Precedent H eg mediator fees. A disbursement is not defined in the CPR but in the Solicitors' Accounts Rules it is defined as 'any sum spent or to be spent by a solicitor on behalf of the client or trust'. The following are not regarded as disbursements by the Law Society--photocopying charges unless an outside agency, travelling expenses and telephone charges. Mediation which should be included as a contingency