The audience at the recent Commercial Litigation Association (CLAN) Annual Conference - Commercial litigation strategies and funding options in the Brave New World – was posed some interesting questions by Lady Justice Gloster.

Unable to attend due to Court of Appeal commitments, Lady Justice Gloster sent in a comprehensive list of questions for the solicitor audience to consider at the event. These included: Will the Jackson costs budgeting reforms impact on commercial litigation?  Should costs budgeting be applied in high value commercial litigation? Why can’t solicitors be left to manage their own budgets without (possibly ill-informed and costly?) micro-management by the courts

Reticence to engage

Litigators are not usually backward in coming forward so I was surprised by the widespread reticence in the room to engage with the debate on changes or even provide answers to some of the questions posed.  Costs budgeting applies to all High Court and County Court multi-track cases (ie those claims of £25,000 or more) commenced on or after 1 April 2013, unless the court orders otherwise. As yet, they do not apply to cases in the Commercial or Admiralty Court or to cases in the Chancery Division, TCC or Mercantile Court where the disputed amount exceeds £2m (excluding interest and costs). It is worth noting here that while it is possible to opt into the scheme, lawyers may be inclined not to seek to self-impose the costs restrictions. The system is still in its infancy and the thinking is that this process is not yet one where lawyers and judges have had enough experience to be able to assess the relative merits of being in the scheme or not.

Professional duties

Of course the costs budgeting reforms will have a significant impact on commercial litigation but in my view they are only re-emphasising the professional duties under the SRA Code that solicitors have to their clients and should be engaging in anyway.

Change is challenging, but put simply, costs budgeting is here to stay. As a litigator, I can only see benefits and think my fellow professionals should embrace the new regime. In fact, what’s not to like?

- Costs budgeting enables a more accurate and, in the long-term, a more cost-effective budget to be produced.
- Effective cost budgeting significantly reduces the risk in your case load.
- Like most things, the more you do it the better the outcome and even more importantly, it will offer important insights for future planning which all firms should be harnessing.
- In the long run, it will make the process of going to court quicker and easier.
- It engenders a system of consistency.

A new discipline required

Many larger law firms already have sophisticated cost systems which are used to record costs and some have cost budgeting systems. However, as the costs pilot schemes showed, the production of costs budgets requires a new discipline for all involved in the process – solicitors, counsel, counsel’s clerks and judges. While there’s been much said about the inadequacy of judicial training in costs management, at least provisions are in place. Even so, I don’t see much appetite for this amongst solicitors and is one reason why solicitors should not be left to their own devices as Gloster, LJ asks.

One possible solution to ensuring there is faith in the process is to allow docketing. One single Judge would then be responsible for the case from start to finish, ensuring a continuity of decision making by the same judge. Without docketing then the emphasis and thoughts/theory behind a particular costs budgeting decision may be lost between judges, although current judicial resources limit the likelihood of docketing being introduced.

I do wonder if some of this reticence on the part of solicitors is due to law on proportionate costs not yet being properly defined. It is widely agreed that this will have to be developed on a case-by-case basis, which may mean a degree of satellite litigation while the courts work out the law, but that is no excuse for standing still; Costs budgeting isn’t a ‘nice to have’, it’s a necessity.