The majority of the recommendations made by Jackson LJ in his 2010 'Review of Civil Litigation Costs' have now been implemented. They fall into five key areas, all of which came into effect in April 2013.

  1. Costs
  2. Funding
  3. Case management
  4. Disclosure
  5. Part 36

In this issue of CirculaR, we will focus on the first (and probably the most widely-known) of the Jackson Five Reforms – the management of costs in civil litigation.

In brief:

  • All relevant parties must file and exchange costs budgets (in the prescribed form, Precedent H) setting out estimated costs for each stage in the proceedings.
  • The budget must be signed by a senior legal representative of the party.
  • Any party that fails to file a budget will be treated as having filed a budget comprising only the applicable court fees.
  • The parties consider each other's budgets (in order to ascertain whether they can be agreed).
  • The court may make a "costs management order", in which it will record the extent to which the budgets are agreed between the parties, or approved by the Court.

Initially, this reform was intended to span all High Court proceedings except those in the Admiralty and Commercial Courts (which have their own costs regimes). However, there are also currently carveouts in relation to claims in the Chancery Division, Technology and Construction Court and Mercantile Courts (for claims where the sums in dispute exceed £2 million excluding interest and costs, save where the court orders otherwise).

The word on the street is that eventually all High Court litigants will be required to comply, but as yet there is little take-up by the judiciary, whose members are finding reasons to opt out. Despite this, the Civil Procedure Rules Committee has set up a subcommittee to advise on the desirability of retaining the blanket exceptions to the budgeting requirements in CPR3.12(1), and also to consider whether (or to what extent) Part 8 claims (including judicial review) should be excluded. The aim is to produce a new definitive rule, which would be extremely helpful from the litigation practitioner's point of view.

There has been much discussion in relation to the inefficient and piecemeal way in which the reforms have been implemented. For example, there has been criticism of not only the practicalities of completing Precedent H (the Ministry of Justice's own form not having been configured correctly), but also the fact that there is no logical category in which to record time spent on strategy or general advice, and work on mediation should not apparently be recorded in the "ADR/Settlement discussions" column!

At CR we have designed and implemented bespoke software:

  • to ensure that this process is as efficient as possible, and
  • to send alerts when the recorded costs are approaching budget.

Perhaps the trickiest aspect of this reform is Tactical

  • Is it best to seek to agree your budget with the other parties, to avoid or at least limit judicial intervention? We wonder what the consequences of this are, from a professional liability point of view.
  • Is it better to over-estimate, on the basis that you are then less likely to need to go back to the Court asking for more? Or is underestimation better, thus potentially putting your opponent under pressure to litigate within your parameters?
  • If a successful party concludes the litigation within their approved budget, will that obviate the need for a Detailed Assessment? Many legal commentators believed that to be the case, but in the recent case of Troy Foods Ltd v Manton [2013] EWCA Civ 615, Moore-Bick LJ dispelled that rumour.
  • How do you manage a situation where the litigation takes an unexpected turn of events, and you need to react quickly (but you have not budgeted for the particular eventuality)? In the recent case of Elvanite Full Circle Ltd v Amec Earth & Environmental (UK) Ltd [2013] EWHC 1643 the Court said that a party must make an immediate application to vary the budget if it is exceeded... but how quickly will those applications be heard, and what are you supposed to do in the meantime?

We will be monitoring the position closely, and we will discuss other Jackson reforms in future issues.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.