Top 6 things you need to know: changes to costs management

Top 6 things you need to know: changes to costs management

Stack of pound coins on financial figures balance sheet

Wednesday 6 April saw the introduction of changes to the costs management regime.  The new rules are subject to transitional arrangements such that the changes will only apply to proceedings commenced on or after Wednesday 6 April.  It may therefore be a number of months before most practitioners have to consider the new rules in practice but it is always advisable to be prepared.  So what are the main changes to bear in mind?

1. How have the rules changed?

There is a mixture of new and amended provisions. In summary:

  • Proceedings involving children are now excluded from costs budgeting
  • Costs management will now ordinarily be disapplied if the claimant has a limited or severely limited life expectancy
  • There is a new requirement for budget discussion reports
  • Clarification on timing of filing a costs budget has been provided, which depends on the value of the claim
  • There is now a requirement to follow the Precedent H guidance
  • The Short form Precedent H can now be used if the claim is  valued up to  £50,000, previously it was only for claims where the budgeted costs were £25,000 or less
  • The hourly rates set out in the costs budget are for reference and backup—the courts will not approve them as part of the process of approving the costs budget

2. Filing Precedent H

CPR 3.13 now sets out that the costs budget should be filed no later than 21 days before the first case management conference unless the stated value of the claim on the claim form is less than £50,000 in which case it must be filed with the directions questionnaire.  This is much earlier than previously.

3. Changes to Precedent H

Various changes have been made to the costs budget, these include:

  • Costs allowed by the judge—the judge will now fill in the front page to give the amount of the approved budget and the amounts allowed for budget drafting and the budget process
  • Assumptions—these have moved from the front page and are found on subsequent pages underneath the phase to which they relate.  For cases using a short form Precedent H no assumptions are required at.  For all other cases assumptions are required for all phases except pre-action.
  • Experts—each phase now makes provision to add in experts costs incurred or estimate for that phase.  This is in addition to the expert phase itself and so should be used for work outside of that required for producing the expert report eg assistance in drafting statements of case in a technical case.

4. Guidance to Precedent H

This has been updated and you can access a document showing the changes made here.  Attention is drawn to:

  • the new guidance dealing with assumptions at para 8 which states that only those assumptions which significantly impact on the level of costs claimed should be included
  • extension of the guidance in para 6 dealing with contingent costs which should only include ‘costs which are more likely that not to be incurred’
  • guidance on what to include for specific phases has been updated eg trial preparation should now include pre-trial conferences and advice from counsel and settlement should also include any conference and advice from counsel in relation to settlement. In addition, the inclusion of settlement negotiations, Part 36 and other offers and advising the client has now been extended to include settlement meetings between the parties

5. Budget discussion report

A new costs precedent, known as Precedent R, has been introduced.  Each party is required to file a BD report no later than 7 days before the first case management conference.  The form is filled in with the other side’s total figures for each phase and then an offered amount for each phase which would result in agreement  are set out along with a very brief explanation of why, if applicable,  there is no agreement between the parties.  Issues may arise in cases concerning multiple parties which could lead to a party having to provide a Precedent R for each of the other parties involved.

6. How can I access the old rules?

For ease of reference,  we provide hyperlinked PDFs of the old rules CPR 3 and CPR PD 3E.

This article was first published on  Lexis®PSL Dispute Resolution on 4 April 2014. Click  here for a free trial.

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About the author:

Janna is a dispute resolution lawyer. She deals primarily with cross border issues and is active in the work being undertaken in relation to the implications of Brexit for Dispute Resolutions lawyers. Janna also heads up a LexisNexis costs team bringing together expertise from across the company to deal with the costs issues facing the profession.