How to Budget for a Court Case

Guest Post

On the 1st of August 2013, High Court judge Master McCloud cut to the root of the issue regarding budgeting for civil litigation with these words.

“Budgeting is something which all solicitors by now ought to know is intended to be integral to the process from the start, and it ought not to be especially onerous to prepare a final budget for a CMC (Case Management Conference) even at relatively short notice if proper planning has been done.

The court must now, as part of dealing with cases justly, ensure that cases are dealt with at proportionate cost and so as to ensure compliance with rules, orders and practice direction. The stricter approach under the Jackson reforms have been central to this judgment.”

Following the new funding rules implemented by Lord Justice Jackson on the 1st of April 2013, civil procedures follow new guidelines and requirements regarding funding.

These new guidelines and procedures essentially state that:

1. Each party involved in civil litigation needs to prepare a costs budget for the case in a standardised form, which includes estimated future litigation costs.

2. Before (or during) the first case management conference, the court will review and approve the costs budgets submitted by both parties.

3. As the case progresses, the court will ensure that both parties comply with the agreed upon costs budgets.

Given that over five months passed between the implementation of the new funding laws and Master McCloud’s statement, it’s far from shocking that Master McCloud is taking such as strict and straightforward approach to their endorsement.

The majority of lawyers have been aware of these laws since 2010, or at least their coming. The lawyers for Andrew Mitchell MP – the former chief whip whose libel case against News Group Newspapers stalled due to a budgeting issue – learned the importance of complying with the laws the hard way.

While leave was granted in this case and the lawyers eventually filed a costs budget for the case, the notable issue makes it clear that the court system is taking a strict and focused approach to budgeting and costs management. This approach is being used already in the Technology and Construction Court and Mercantile Courts.

One of the major objectives of the reforms was to control the large increase in the cost of litigation. Uncertainty regarding costs, particularly the total fees a client in any court case could end up paying, was also an issue. The new rules require that costs are reasonable compared to a claim, making it significantly simpler for potential litigants to prepare a realistic budget for their cases.

As budgets are agreed upon early in the case – in some cases, six weeks before the first case management conference – clients can enter their cases knowing, to a far greater degree than before, what their potential costs may be. Both parties benefit from this and are able to enjoy a greater level of confidence regarding their case.

With these laws now almost nine months old and Master McCloud’s statement over five months old, it’s very unlikely that solicitors should expect a degree of flexibility if the rules are broken. When followed and enforced properly, these laws give both clients a heightened level of confidence and clarity regarding case budgeting.

This article was written by Vannin Capital. Visit their website to learn more about legal funding options in the UK.