This article was produced by Nabarro LLP, which joined CMS on 1 May 2017.
Summary and implications
Love it or hate it, cost management is here to stay. What is more, according to the architect of the regime, "costs management works".
On 13 May 2015, Lord Justice Jackson delivered the third annual Harbour Litigation Funding Lecture titled "Confronting Costs Management".
In particular, he outlined a number of key benefits of costs management:
- Both sides know where they stand financially.
- It encourages early settlement.
- It controls costs from an early stage.
- It focuses attention on costs at the outset of litigation.
- CMCs are now more effective.
- It promotes fairness in that it allows each party to know what is being claimed.
- It protects losing parties from being destroyed by costs.
In summary, Lord Justice Jackson explained that costs management works when done properly. This conclusion was formed following meetings with various practitioners and discussions with key judges, including Mr Justice Edwards-Stuart.
However, he also highlighted a number of problems that have emerged since the Jackson reforms were introduced two years ago, together with a number of recommendations for improving costs management as follows:
|Judicial inconsistency, unduly long hearings and micro-management
|Better judicial training, including compulsory attendance at a costs management course
|The wide variation in the form of costs management orders issued by different courts
|Introduction of a standard form of costs management order, with court discretion to depart from the standard form of order as the circumstances of the case require
|Delays and backlog
|Recent amendments to rule 3.15 and PD3E have resulted in the courts making costs management orders in virtually every case where such an order is available. This is not practical and is causing delays so Lord Justice Jackson recommends that recent amendments to rule 3.15 and PD 3E be repealed and replaced with a set of criteria to guide courts in deciding whether or not to make a costs management order
|No effective mechanism for controlling costs incurred before the first CMC
|Generally, the court should only budget future costs, leaving incurred costs for detailed assessment if not agreed. However, it should be given the power to comment on or summarily assess incurred costs or set a global budget figure for any phases, including both incurred and future costs
|Time for filing and exchanging budgets– some courts require parties to file and exchange costs budgets too soon
|The date for filing budgets should be moved to 14 days before the first CMC to allow time for discussion and agreement of budgets
|Difficulties at detailed assessment because costs budgets and bills of costs are in different formats
|The introduction of a summary of a bill of costs in a format matching Precedent H
|Shortcomings in Precedent H
|This should be addressed by the Coulson Committee (see below) but in particular, the provisions in respect of assumptions and contingencies need attention and there should be further guidance on how to deal with expert costs
In response to Lord Justice Jackson's findings, a sub-committee of the Civil Procedure Rule Committee chaired by Coulson J has been set up to examine the extent of the problems and to make formal recommendations for improvement.
The above summary is only a snapshot of Lord Justice Jackson's discussion and recommendations.
For those of you that missed the lecture, it can be accessed on the Courts and Tribunal website here.