The estimates solicitors are required by their professional rules to give to clients should form the basis of costs budgets, the deputy head of civil justice has argued.
Sir Colin Birss also threw out the idea of abolishing detailed assessment to reduce the “cost of costs”.
Speaking last Friday at the Association of Costs Lawyers’ annual conference in London, Sir Colin said he was “genuinely puzzled” about the distinction between estimates and budgets.
“Law firms are all required by the SRA to produce costs estimates for their clients and keep them up-to-date. And it’s an important job and I know it’s taken seriously, particularly by solicitors… These same people tell me that they find preparing budgets to be very difficult, time-consuming and expensive.
“I’m not belittling some obvious differences between estimates and budgets – one goes to court and their opponent and the other doesn’t. But I still, to be honest with you, find it hard to understand why they’re so different from the point of view of the preparation.
“The reason it matters is because if we could harness the work on estimates and use it for budgeting, it would save an awful lot of effort. But everyone tells me you can’t do it. But so far, to be honest, no one’s ever really managed to explain to me why.”
He acknowledged that there were “marginal points”, such as estimates including costs which were irrecoverable, and budgets containing more contingencies, “but I’m sure you could deal with that”.
In questioning the value of detailed assessment, the Court of Appeal judge – who chairs the current Civil Justice Council costs review – made clear that there were no plans to do away with it but that he was raising the issue for debate and because the cost of costs was one of his “bugbears” in civil litigation.
He said summary assessment was “significantly less costly and time-consuming” and “my question is whether we should not just use that in every case”.
“Assuming there’s no debates about what the actual fees are, then summary assessment will produce a figure which a judge has arrived at by exercising judgment about what’s fair, reasonable proportionate in the circumstances.
“If we assume the extra effort involved in a detailed assessment does reach a closer approximation to the right answer, and I’m prepared to accept that, it also comes to a very substantial marginal increase in the associated second order costs to get there. And the question is whether that close approximation is really worth it.
“And I’m bound to tell you, I’m not sure it is. In saying this, I’m not criticising the people who work in the system as it is – it’s important work and that’s how our system is set up.”
Also in his keynote address, Sir Colin said the Civil Procedure Rule Committee – which he chairs – was that day giving “full scrutiny” to the rules which would govern the extension of fixed recoverable costs from next April.
The final set would go before the committee’s December meeting for approval and, if received, Sir Colin said the aim was to publish them before ministerial approval so as to give the profession as much time as possible to prepare for them.