Top judge asks: Why don’t litigators know how much a case will cost?

ACL roundtable: Jack Ridgway (left) and Sir Colin Birss

Litigators should know how much any case is going to cost before they even begin the process of budgeting, Sir Colin Birss, the deputy head of civil justice, has argued.

He was speaking at a roundtable convened by the Association of Costs Lawyers (ACL) to mark the 10th anniversary of the introduction of costs management on 1 April 2013.

It was held in the shadow of the Civil Justice Council costs review, chaired by Lord Justice Birss, whose final report is due to be published shortly.

The thing that I still do not understand about civil litigation is: how come nobody really knows how much every case is likely to cost?” Sir Colin said.

“Cases are really not that different from each other. My old clerk could guess pretty well what the case was going to cost. We seem to have bought into the idea that for every single straightforward or even relatively complicated case, one cannot say roughly what it is going to cost. I do not believe it.”

Susan Dunn, founder of third-party funder Harbour Litigation Funding, agreed: “We get 40 new inquiries every month. I can tell you what each one of those is going to cost, and then I look at the budget and I go, ‘That is good. That is about right’, or I go, ‘Wow’.”

District Judge Simon Middleton, a regional costs judge who leads Judicial College training on costs, explained how judges were told to trust their instincts too.

“I say to judges, ‘Read the statements of a case, read the DQs [directions questionnaires] with the assumptions. Do not look at the budget. Think about what figure you are expecting to see in the bottom right-hand corner of page one. Then you know when you look at it whether the reaction is, “Well, that is there or thereabouts”, or, “Oh my goodness”.’”

But ACL chair Jack Ridgway countered that, even where the claimant lawyer has experience of a particular defendant in a certain type of case, they can sometimes take an unexpected new approach.

“You are looking at two boxers and you are asking one boxer to say, ‘You do not know what kind of punch he is going to throw, but I want you to predict it and you have to be right every time’, because that is civil litigation, ultimately. It is two people trying to knock each other out.”

At the same time, practitioners reported that efforts to vary budgets often failed. David Marshall, managing partner of London firm Anthony Gold and chair of the Law Society’s civil justice committee, said: “Even on applications where directions are varied, you are often turned down. It is a very bad experience.”

The roundtable heard that judges have also become very strict on allowing parties to depart from their budgets at the end of the case under CPR rule 3.18, which allows this when there is ‘good reason’ to do so.

Victoria Morrison-Hughes, a costs lawyer at Integral Legal Costs in Manchester, said: “The 3.18 get-out clause has become tighter and tighter. When budgeting was first introduced, you had some confidence in explaining to clients that you might be able to argue good reason. That confidence is diminishing.”

Susan Dunn said many lawyers still struggled with budgeting, criticising their failure to use data from past cases to predict how future cases will go.

“People who say they are good litigators and cannot manage their budgets are not good litigators because there is a disappointing outcome for their client at the end of it. I am glad to hear that the strictness in the 3.18 is as it is.”

Participants agreed that, overall, costs management had benefitted the civil justice system, the ACL reported.

They felt it had cut the number of detailed assessments by making it easier to negotiate at the end of the case – although several people mentioned the lack of data to back up the anecdotal evidence of this – provided more certainty for parties and was, albeit slowly, changing the culture, with fee-earners recording their time better and monitoring their budgets as cases progress.

Among suggestions for reform were allowing underspends on one phase of a budget to be offset against overspends in others, requiring parties to certify at the pre-trial review that they are still in budget, and widening the use of costs capping.

King’s Bench Division Master David Cook said: “[Costs-capping] started off as a good idea, but the circumstances in which you can deploy it as a judicial tool now seem to be virtually non-existent. Sometimes there are times when you say to yourself that, really, what you need to solve this problem is just to put a cost cap on it.”

Speaking after the roundtable, Mr Ridgway said: “Costs management has overall been a force for good in civil litigation over the past decade but it has yet to deliver fully. The change in culture it demands has been slow to happen because some fee-earners still do not take the responsibility for costs that they should.

“Costs lawyers’ expertise has come to the fore since 2013 but ultimately it needs to be a partnership with fee-earners if the system is to work to the benefit of all.”

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