Nicholas Lee of Paragon Costs Solutions comments:-
Following Bristol Law Society’s informative and well attended Dispute Resolution Conference last month, I thought I would share my views on costs budgeting. Both HHJ Denyer QC and Greg Saunders of Foot Anstey LLP addressed this important new procedure at the recent conference. As the only person in the room who admitted to preparing a costs budget and attending a CMC to defend the same, I happily shared my views which prompted some interesting discussions over coffee.
As if preparing the costs budget is not tough enough, you then have to seek your opponent’s agreement. If your budget cannot be agreed, then you may have to attend a costs management hearing. Unfortunately that is not the end. You will then need to closely monitor your costs budget to ensure that, for each of the phases, your budget remains accurate. If you are likely to exceed your budget then you will either need to seek the agreement of your opposite number or apply to the Court. At the end of the case, you are unlikely to recover any more than your approved or agreed budget.
Mix this new procedure with the tougher approach to compliance with rules and relief from sanctions, and you may find yourself feeling rather nervous. The prospects of being able to amend an inaccurate budget or seeking an adjustment without merit, are slim if not hopeless.
I thought I would touch upon the often over-looked process of monitoring your budget, which in my view is going to be a vital element for surviving this new regime.
There are two very good reasons for monitoring your budget. The first and most obvious is to enable you to recognise where costs are approaching the level of your budget and for you to consider whether you are justified in seeking an adjustment. The second and less obvious is to enable you to collect vital statistics for future costs budgets. Many firms do not have the level of data required to cross reference their budgets against historic cases. Even reviewing old bills of costs will not enable you to prepare a precise analysis of work done by reference to the new phases. The sooner you implement changes to your time recording, the sooner you will begin collating comparative data to assist you with costs budgeting.
Many law firms have now adapted their time recording systems to enable them to record work (pre and post issue) under the new phases. Some have gone a step further and have implemented software which will monitor WIP against the budget. Most time recording systems can be adapted and making these changes should not come at a significant cost.
The alternative option would be to code your own time recording. Most time recording systems allow you to enter a narrative against the time you are recording. If you code your narrative to reflect the phases, then you should be able to report/filter based on your coding.
However you approach it, there is a need to find a method which works for you or else you may find yourself in difficulties in the near future. Costs management is here to stay and we can expect a robust approach with reported case law already making it’s way to our desks (Elvanite Full Circle Ltd v AMEC Earth & Environmental (UK) Ltd EWHC 1643 (TCC)).
We offer training and consultancy on preparing costs budgets and adjusting your time recording systems. Please call 0117 9309595 for further information.
Paragon Costs Solutions