The second anniversary of the introduction of costs budgeting passed with a whimper compared with the heat that it has generated during this short lifespan.
The requirement on claimant solicitors to prepare a costs budget and then verify it with a statement of truth was not universally popular within the claimant community. The need to look at costs prospectively with limited opportunity to revisit the exercise meant claimant budgets sought to include costs for almost every eventuality that was possible. The natural response from defendants was scepticism and concern that a perceived unreasonable approach to costs management reflected a claimant’s intended approach to the claim generally. This has probably increased frictional cost and led to some of the behaviours we discuss below.
Limited training and appetite of the judiciary for costs management has led to the suggestion by some that costs management is causing an injustice which has prevented victims from getting compensation due to them. A diverse range of approach and difference in costs management on cases with similar facts and draft budgets has also caused some disillusion with the ethos behind costs management and the benefit to the parties.
The project management of litigation costs throughout the life of a claim was a worthy ambition, but a number of its features and restrictions have had some regrettable unintended consequences.
In this costs budgeting review, we discuss some of the prevalent issues and what they mean for insurers. We also aim to address some of the difficulties in effective costs management and discuss how matters might be improved moving forwards.
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