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CPRC Snippets: July 2015: work in progress – costs management in the spotlight

Earlier today, I set out some of the key “done and dusted” items considered by the CPRC at its meeting in July, that are being implemented as part of the 81st CPR update. In this blog post (and a third one to follow), I turn to ongoing projects being worked on by the CPRC. This blog focuses on its ongoing review of the costs management regime. It includes details of some important refinements now in the pipeline that will, hopefully, be welcomed by litigators currently grappling with costs budgeting in practice.


At the July meeting, the CPRC considered a report from Coulson J’s sub-committee charged with reviewing the operation of the costs management regime and considering changes.

That report picks up on points made in a paper by the Association of Personal Injury Lawyers (APIL) responding to Jackson LJ’s lecture for Harbour Litigation Funding on 13 May 2015, “Confronting Costs Management”, and Lord Dyson MR’s address the same evening (which the Coulson committee considered). It makes interesting reading, with observations on matters ranging from the required judicial training through to the time for lodging budgets, and concluding with a suggested solution to the “costs budgeting log-jam” that involves utilising resources in the SCCO.

Some key areas up for consideration, and changes now agreed by the CPRC, include the following.

Scope of the regime

A critical problem identified by the sub-committee is that costs management is causing significant delays in the pre-trial process, and “eating up hard-pressed judicial resources”. There seem to be two key causes: first, the fact that costs management is being carried out in “just about every case” and, secondly, nervousness (because of CPR 3.18) that if you don’t include everything in your costs estimate, you won’t get it back on detailed assessment.

Possible solutions are to take some cases out of costs management altogether, or to do costs management differently and/or with less draconian consequences. The sub-committee’s unanimous view is that both measures are required.

The sub-committee concluded that cases involving children, and cases where the claimant’s illness or injuries were terminal, could be taken out of the costs management regime, but was unable to agree an approach for cases involving protected parties. The sub-committee was also unable to agree whether there should be a “value band” (as in the Rolls Building courts) and, if so, whether it would work to have different bands for clinical negligence claims and for other civil claims.

The minutes of the July meeting record that, after discussion, the CPRC concluded that:

  • Cases relating to children should be excluded from the costs management regime (subject to a judicial discretion to apply it where applicable).
  • Cases involving protected parties should stay within the regime.
  • The PD should indicate that it may be appropriate to disapply costs management in cases where a party has a short life expectancy or is particularly elderly.
  • Clinical negligence and personal injury cases (subject to the position on children) should remain within the costs management regime.

The CPRC has also concluded that the current £10 million figure, below which costs management apples (subject to specified exemptions) should not change.

Timing of exchange of budgets

The sub-committee unanimously agreed that more needs to be done to encourage parties to agree their budgets. It considered that a practical means of achieving this might be to require budgets to be exchanged 21 days before the first CMC, with a requirement that the other side should agree the budget (or as many elements as possible) and, failing that, should exchange alternative figures for phases not agreed seven days before the first CMC.

The CPRC has approved this approach.

Hourly rates

Coulson J’s sub-committee referred to “confusion” about whether hourly rates should be approved as part of the costs budgeting process, and noted that it had had major debate over this issue. The majority felt (as Jackson LJ said in his Harbour lecture) that the court should not set rates or hours but just set a figure for each phase.

The CPRC has agreed that PD 3A should make it clear that, when reviewing budgets, the court will look at the totals for each phase, and that it is not the court’s role to fix or approve hourly rates.

Paper applications

There have been proposals (for example, from APIL) for costs management to be dealt with on paper, so as to speed up the process. The sub-committee noted that there has been significant opposition to this from members of the judiciary who feel that advocacy should help to speed up the process.

The CPRC has concluded that there should be individual judicial discretion about whether to deal with costs management on paper, or at a hearing.

Precedent H

The sub-committee unanimously agrees that there is scope for improving Precedent H, and referred to some helpful suggestions from APIL. The CPRC has agreed.

CPR 3.18: everything but the kitchen sink…

The Coulson sub-committee felt that, if CPR 3.18 was “ameliorated”, budgets might be less cautious (avoiding the tendency to include things “just in case”), which might make it easier for budgets to be agreed. However, it recognised that this would be a major change, and that it begged the question of what it might be replaced with.

The CPRC has concluded that CPR 3.18 should not be amended. However, it agrees that it should be made clear that budgets should only refer to contingencies that are “more likely than not to happen”.

Incurred costs

The Coulson sub-committee concluded that summary assessment of incurred costs at the time of the CMC would only go to increase the complexity of costs management, and asked the CPRC for views on the appropriate approach for incurred costs.

The CPRC agreed that no change should be made, and that incurred costs should continue to be dealt with on detailed assessment.

Lower value cases

The sub-committee considers that fixed rates are required for cases under £50,000, but recognises that this could take some time to come into effect. In the meantime, it suggests that the simplified version of Precedent H currently used in cases up to £25,000 could be used in cases up to £50,000.

The CPRC agreed with this approach, and commented that “the aim should be to introduce fixed costs as soon as possible for all such cases”.

Costs capping

The CPRC agrees with the Coulson J sub-committee that the costs capping rules should now be removed.

Coulson J’s sub-committee will now prepare the necessary amendments, hopefully in time for them to be considered at the October CPRC meeting.


That was not the end of the story on costs management at the July meeting. The CPRC also considered a report from the Judicial College, again responding to Jackson LJ’s Harbour lecture. It highlights the following five general themes that have emerged from its current costs management module.

Continued resistance to costs management and proportionate costs

The report refers to “residual skepticism” amongst members of the judiciary regarding the merits of costs management. Rather coyly, it states that it “cannot comment” on the extent to which this may present a problem if there are options allowing judges to “opt out” from costs management. This is clearly a reference to Jackson LJ’s suggestion of a possible opt out where costs management would cause problems in terms of judicial resources and, implicitly at least, highlights this as a potential issue.

Iterative approach to costs management

The Judicial College considers that the normal approach to case and costs management should be iterative (as Jackson LJ has indicated), and that costs management does not involve setting hourly rates, considering time spent or breaking down the costs per phase between disbursements and solicitors’ costs. Some have criticised this as “too dictatorial”. The Judicial College suggests that, if the iterative approach is correct, and involves setting a lump sum per phase of the “to be incurred costs”, then that should be clarified, which would help to achieve consistency of approach.

Use and format of Precedent H

It is suggested that reducing Precedent H to the first page only (taking out the phase breakdown pages that ask for hourly rates and time) would steer the approach to budgets away from the “flawed hourly rate multiplied by time” approach.

Standardisation of pre-case/costs management hearings

The memo notes that the key point is to ensure that the costs management process is kept proportionate. Consistency is important, but in any prescribed form of costs management order, it should be made clear that not all of its provisions have to apply in every case.

Standardisation of costs management orders

The memo notes that some judges budget electronically but others do not, so the orders must reflect that. The key is to make clear what phases have been budgeted, and in what sum.

To view the papers in full on our website, see the resources page and the section headed “Civil Procedure Rule Committee Meetings”. The papers include draft minutes, which provide a useful summary of all of the matters discussed.

Practical Law Dispute Resolution Beverley Barton

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