Case and Costs Management: the Unhappy Bedfellows

Articles | Tue 2nd Jun, 2020

Written by Paul Stagg, Barrister¹

The coronavirus lockdown has had many effects. Many people are saying that spending much more time with a significant other than either of them is accustomed to brings into sharp focus just how well they are suited to each other. In the case of barristers practising in civil law, widespread cancellation of trials and substantial interlocutory hearings has led to our court diets consisting largely of a succession of case and costs management conferences. Some of these hearings have firmed up a conclusion that has been forming in my mind for some time: the marriage of case management and costs management is an unhappy one, and they should undergo a conscious uncoupling.

I will admit to always having been a sceptic about the value of formal costs management. We are now over seven years past the implementation of the Jackson reforms, of which costs budgeting formed a substantial constituent part, and as far as I am aware, there has been no systematic research carried out into whether costs budgeting has actually led to the reduction in the costs of litigation which was trumpeted. Although NHS Resolution has proclaimed recent success in reducing costs in clinical negligence claims by not insubstantial amounts, it is unclear how much of that is related to costs budgeting as distinct from other elements of the Jackson reforms, most obviously the removal of recoverability of success fees and ATE premiums in most cases.

Leaving aside the principle of whether costs management is a good thing at all, I question whether it is generally a good idea to attempt to carry out costs budgeting at the same time as giving case management directions.

The main difficulty, in my view, is that that disputes over directions inhibit agreement over costs budgeting. Take a case where the parties are substantially agreed as to directions, save that there is a dispute about whether expert evidence is required in a particular discipline. Whether or not such evidence is allowed has a profound effect on the level of costs which should be properly allowed in the budgeting process. If permission to adduce the evidence is refused, then no allowance should be made for any fees for the expert in that discipline. Removal from the budget of the expert’s fees for their report and participation in joint discussions, plus their attendance at conference and trial, may be relatively straightforward. However, the involvement of the expert brings other costs as well. The party’s solicitor will require additional time for instructing and liaising with the expert and perusing the resulting report and the evidence of any counterpart expert on the other side. The preparation of agendas for joint discussions is now commonplace (overly so, in my view, but that is a topic for another article). Counsel will also frequently be involved in the refinement of expert evidence. Where a budget is drafted on the assumption that expert evidence will be allowed, exclusion of those other costs is not a straightforward process. If the parties do not know what expert evidence is going to be allowed in advance, the refusal of permission to call an expert may lead to costs budgets remaining in an inflated state due to the lawyers’ time remaining included therein.

These problems are amplified in cases involving multiple parties, where the costs budgeting exercise multiplies appropriately in complexity. They are also increased where a split trial is proposed by one or both parties. In personal injury cases where the court determines liability at one trial and quantum, if necessary, at a second hearing, it will not ordinarily give directions for the quantum phase until after the determination of the liability issues. In such a case, where there is a dispute about the expert evidence required to resolve the quantum issues, it will not be determined until liability has been dealt with, and yet the default position is that the court is expected to approve budgets for the whole case. There is provision for budgeting to be similarly split. Paragraph 6(a) of Practice Direction 3E states as follows:

…. In substantial cases, the court may direct that budgets be limited initially to part only of the proceedings and subsequently extended to cover the whole proceedings. ….

The practical difficulty is that before case management takes place, the court is not likely to have identified that the case may be one which is appropriate for a split trial, in order to give such a direction. It could, of course, give such a direction at the CCMC, but the reality is that the parties will at best end up preparing two budgets, one for the determination of liability issues alone and one for the whole case, and at worst the costs management issues will have to be adjourned. Even if the parties are agreed that a split trial is appropriate, there is no guarantee that the court will agree to adopt such a course.

A further issue with dealing with case and costs management together is the consequent waste of resources which frequently occurs at CCMCs. It is commonplace these days, particularly in clinical negligence cases, for there to be two or three lawyers in attendance at CCMCs for each party; counsel or solicitors (or both) to deal with directions, and the costs draftsman to argue about costs budgets. Where case management is straightforward, counsel and solicitors may end up as spare parts during the costs management part of the hearing. Where costs draftsman are not instructed to attend the hearing, they nevertheless have to be involved in briefing the advocate and that also creates an extra layer of expense for the parties. We also need to be honest; most barristers (and I am happy to admit to being among them) cannot claim to have the sort of day-to-day experience of handling a case which gives us a feel for exactly how much work will be required by a solicitor in relation to a particular task in a particular case.

My view is that in common law civil litigation, single CCMCs should be abandoned and the norm should be that courts should list case and costs management at separate hearings. The costs management hearing should be listed at about four weeks after the case management hearing, with the parties to exchange Precedent H within seven days of the latter and Precedent R, if so advised, within a further seven days. The parties will then have a further short time to carry out any further negotiations. The primary advantage of this course is that case management directions will have been given by the court and the parties will have a much clearer view as to exactly what work needs to be done, and by whom. Costs budgets can be drawn up on the basis of the reality as to what needs to be done, with fewer assumptions having to be made as to the amount of work which is necessary. The result should be a narrowing of the issues between the parties in costs budgeting.

There are other advantages of such a course.

(1) The directions aspect of the case is handled by the solicitor or barrister and the costs draftsman does not need to be involved at that stage at all, and the reverse is the case with costs management, thus ensuring the proper deployment of expertise where it is needed.

(2) It is more likely that the court will be able to follow the push given by CPR 3.16(2) to deal with costs management issues at a telephone hearing or on the basis of written submissions “where practicable”.

(3) A greater incentive to narrow the issues could also be given by making it easier for the court to penalise in costs a party which, in its view, has taken an unreasonable approach to costs budgeting. Since CCMCs also involve the giving of directions at which the costs order is almost invariably “costs in the case”, it must be rare for the court to exercise any discipline over exaggerated budgets or overly parsimonious offers in respect of the opponent’s budget.

Directions for the costs management phase do, however, need to be given before case management directions are given, to ensure that costs management is completed and budgets put into place before the parties are required to carry out any substantive steps in the case. If the costs management exercise ends up being dealt with at a later stage in the litigation, it will be less efficacious because more of the costs will already have been incurred; disclosure, for example, may already have been completed, and so the court will have lost the opportunity to control the costs of that process.

I can only see two possible downsides to the change of approach that I am proposing. First, it may cause some modest delay. If costs budgeting is tightly timetabled in the way that I have indicated, then it should be minimal in the context of the one to two years that it currently seems to take for the average multi-track case to come to trial. Secondly, it may be more problematic for the courts in terms of listing. If a CCMC would be listed for ninety minutes, I am unconvinced that significantly greater difficulties would be caused by splitting it into two hearings of half an hour for directions and an hour for costs management. There is no particular reason why the two hearings would need to be dealt with by the same judge, though judicial continuity would be helpful (again, the advantages of the sort of judicial continuity which is strived for the Family Court and ought also to be an aim of the civil courts is a subject for another article).

Overall, I believe firmly that an amicable divorce between case and costs management will lead to more economical and more accurate costs budgeting. The only real disadvantage is that we will have to think of new acronyms, as “CMC” is ambiguous.

¹I am very grateful to Hekim Hannan of Browne Jacobson and to a number of colleagues at 1 Chancery Lane for their comments on a draft of this paper. Error, controversial opinions and pig-ignorance remain the sole fault and province of the author.