The importance of the Precedent R budget discussion report is often overlooked.
There is always a balancing act in the costs budgeting process. On the one hand, a party will want to increase their prospects of maximising costs recovery in the event there is a successful costs order in their favour. This encourages budgets to be advanced that are set at a high level. On the other hand, they will want to minimise the level of costs they will have to pay if an adverse costs order is made. This encourages overly robust Precedent R’s to be drafted which challenge every aspect of an opponent’s budget.
There is obviously a potential conflict here. Submitting a Precedent R budget attacking an opponent’s budget as being too high may, in turn, undermine one’s own budget. There may also be conflicts of interest between the client and the solicitor, particularly where the claim is being conducted under a conditional fee agreement. The solicitor may wish to maximise their own potential costs recovery whereas the client may be more concerned with minimising the level of any adverse costs order.
Consideration needs to be given as to how to balance these competing interests. This may, partly, be influenced by the prospects of success in relation to the case. Is the client more likely to be the paying or receiving party at the conclusion of the claim? If paying, the primary aim of the costs budgeting process will be to limit the size of the opponent’s agreed or approved costs budget. If receiving, the primary aim will be to maximise the size of one’s own agreed or approved budget.
The drafting of Precedent R therefore needs to based on a proper understanding of the primary aim which the client wishes to achieve from the budgeting process.
Matters are further complicated by the fact the courts have often been critical of defendants – who are generally more likely to be the eventual paying party – submitting what are viewed to be artificially low costs budgets. This is seen as an attempt to persuade the court that the case can be conducted as significantly less cost than is actually the case.
Where the aim of the costs budgeting process is to minimise the likely level of an opponent’s costs budget, the following issues need to be considered when drafting Precedent R:
- Is the opponent’s budget proportionate to the amount at stake and the other relevant factors?
- Although, as part of the costs management process, the court will not approve costs incurred before the date of any costs management hearing, the court may record its comments on those costs and will take those costs into account when considering the reasonableness and proportionality of all budgeted costs. It is therefore important to consider and comment on the level of costs that have already been incurred when drafting Precedent R.
- Are the opponent’s assumptions, as set out in Precedent R, consistent with their Directions Questionnaire and draft directions? If not, this may be evidence that the costs budget includes elements of costs that unreasonable or unnecessary.
- To the extent to which the assumptions are consistent, are they agreed? If there is disagreement over the number of experts required or the length of the trial, for example, this will obviously have a knock-on impact on the appropriate size of the costs budget. These issues need to be raised in Precedent R. To the extent to which the court accepts the challenges to the opponent’s assumptions at the CMC stage, this should follow through into reductions to the approved costs budget.
GWS Costs have extensive experience drafting Precedent R budget discussion reports.
We can also draft outline submissions to assist the advocate, whether this is the fee earner or counsel, at the CCMC hearing.
Contact us – we are here to help.