As is often the case these days another Civil Procedure Rule update brings another change to the rules concerning costs. The statutory instrument containing the amendments to the Civil Procedure Rules has now been confirmed and the update contains amendments to both the Practice Directions (PD) in respect of costs management and budgeting and the procedure of detailed assessment.
These changes are to come into force from the 6 April 2016. But not to worry, fortunately MRN’s pro-active approach proves us to be ahead of the game with contemporary costs issues and confirming our reputation in the marketplace as leaders in innovation. It is perhaps this foresight which has seen us nominated as best Costs Company at the 2016 Modern Law Awards.
The changes are as follows,
PD 3E – Costs management
- Where the claimant has a limited/severely impaired life expectation (five years or less) the court will ordinarily disapply cost management.
- Claims made on behalf of a child are also excluded from the regime, where proceedings are commenced after 6 April 2016.
- Where a party’s budgeted costs do not exceed £25,000 or the value of the claim as stated on the claim form is less than £50,000, the parties only need to complete the first page of Precedent H.
- The assumptions in the budget should be brief and set out within the box under each phase. Additional documents are not encouraged.
- The time spent in preparing the budget and associated material must not be claimed in the draft budget under any phase. The permitted figure will be inserted once the final budget figure has been approved by the court. This will apply to budgets of all values.
- Where damages are claimed at under £50,000, the cost budget must be filed with the directions questionnaire. For other claims, it must be filed 21 days before the case management conference (CMC).
MRN has long adopted the approach that costs budgeting should be addressed at an early stage in the litigation process. We have always requested that Clients keep us in the loop after the defences have been served so that there is sufficient time to draft an accurate budget. This change to the rules will formalise the need to address budgets at an early stage in the litigation process.
- The rules introduce a Budget Discussion Report (Precedent R) which will set out the figures agreed for each phase, the figures which are not agreed for each phase and a brief summary of the grounds of dispute. Form Precedent R is to be filed seven days before the first CMC. MRN have been working towards this form for some time to tie together the often long and drawn-out document heavy ADR process often associated with budgeting.
MRN has always taken an active part in dispute resolution relating to costs budgeting, often securing agreements to costs budgets prior to the CMC. The use of the new Precedent R will formalise the process and ensure all parties are focused on agreeing costs budgets to the fullest extent possible prior to the CMC. This is perhaps a welcome change that will assist the process and ensure that all information is readily accessible.
- The rules clarify the position of the role of the court in respect of approving or disapproving hourly rates at costs case management conferences (CCMC). It is not the role of the court to fix or approve hourly rates claimed in budgets at CCMCs. Rather, this information is used for reference only in fixing totals within the phases.
PD 47 – Procedure for assessment of costs and default provisions
- On cases which are commenced on or after the 1 April 2013 and the time claimed within a Bill involves work done pre and post that date, the receiving party is to divide the Bill of Costs in to parts pre and post 1 April 2013.
MRN have been preparing Bills in this format following the introduction of the civil justice reforms in April 2013. The software allows the Bill to be produced into its phases and at various other points where formatting is an issue in order to ensure that the assessment process runs as smoothly as possible.
- Where there has been a case management order and the receiving party’s budget is agreed or approved by the court, the bill of costs must be divided into separate parts to distinguish the costs for each phase of the last agreed or approved budget.
At MRN our software has been developed ahead of the changes and we have been preparing multiphase Bills for some time in an effort to again assist the court and the parties where cases have been costs managed. By doing so the court and the paying party can easily identify the incurred costs and estimated/budgeted costs, each perhaps being the subject of differing levels of scrutiny on assessment.
- Within each part, the Bill must distinguish between costs shown as incurred in the last budget and those which are estimated. Where the court makes a costs management order, the costs of completing the budget and all costs of costs management are to be set out separately within the bill of costs.
MRN has long since considered this a sensible approach to ensure the bills produced actually match the budgets that were cost managed during the lifetime of the case. Further when we conduct budget reviews and updates we ensure that those additional costs are kept separate so that in the event a bill of costs is required in the future this can be easily be produced in a compliant format.
- The recent further delays to the New Bill Pilot Scheme until 30th September 2016 are again perhaps indicative of the difficulties faced in this area. This is only likely to be a short delay in the process to consider if the changes made sufficiently address the issue of matching costs budgets with bill of costs.
MRN have been working hard on unified techniques at both software and case management level with the aim to ensure that the costs process and documentation is manageable and understandable for our Clients and the court alike. During this intervening period, the expertise of our fee earners has helped to develop a collective approach to assist the merging of the Bill/Detailed Assessment procedure with the Budget/Costs Management system to promote coherence in a difficult and complex costs period.
What we can do to help you comply…
During the costs management process MRN ensure that the correct format of costs budget is used, dependent upon the level of damages and the budget value. Our budget template has always separated the costs of preparing and dealing with the costs budget and the Costs management percentage, which then allows for the figures to be automatically adjusted upon approval or agreement. This process was adopted following frequent visits to the Royal Courts of Justice where a similar system had been developed as best practice and National courts were very receptive to the notion as it clarified and simplified those issues much more effectively.
At the end of the case MRN’s advanced bill drafting software enables us to draft multi-phase bills with ease. The multi-phase bills are fully compliant with the new rules. We are also able to produce the Precedent Q document which was made a requirement in cost managed case in October 2015.
Involving MRN at an early stage in the costs budgeting process will ensure that compliance with the rules is made simple. All of the amendments to the rules introduce as standard practice things that MRN have been undertaking for some time.
The way in which MRN operates, with the key issues firmly in mind, continues to set us apart as innovators in the legal costs market place identifying issues and addressing them with solutions ensuring that we and our Clients are always well prepared in an ever changing environment.