Optimising Costs Management: Part 3

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This is the final entry of our three-part series on optimising costs management.

The first blog in this series outlined the 2% budget process provision; how to utilise this to obtain the best outcome possible at a CCMC; and the benefits of monitoring budgets. This can be read or listened to here.

Our second blog detailed potential problems of not utilising the 2% budget process provision. This can be read or listened to here.

The focus of this blog is minimising risk. So what steps can be taken to reduce exposure to risk?

Utilising budget process provision

If you utilise the 2% budget process provision prior to CCMC by investing time in budget discussions then at best you can have your budget agreed in full and at worst, nothing will be agreed but you will know which issues are in contention ahead of the CCMC. Counterarguments can then be prepared. Either way, you are in a much better position than if you fail to engage from the outset. Attending a CCMC with little idea of what the other party will say is not advisable.

The best way to optimise costs management following CCMC is to regularly monitor the costs of a case. This will enable you to take a proactive, rather than reactive, approach to managing your costs and ensure you achieve the most beneficial outcome for your costs recovery.

PTA time recording systems

One of the most efficient ways to monitor costs managed cases is by utilising a Phase, Task and Activity (PTA) time recording system. If your time recording system allows, every entry that is recorded should be allocated to an appropriate phase, task and activity. The benefit of doing this is that a costs managed matter can be monitored quickly and easily to ensure that the budget is not being exceeded, or if it is, providing the significant development criteria is met, then an application to vary the budget can be made promptly. This will also allow you to keep your client regularly updated on how much of the budget has been spent within each phase and make them aware of any potential shortfall well in advance. It also allows you to factor this into the case strategy.

Regular monitoring

As aforementioned, one way a case can be monitored is by way of a PTA time recording. However, not all systems are equipped to process this information. If you find yourself in this position, then we can carry out regular phasing exercises on your behalf using an export of your time ledger. Following this, we will present you with the budget monitoring data and the options going forward. It will be clear how much of the budget you have used in each phase and whether there is likely to be an overspend.

Budget revisions

For a budget revision application to be successful, you must satisfy a two-stage test; that the budget variation is due to a ‘significant development’ and the application is made ‘promptly’ as required by CPR 3.15A (2).

If you have been utilising the 2% budget process provision then you will have early notice of and be able to make an application to vary a costs budget promptly. Master Kaye held in Persimmon Homes Ltd and Anor v Osborne Clarke LLP and Anor [2021]that an application made 10 months after the alleged ‘significant development’ was not prompt enough and the variation was refused.

If a ‘significant development’ arises that has not been provided for in the assumptions to your Precedent H, and ‘was not one which ought to have been reasonably anticipated before it happened’ as per Master McCloud in Thompson v NSL Limited [2021], then an application to vary a budget should be considered. Clear budget assumptions and a good CCMC note can hugely improve the strength of your grounds for revision and the prospects of being successful.

‘Good reason’ to depart from budget

If following settlement, a case which has been costs managed and is to be assessed on the standard basis, costs in any given phase exceed those on the costs management order then the overspend may be allowed if it can be shown there was ‘good reason’ to depart from the budget. It is however advisable to ensure the revision route is explored initially and without proper definition, and because it is a discretionary power which the judge will consider based on case circumstances, using ‘good reason’ as an overspend justification really is a last resort.

This brings our mini blog series to a close. We hope it has been useful and please get in touch if you have any queries at all relating to budget process provision and how we can assist you in making the most of the costs management regime.

You can find out more about our services here or you can contact the Costs and Litigation Funding team at CivilCosts@clarionsolicitors.com.

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