Reforming Budgeting, Guideline Rates, Pre-action/Digitisation and Consequences of Extended FRC

The Civil Justice Council have published their costs consultation responses and recommendations:

Although four key areas were considered, costs budgeting was the focus.

Costs Budgeting

The overarching finding was that budgeting is useful and should be retained, but ought to vary between different areas of civil justice.

Despite a wide range of responses, a clear outcome from the consultation was expressed in the following statement:

Since costs budgeting was adopted, there is now evidence of real and sustained progress in the discipline and understanding around costs and this has consequently improved case management and the proportionality of costs

Although a handful of respondents suggested the abolition of budgeting, most recognised that visibility of meaningful costs estimates is useful and should be retained, but  “a fresh, more nuanced approach” to budgeting was recommended.

It has been proposed:

  • Front sheets replace full budgets for Defendants where QOCs apply, but the courts will still have the power to order a full budget at its discretion. It is unclear how this will be of benefit given the fact a full budget is still required in order to produce a front sheet.
  • A ‘costs budgeting light’ scheme is introduced applying to claims valued between £100k and £1m. A separate ‘light touch’ approach to claims of £1m+ in the Business & Property Courts is adopted. These ‘light’ schemes are yet to be defined.
  • A staged process between directions and costs management is introduced where directions are contentious. Some costs information would however still need to be filed before directions. It is not yet clear what this information would consist of.
  • Mesothelioma and Media and Communications claims (and perhaps other specialist proceedings) are to adopt more bespoke practice arrangements for conducting budgeting.
  • Timescales for exchanging budget discussion reports are extended to allow for meaningful negotiation. It is hoped this will reduce the amount of budgeting hearings.
  • The budget variation process (Precedent T) is simplified. Details of a more straightforward process have not been provided.
  • There should be penalties for those who default on aspects of the budget timetable leading to a wasted court resource.
  • Hourly rates and incurred costs in the budgeting process are reviewed further.

Guideline Hourly Rates

The general consensus of respondents took the view the GHRs had a useful role in that they were a starting point for assessment and broadly reflect market rates.

In the short term, recommendations are:

  • A new band for complex, high value, commercial work is introduced, whether in London or elsewhere.
  • Hourly rates are subject to yearly reviews linked to SPPI on the 1 January each year. A retrospective uplift to the 2021 figures is to be applied and a detailed review should take place every 5 years. 
  • Counsel’s fees should be capable of being assessed by reference to GHRs, separately to solicitor GHRs.
  • A clearer test is introduced to allow for departure from GHR. No details of this proposed test are provided.

Costs under pre-action protocols/portals and the digital justice system

The aim of pre action processes, digital or otherwise, to settle claims without the need for litigation  or to narrow the issues where possible, should be encouraged and any reform should further this aim. 

Key proposals are:

  • Changes to pre-action costs; specifically the extent of recovery for new digital pre-action protocols. These should not impact recovery of pre-action costs post-issue.
  • A review of the Solicitors Act 1974 in view of the digitisation of dispute resolution.

Consequences of the extension of Fixed Recoverable Costs

As the extension of FRC regime is already underway, the general implications were not addressed in any depth. The only recommendation of note is:

  • The introduction of a costs cap of £500k into the Shorter Trials Scheme for patent cases.

Next steps…

The CJC will now consider how these recommendations are taken forward.

Look out for further commentary from the Clarion Costs Team.

Anna Lockyer is an Associate in the Costs and Litigation Funding Department at Clarion Solicitors. You can contact the team at

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