Don't set the wrong precedent!

1. Plan ahead

You know your client is involved in litigation and you know that given the claim value the matter is likely to going to be allocated to the Multi-Track and that therefore cost budgeting is going to be required. There’s no reason not to plan ahead!

This means that:

• If the stated value on the claim form is less than £50,000, filing (and exchanging) the first page of the Precedent H with your directions questionnaire (CPR r.3.13(1)(a) and PD 3D para4(b)); or
• If the stated value exceeds £50,000 then a Precedent H must be filed (and exchanged) not later than 21 days before the first case management conference (r.3.13(1)(b) and PD 3D 4(a)) (N.B. this may just need to be the front sheet if the estimated costs are somehow less than £25,000 as per PD 3D para 4(b)).

Don’t wait for the order directing directions questionnaires and listing the CMC. Any delays in your local court office can mean you end up having very little time between when you receive this order and 21 days before the first CMC. Once you’ve filed your Particulars of Claim/Defence start estimating the costs for each phase and obtaining any necessary counsel’s quotes.

2. File the budget in time

Make sure you know when the Precedent H has to be filed (and exchanged) and diarise the date.

Remember not later than 21 days means 21 clear days (r.2.8(3)) i.e. you must be able to count that many days between the date for filing/exchange and the date of the hearing. For example:

• If the CMC is listed for Friday 22 September 2023 then your budget needs to be filed by no later than Thursday 31 August 2023 not by Friday 01 September 2023;
• If the first CMC is going to be on Monday 30 October 2023 then your budget needs to be filed by no later than Friday 06 October 2023 not by Monday 09 October 2023 (as you can’t file and exchange on exactly 21 clear days as that’s Sunday 08 October).

3. But also, leave it to the last minute!

Have your budget finalised well in advance of the court deadlines but try to file and exchange it on the last day for compliance as this is less likely to tip off a disorganised opponent.

Although only ‘exchange’ is required rather than service, make sure you’re aware of whether your opposite number accepts service by email or whether it's something you need to potentially post a couple of days earlier.

4. Do the maths

Double check the maths before signing off on the budget. Neither the judge nor your counsel will thank you for having had to spend time trying to work out why  simple or minor changes to the budget don’t add up and where they’ve gone wrong only to realise that the Precedent H didn’t add up in the first place!

Remember that Excel is your friend!

5. Counsel's brief fee is trial prep

Remember that counsel’s brief fee goes under the ‘Trial Prep’ phase rather than ‘Trial’ which should instead be reserved for refreshers (PD 3D para 10 – table). This is a really common mistake I see and it can impact on the budgeted costs if counsel’s fees aren’t clear.

Trial prep will also include agreeing the brief fee and any pre-trial conferences with counsel.

If in doubt check the latest Precedent H Guidance Notes/PD 3D.

6. The assumptions box is your friend

Another big ‘mistake’ I see is people underutilising (or more likely not using at all) the assumptions boxes on the full Precedent H. Not using the assumptions box is frequently a missed opportunity.

The assumptions box is the place to give a brief (one line or so) explanation behind your costs for that phase. It can help to justify why costs for a phase are particularly high by explaining what it includes – maybe you’ve got 10 witness statements to prepare or disclosure is going to involve going through numerous historic documents. Do however bear in mind the requirements of PD 3D para 10.

7. Contingency phases

Only include something in the contingency phases if it is more likely than not to be incurred and it does not fall within the other phases of the Precedent H.

Costs which are not anticipated but become necessary later on will need to be dealt with by way of revised budgets under r.3.15A.

Point 6 also applies here – if you’re going to include contingency fees make sure you explain what they relate to in the relevant assumptions box.

8. Make sure your costs are proportionate

The one question judges always want to know at a CCMC (where the answer isn’t obvious) is “What is the value of the claim?”.

The one thing front and centre of the judge’s mind when carrying out any budgeting analysis is whether the budgeted costs are proportionate to the amount in dispute and the complexity of the issues. Where there is both a claim and counterclaim ask "What is the difference in value between each party’s position and does the counterclaim broaden the factual and legal issues that need to be considered?"

In TOLATA matters, for example, consider what is the approximate difference in monetary value between the parties’ alleged beneficial interests in the disputed properties coupled with the complexity of the declarations or orders for sale the court is being asked to make.

If you’ve budgeted costs in excess of the amount in dispute you better have a good reason for it!

9. Be sensible when challenging costs

When it comes to preparing the Precedent R look at what you’re spending compared with the opposing side and take a measured approach – it’s not always a competition to have the higher approved budgets for each phase.

Are you offering them nothing for attendance at trial but then claiming 8 hours a day yourself? Are you claiming £20,000 for counsel over 3 days but then challenging their £10,000? Have you budgeted £5,000 for witness statements but saying their £5,500 is disproportionate for the same number of witnesses and only offering them £2,500?

10. Agree the budgets!

Finally, notwithstanding the above points, the one way to drastically reduce the chance of the judge swinging their costs budgeting scythe at your Precedent H is to seek to agree the budgets with the other side.

You will often find that you can likely agree a higher budget with your opposite number than you might otherwise get under a judge’s free hand – even agreeing most if not all phases goes a long way to keeping most of your budget in tact maximising costs recovery when you ultimately win at trial.