Birss review says yes to costs budgeting & guideline hourly rates

Costs budgeting has been ‘useful’ and should be retained, guideline hourly rates (GHRs) retained but uprated annually for inflation, and a £500,000 costs cap installed in patent cases, a major review led by Lord Justice Birss has concluded.

Lawyers welcomed the final report of the Civil Justice Council’s (CJC’s) year-long costs review this week. It concluded that costs budgeting, a key Jackson reform introduced a decade ago, has proved to be ‘a significant and valuable shift’, although the way costs budgeting works should in future be allowed to vary between different areas of civil justice. The reform has to date had to operate in the same way in all areas.

The Birss review recommended keeping the GHRs as they currently stand but with a ‘detailed review in five years’. It also recommended creating a new band for ‘complex, high value commercial work’. New GHRs were accepted by the Master of the Rolls in August 2021, proposed by a previous CJC working group, and the MR pledged to report again within two years of that acceptance.

The review supported the idea that digitising justice will lead to ‘significant savings in costs’. It recommended that digitisation facilitate early narrowing of the issues and resolution between parties, for example, through the use of digital pre-action portals. On fixed costs, the fourth plank of the Birss review, the CJC working party noted that fixed costs are already underway, but supported proposals for a £500,000 cap in patent cases.

David Bailey-Vella, vice-chair of the Association of Costs Lawyers, said: ‘The CJC report offers a sensible route to build on the gains achieved by costs budgeting over the past decade.

‘Our research has constantly shown that many solicitors remain reluctant to engage in it but making it a more tailored and proportionate process should win them over. It is undoubtedly in the interests of clients.

‘Annual uprating of GHRs—and a clear test to depart from them—will make life better for all. Costs lawyers have worked hard to make budgeting a success and the report’s recommendations will put our skills central to the efforts to improve the process.’

Sir Geoffrey Vos, Master of the Rolls, said: ‘It is essential that all those bringing or defending civil claims have clarity on their likely exposure to costs.

‘Those costs must always remain proportionate to the value of the case. Annual adjustment of the GHRs will ensure that they are not left to stagnate as they have in the past. 

‘It is now ten years since costs budgeting was first introduced in England & Wales. That period has seen significant changes to both the operation of the civil courts and our society as a whole. Our litigation and judicial processes require reconsideration in the light of the major technological advances that have occurred.’

This article first appeared in the New Law Journal on 11 May 2023

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02 Jun 2023

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