Francis Kendall shares some shocking statistics from the 2018 ACL conference survey
A poll of 146 Costs Lawyers at the ACL’s annual conference last November showed that only 10% said solicitors have got better at sticking to their budgets.
This shocking statistic is perhaps mitigated slightly by the fact that only 23% of those responding said solicitors always went over what was budgeted. However, a further 53% said they sometimes went over.
Although these figures are all improvements on the same survey in 2017 – where the figures were 5%, 29% and 65% respectively – it must be of concern.
Absent success on the “good reason to depart” test on detailed assessment, any costs over budget in a phase reflects work that solicitors are undertaking that will simply never be recovered from the opponent on assessment. They must either know, suspect or are simply ignorant to that position at the time that the work is undertaken.
With clear instructions from a commercial client, I guess this remains remunerative although not the best PR. However, with most lay clients this will simply be wasted effort – going above and beyond for the sake of the case in the knowledge that the solicitor will never get paid for the extra work undertaken.
Some 22% of Costs Lawyers reported more applications to revise budgets, although 19% said they had still never seen one – figures again that were better than the 2017 survey.
Enter Master Davison in Al-Najar and Ors v The Cumberland Hotel (London) Ltd  EWHC 3532 (QB), a case proceeding to a liability-only trial, but with complex issues as reflected by the approved claimant’s budget of £1m.
Within that, the disclosure phase had been approved at £62,626, with an expectation set of 1,000 to 1,500 documents, although this was not identified in the assumptions contained in the budget. Regardless, the master took that as a fair assumption to be made at the time, and when disclosure ran to some 3,250 documents, the claimants sought a 78% increase to this phase to £112,000.
Drawing on the practice direction, and Chief Master Marsh’s 2018 decision in Sharp v Blank, five broad principles were derived as to what amounted to a “significant development” that would justify a revision to a budget. In short these are:
- Fact – the scale and complexity of the development;
- If it could have been reasonably anticipated at the time the budget was originally set, then it will probably be neither significant nor a development;
- However, this is no requirement that the development must have occurred other than in the normal course of the litigation; and
- If there has been a significant development, the question is whether the figures in the revised budget are reasonable and proportionate in light of it.
That is only four, I hear you cry. The fifth (listed as the fourth) is significant: “As a matter of policy, it seems to me that the bar for what constitutes a significant development should not be set too high because, otherwise, parties preparing a budget would always err on the side of caution by making over-generous (to them) assessments of what was to be anticipated”.
One would hope to see a marked increase in the survey results next year as a result of this.
Three lessons can be learned from the principle: do not make over generous assessments of the work to be undertaken when preparing the initial budget; always include clear assumptions that can be distinguished against as necessary (although the claimants got away with that one in this case, it is both a common mistake when budgets are not prepared by costs professionals and a position that is unlikely to succeed in the majority of cases); and no longer be overly cautious about making an application to revise as necessary.
It goes without saying that any application must be foreshadowed in correspondence with the hope that pragmatic parties can agree the position without the need to trouble the court – and perhaps that is a good reason why the survey results seem low.
Other highlights from the survey results were that 41% of Costs Lawyers said they were now getting used to the electronic bill of costs – with several saying they prefer the ACL’s own version – although a similar number still think it is making things worse, and 23% described it as a “hard sell” to solicitors.
With the first anniversary of the electronic bill coming up, ‘selling’ it to solicitors will likely become a sterile question soon. Most costs claims will simply have to have a significant chunk of costs presented in this way and it will not be long before any perceived benefit of not doing so for early work will become obsolete.
While most Costs Lawyers were ready when the electronic bill came into force last April, 48% said the solicitors they dealt with were not. More positively, 43% of Costs Lawyers said all or some of their clients were ready, although only 6% of Costs Lawyers reported that solicitors had transitioned easily to the new regime.
Some 42% said solicitors had asked their Costs Lawyers to sort it all out, while 23% said their solicitors were just putting off dealing with it.
Although respondents said the judiciary was largely not ready for the introduction of the electronic bill either, 54% said judges were now “keen to get going” with it, compared to 24% who thought judges were going to waive the use of the new bill for as long as they could.
Some 58% of Costs Lawyers said the electronic bill had increased the costs of assessment, which is unsurprising as users get to grips with it.
Members were also asked about their views on the proportionality test, with 58% calling for Court of Appeal guidance on its operation, and 50% saying that “everyone has their own approach” coupled with 46% noting that it depended on which judge you were before.
No surprises there and no doubt the topic of many more articles over the coming years as the test is applied (in as many ways as it is) in more interesting cases on the point. It is certainly currently the default first consideration in any assessment.
Francis Kendall is a Costs Lawyer at Kain-Knight and vice-chair of the Association of Costs Lawyers
This article was first published in the New Law Journal on 8 February 2019.