By: 28 November 2016
Vast majority of solicitors don’t stick to their costs budgets, says ACL

Only 2% of solicitors always stick to their cost budgets, according to the Association of Costs Lawyers (ACL).

The alarming figure has come from a poll carried out by the ACL, which also found that 72% of solicitors “sometimes” went over their budgets, while 22% never manage to stick to original planned costs.

ACL surveyed 117 costs lawyers for its research and said that it showed that costs management rules have failed to change behaviours.

It said that one reason for the dismal findings may be that budgeting takes place too early on in proceedings. Half (51%) of costs lawyers said that it should be held later, once the course of the litigation is clearer.

ACL also said that solicitors should be updating their budgets if required as the case progresses. However, judges have often complained that this rarely happens, and the survey backs that up – almost a third of costs lawyers (32%) said they had never seen an application to update a budget, while only 18% reported that their number was increasing.

However, judges continue to be a problem. Given a set of statements on how costs management is working, the most popular (ticked by 62% of respondents) was that “it depends on which judge you’re before”, while 32% agreed that “judicial inconsistency is killing it”. Just 10% thought that judges were finally getting the hang of costs management.

The survey also uncovered concern about the Court of Appeal ruling earlier this year in Sarpd Oil International Ltd v Addax Energy SA [2016] EWCA Civ 120, which suggested that the first case and costs management conference was the place to contest the reasonableness and proportionality of costs that have already been incurred – rather than just those to be incurred in the future. It had been thought that these should be left to detailed assessment at the end.

Four in ten costs lawyers said the ruling had made the first conference much more contested and significantly increased the amount of preparatory work as a result. The same number said there needed to be a rule change – something that is under consideration.

ACL chairman Iain Stark said: “We are more than three years into costs budgeting and the reality is that – while it has been of benefit in some instances – it has not delivered in the way that was hoped. This is, at least in part, because many solicitors have still not properly engaged with the process, even though they risk court sanctions as a result.

“The alternative, as laid out starkly by the senior judiciary recently, is fixed costs for cases worth up to £250,000 – a figure that covers the vast majority of litigation in England and Wales. Maybe this is the shock solicitors need to get serious about costs budgeting. Costs lawyers stand ready to help them.”