Costs Budgets

Costs Budgets Update

The latest update to the Civil Procedure Rules will introduce important changes to the Costs Management and Detailed Assessment Procedure in respect of proceedings issued on or after 6 April 2016. The changes are quite dramatic in certain circumstances with amendments to the procedure and the Precedent documents in both areas.

Preparing a Costs Budget is no easy task and can take a considerable amount of time as each item of work needs to be assigned to an appropriate phase. That is the main reason for using a Costs Draftsman so your time can be spent dealing with your caseload.

In addition the costs of initially completing the Precedent H (max £1000.00) or 1% and all other recoverable costs of the budgeting and costs management process (not exceed 2%) of the approved or agreed budget is payable by the opponent so it costs you nothing.

The changes are as follows.

  • CPR 3.13 (1) Budgets in claims valued at £50,000 or more are to be filed 21 days before the first case management conference
  • CPR 3.13 (1) Budgets in claims valued at less than £50,000, are to be filed with the Directions Questionnaire
  • CPR 3 PD3E (c) In cases where a party’s budgeted costs do not exceed £25,000 or the value of the claim as stated on the claim form is less than £50,000, the parties must only use the first page of Precedent H.
  • CPR 3.13 (2) All parties will be required to file an agreed Budget discussion report (Precedent R) no later than 7 days before the first CMC setting out the figures that are agreed and a summary of disputes.
  • CPR 3.12 (c )Claims made by or on behalf of a child (under 18) are exempt from costs budgeting (exemption continues to apply after the child reaches the age of majority unless otherwise ordered).
  • Where the Claimant has a limited or severely impaired life expectancy (5 years or less remaining) the court will ordinarily dis- apply cost management under section II of Part 3 (CPR 3 PD3E 2(b)).
  • Any party may apply to the court if it considers that another party is behaving oppressively in seeking to cause the applicant to spend money disproportionately on costs and the court will grant such relief as may be appropriate.
  • CPR 47 PD 47 5.8(8) In instances where there is a CMO approving Budgets, or costs Budgets are agreed, the Bill must be divided into separate parts so as to distinguish between the costs claimed for each phase of the last approved or agreed budget, and within each part the Bill must distinguish between incurred and estimated costs.

The format of form Precedent H has been revised and from 6th April 2016 must be used for ALL claims irrespective of whether they were issued before or after that date. The revised form Precedent H, together with the Precedent H Guidance Notes and form Precedent R can be found by following this link

Time Recording

Maximising time recording – from inception to conclusion of a claim, for example where a lower grade fee earner meets with conducting fee earner say during a conference and tasks are split.  You need to properly capture time for reviewing the file before the conference, the time spent for both fee earners during the conference, time spent considering and discussing an action plan post conference and for preparing the notes. 

You cannot charge for letters in but you can charge for reviews and consideration following that letter.

If you fail to record time we can estimate the time within the bill but estimated time raises objections in bill of costs, citing Brush v Bower Cotton [1993] 1WLR 1328 when Defendants rely on the passage that states that “only in unusual cases will any substantial allowance be made for unrecorded time. “

I once had a case at Assessment and the DJ said “Mr Fulcher if your Client cannot be bothered to record time then I cannot be bothered to allow it”, this reduced the bill by 60% and we lost having to pay the opponent £3k in assessment costs in addition to the reduced bill and having to pay them back some of the interim payment they had made.

Hourly rates

There is more misunderstanding about Guideline Hourly Rates than any other aspect of costs.

Quite simply they have no application at all in relation to anything other than summary assessment, and even in summary assessments they are guidelines and not tramlines, and are not supposed to replace the experience and knowledge of those familiar with the local area and field and the field of law generally.

The test is what rate is reasonable for the case in question?

For example if you have a high value Multi Track case with allegations of fraud or LVI you can apply them even if you have a Paralegal assisting on the matter. I have been successful 7 times this year at Assessment and achieved results from £177.00 for a non qualified to £250.00 hour. Of course it is subject to the retainer in place and may need changing and a simple letter to the client will be enough.


A Part 36 offer is a settlement offer made without prejudice save as to costs.

Like other forms of settlement it can be used to settle all or any part of a claim, monetary or otherwise. It can also be used to settle counterclaims and additional claims, and Part 36 offers can be made solely in relation to liability, leaving quantum to be argued over.

However, for an offer to fall within Part 36 it has to be: a genuine offer to settle (as opposed to a tactical offer made purely to attract Part 36 costs consequences), made in accordance with the strict requirements of Part 36. A Part 36 offer can be made at any time, including before the commencement of proceedings. However, although an early offer can provide substantial cost benefits and costs protection, a party may not be in a position to make an informed offer until proceedings have been commenced. If not made at the outset, Part 36 should be reconsidered throughout the case. Part 36 offers can also be made in appeal proceedings.

The rules on making a Part 36 offer are the same for both claimant and defendant offers, whether made pre-action or after proceedings have commenced. Part 36 offers have to be made in writing and must state a period of 21 days or more within which the defendant will be liable for the claimant’s costs.

However, Part 36 is just one way of settling litigation. It is open to parties to use other forms of settlement, e.g. Calderbank letters (offers made without prejudice save as to costs). Although Part 36 consequences will not follow, the court’s discretion on costs under CPR 44.2 will still be available. There will often be circumstances where a Part 36 offer is inappropriate or another form of settlement offer is more attractive.

Changes to Part 36 from 1 April 2013

From 1 April 2013 an additional costs sanction was added to Part 36, in order to provide claimants with an extra incentive to make Part 36 offers in order to settle disputes. Under the revised rules, defendants who do not accept a claimant’s Part 36 offer, with the result that the claimant goes on to obtain a judgment that is equal to or more advantageous than its offer, may be ordered to pay a sum in addition to the claimant’s costs.

Calculating the additional sum

The additional sum is calculated as follows:

  • In money claims or mixed claims, for amounts awarded of up to £500,000: 10 per cent of the amount awarded.

  • In money claims or mixed claims, for amounts awarded of £500,000 up to £1,000,000: 10 per cent of the first £500,000 and five per cent of any figure above that figure.

  • In non-monetary claims, for costs awarded up to £500,000: 10 per cent of the amount of costs awarded.

  • In non-monetary claims, for costs awarded of £500,000 up to £1,000,000: 10 per cent of the first £500,000 of costs awarded and five per cent of any amount of costs awarded above that figure.

The additional sum is limited to £75,000 in all cases.

Effect of the rules: is there still a place for Calderbank letters?

A Calderbank letter is simply a letter containing a settlement offer which is made on a “without prejudice save as to costs” basis.

Calderbanks can offer more flexibility that Part 36 offers

In contrast with an offer made under Part 36, there are no restrictions as to the terms of an offer that can be made by way of a Calderbank letter.

However, whereas a Part 36 offer carries clear costs consequences, a Calderbank letter is merely persuasive. When considering costs following a trial, the court has the discretion to decide how much weight to give to the fact that a Calderbank offer has not been accepted.

The certainty provided by Part 36, in addition to the added bite given to Part 36 offers by the revised rules, will mean that offers made under Part 36 are often a more attractive option than Calderbank letters.

However, there are still circumstances where a Calderbank letter may be a useful option.

When to use a Calderbank letter

A Calderbank letter can still be an effective option in some circumstances. For instance:

  • where a party wants to make the terms in relation to costs in a settlement offer on a basis which differs from the cost consequences of Part 36;

  • where a party wishes to make an offer with a limited time for acceptance; and

  • where a defendant wishes to make a settlement offer, but does not believe that it will be able to pay the amount offered within 14 days (as required by Part 36).

Enforcing costs agreements

 When I settle I make the settlement subject to 14 days payment and ask them to pay BACS where possible.

 I send a reminder on day 7 and on day 15 you can apply to the court for a final costs certificate: CPR 47.17.PD16.12.

An interim or final costs certificate may be enforced as if it were a judgment for the payment of an amount of money.


The retainer agreement must explain your fees, how they will be calculated, and how they are to be paid. The agreement should also explain what fee structure will be used. You may charge in the following ways:

  • Hourly rate: The most common form of solicitor compensation is the hourly rate, which can range anywhere from £100 to £300 or more.

  • Fixed fee: You may agree to carry out work for a fixed fee, or agree to cap your costs at a certain level.

  • Conditional Fee Agreements (‘no win, no fee’): You agree to defer payment until the case is resolved at trial or settles. .

There are other terms that need to be in there such as:

  • Extent of the representation: The agreement should make clear that you will represent the client in all legal proceedings, up to and including trial.

  • Who will do the work: The agreement should specify which solicitor will handle the case.

  • Ending the relationship: Agreements need to set out how each party can end the relationship.

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