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Costs management: better than fixed costs, say solicitors

Posted on April 13, 2017

Solicitors do not like costs management but consider it the lesser of two evils given the prospect of more fixed recoverable costs, a survey by Just Costs Solicitors has found.

In a poll of 146 personal injury (PI) solicitors and 155 commercial litigators from the UK’s top 200 firms, Just Costs also found the former far more likely to outsource their costs work than the latter.

The survey found that 65% of PI solicitors and 60% of commercial litigators thought that costs management had had a negative impact on litigation. Commercial litigators complained about the lack of consistency among judges. “The lack of guidance as to what proportionate costs means and the fact many judges are still unclear on what basis they are supposed to review the parties’ budgets only heeds to heightens their concerns,” the survey said.

“The introduction of cost management process has only increased the cost of litigation in some litigators’ eyes. The need to comply with deadlines, or having to apply for an extension before the deadline expires, is seen as an accumulation to the cost of litigation, especially when the principal claim remains their main focus of litigation."

“Given that costs management has been in place for four years and only 17% said it has had a positive impact and 23% remained neutral, the survey said questions remained about whether the fundamental procedure was working.”

The views were similar among PI lawyers, with just 10% saying costs management has had a positive impact.

But despite this, 90% of personal injury solicitors and 78% of commercial litigators preferred costs management to fixed recoverable costs.

The PI survey added: “There is also a possibility that legally complex cases, though low in value, will require an extensive amount of work to obtain a successful conclusion [that is more than] the allocated cost band would allow. This could ultimately result in litigators not taking on such complicated, low-value cases, preventing legitimate claims from being pursued.”

However, 57% of commercial litigators believed their clients would prefer fixed recoverable costs. Only 33% of PI lawyers thought the same.

Phil Bradbury (pictured), head of costs management at Just Costs, said: “Lawyers are trapped in a marriage of convenience with the costs management process. There’s no love or affection for the process, but it’s ‘better the devil you know’ and they won’t be filing for divorce any time soon.”

The survey found that commercial litigators were far more likely to complete Precedent H in-house (63%) – usually the fee-earner with conduct of the case – while 70% of PI lawyers outsourced the work to costs specialists.

Frustrations with the Excel-format Precedent H were also found, highlighting deleted formulas/reformatting and limited contingents as the biggest problems.

 

The ACL eBulletin will back in a fortnight.

 

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