Nearly seven in 10 commercial litigators have incurred costs above approved budget levels but only a handful have made an application to revise the budget upwards, a major survey by Just Costs has revealed.
The findings in the survey of 912 commercial litigation partners at the top 200 law firms echoed the recent ACL Judicial Roundtable, at which District Judge Chris Lethem expressed concern about the lack of applications to vary budgets.
Some 73% of respondents said they had prepared a Precedent H budget which was either agreed between the parties or approved by the court. But, even though every single one of them said they monitored the costs they incurred to ensure they remained within the budget for each phase, 69% said they had exceeded a budget at some point. This meant there are “obviously flaws” in the process, the survey said.
Of these, just 11% had made an application to revise the budget upwards. Six in 10 said they did so because of significant developments in the litigation – which is what the rules specify as the reason for revision – 10% described it as “simple overspend” and the rest cited both.
Paul Shenton, managing director of Just Costs, said: “This research suggests that the majority of solicitors are either unaware that a mechanism exists for budgets to be revised or believe that any such application will automatically fail so there is no point in pursuing it.
“It is very difficult for solicitors to recover an overspend without applying to revise the approved costs budget upwards. If clients are paying win or lose, this is a potential professional negligence issue – and if law firms are limited to what they recover then they are effectively working for free.”