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Costs management: Already running into the buffers?

Costs budgeting and management

As you know, costs budgeting and management is an important part of Lord Justice Jackson's reforms, and is to apply to all multi-track cases issued after 1 April.  We are expecting to see the first costs management orders made in run of the mill multi-track personal injury as well as non injury claims in May or June. 

But it is now clear there is a bandwagon starting to roll against costs management, and in the driving seat are some members of the London-based judiciary who would deal with costs management.  Claimants' solicitors are starting to queue up to create some momentum in the hope of de-railing costs management at the outset.

The first development happened with the recent publication of a practice note from one of two specialist High Court clinical negligence Masters who sit in the Royal Courts of Justice in London, Master Roberts.  This note pointed to the perceived lack of resource on the part of the clinical negligence Masters to carry out costs management, and also that no pilot of costs management had been run in clinical negligence claims.  If they had to do costs management, the clinical negligence Masters would be overloaded with work and this would lead to unacceptable delays, it was said.  A direction has therefore been issued applying to all clinical negligence cases issued out of the RCJ, which says that costs management will not be used for the time being for the most serious cases involving cerebral palsy, moderately severe acquired brain injury claims, as well as paraplegic and tetraplegic cases.  In all of those cases the Masters will consider not ordering the costs budgets now to be exchanged for at least six months. All of this is limited to the clinical negligence context. 

The position has been taken a stage further by the publication today from Master Whitaker as who oversees mesothelioma claims in the RCJ, proposing a meeting of lawyers who use that court to consider how to deal with costs management in those claims.  Master Whitaker is already on record criticising the lack of judicial training on costs management and is likely to take a similar view to the clinical negligence Masters. This meeting may well be the start of a similar decision to try to avoid costs management in those cases too at least for now. 

In reality, we should not be surprised at these developments.  There is concern within the level of judiciary who would carry out the costs management at the amount of time that the exercise will take.  That concern is greatest in London, where the Masters are generally unfamiliar with costs.  In courts outside London, the equivalent of Masters are District Judges who have always dealt with costs issues, and they have not expressed the same concerns about taking on the new costs management role, at least as yet.  The Masters in the RCJ, on the other hand, generally have lower levels of costs experience, as the costs issues on their cases are dealt with by specialist costs judges in the Senior Court Costs Office.  It is worth keeping in mind though that the Judges who have been involved in the costs pilots that have been run in certain specialist courts, such as Judge Simon Brown QC, the Mercantile Judge in Birmingham, are firmly in favour of costs management, pointing to the limited time involved in the process, that the additional skills needed are easily acquired, and that there are in fact savings in the overall workload to be gained.

For the time being, the concern about costs management from Judges who are reluctant to be involved in it with the current level of resource in their courts, is limited to certain Masters dealing with specialist cases, clinical negligence and mesothelioma.  There must be a concern though that Masters dealing with other multi-track cases in the RCJ will join in what may then be regarded as a campaign, and even that it will spread beyond London.  In February, under pressure from the judiciary, costs management was dropped from TCC, Mercantile and Chancery cases worth more than £2million.  The reason for this was to be consistent with the Admiralty and Commercial Courts, from which costs management was already excluded in those types of claims, and because of potential overlap between these types of courts.  The irony is that it is in fact in the larger claims that costs management is most needed, to avoid the higher risk of the level of costs becoming disproportionate.  The Masters in the clinical negligence court have also indicated their intention to exclude types of case which are in fact the larger claims, where they will see costs management as a bigger exercise and therefore more time consuming, even though it is desperately needed in those cases.

Some claimants are now seeing the prospect of all multi-track claims worth more than £2million being excluded from costs management across the piece.  This would be a major negative development for insurers, though we see it as unlikely.  The views of those in favour of costs management, who know the process well, and have seen it proving beneficial in practice, such as Judge Simon Brown, as well as Jackson himself, need to be brought to the fore.  We will of course keep you informed of developments in this area.

For further information contact Simon Denyer, Partner on 0161 604 1551

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.