Whatever we might think about the Jackson reforms, significant change is upon us.

In the medium term costs drafting in the conventional sense will be replaced by reviews of costs incurred against budgets. Already we are seeing costs claims emerging from the costs management pilots that suggest parties are floundering with how to present the comparison – some are even failing to address the issue totally.

There is no better example of such failures than in the case of Sylvia Henry v News Group Newspaper Ltd [2012].

In the above case, the Claimant was a social worker who had been involved in the cases of Victoria Climbié and Baby P. She had been the subject of defamatory newspaper articles and had brought proceedings which settled on the basis of the payment of damages and an apology published in The Sun newspaper.

C was entitled to standard basis costs to be dealt with under the Defamation Proceedings Costs Management Scheme. The issue was whether there was a good reason for departing from the Court approved budget, and, if so, by how much the budget should reasonably be exceeded. C had departed from her budget in relation to witness statements and disclosure to the tune of almost £300,000. C argued that the Defendant’s robust tactics and multiple re-amendments to the Defence and Lists of Documents caused a considerable amount of work which had not been envisaged which was a good reason to depart from the approved budget.

D argued that the Court could only find there was a good reason to depart from an approved budget on the basis that C had complied with CPD 51D which she had not. C’s budget was flawed from the start and C had failed to inform either D or the Court that it had been exceeded despite having the opportunity to do so.

Furthermore, the amendments to the Defence and further disclosure would not have occasioned significant work. The Senior Costs Judge found that C would have had a good case for the additional costs at detailed assessment; the Defendant could not pass off the four amendments to the Defence and ten supplemental Lists of Documents as a minor inconvenience. However, the provisions of CPD 51(D) were mandatory and C had failed to comply. The purpose of the scheme was to put the parties on an equal footing and that purpose was lost if one party’s budget was significantly exceeded without the other’s knowledge. There was therefore no good reason to depart from the Court approved budget.

Permission to appeal was granted in view of the importance of the issues and the sums at stake.

Our goal at Secure Legal Services Ltd is to be the partner of choice for law firms and in-house legal departments looking to engage with costs management.

Preparing robust Costs budgets is nothing new at Secure Legal Services – we’ve been preparing budgets and managing costs for a number of years. One thing is certain. Without the buffer of recoverable success fees and in the increasingly tough economic environment we are all in, law firms will not be able to withstand losses sustained as result of blowing budgets. Early warnings will be vital to the prospects of plugging leaks or applying for variations before “the horse has bolted”.

Are you looking to engage with costs management? Are you looking for an established costs management service to engage with? Contact us now for more information on how we can assist your firm, now and in the future.

Call: 01543 492135

Email: info@securelegalservices.co.uk