Precedent H Budgets – You can’t afford to get them wrong

All those practitioners involved in multi-track litigation will be well aware of the introduction of budgeting by the reforms of 2013. The introduction of the new Precedent H budget caused many to either shudder in fear, or randomly fill in boxes just like picking their lotto numbers. However, the Rules made it abundantly clear the preparation of a Precedent H budget could not be avoided if you wanted to recover costs from an opponent if the case was won.

Sadly, many Practitioners seem to adopt the finger in the air approach to budget preparation – a guesstimate at best to costs that have been incurred and those that might be required going forwards. Those who do, do so at their peril.

The incurred costs at the time the budget is prepared must be an accurate reflection of what has been incurred in each phase up that point. If not, when the final bill is prepared there will be disparity that will be hard to justify, and likely be detrimental to the recovery.

Furthermore, if you have plucked figures out of the air for the future costs, and they are agreed or approved by the court, yet woefully inadequate, exceeding the approved or agreed budget will prove almost impossible.

So? You should remember, as fee earners, you have an obligation to keep your Clients fully informed of the costs they are incurring or likely to incur in respect of the litigation. The Precedent H budget is an ideal tool for doing just that. However, if you invoice your Clients, say, £150,000 plus vat for the work you do, yet your budget only allows for £100,000 plus vat, the maximum you are likely to recover from the opponent is £100,000, probably less on assessment. Result! Extremely disgruntled Client. Questions such as why have you charged me £150,000 plus vat, yet only ever expected to recover a maximum of £100,000 plus vat? Have you over-charged me? Have you made a huge blunder on the budget? If either, your Client will not be happy. If the former, you could be going along to an assessment of your own costs which will be time-consuming and expensive. If the latter, you could be facing a negligence claim, so polish up the indemnity insurance and expect the claim form to tumble through your letterbox.

What is the solution? Only rely on quality, experienced costs lawyers to prepare your Precedent H budgets. People who understand exactly what is required in these forms – the importance of getting them right. Yes, they are prepared at a time when you are in full flight preparing for a CCMC, but those who are competent at budget preparation can work well with fee earners who instruct them, and files should only be away from your office a very short time.

At CM Costing we habitually prepare Precedent H budgets which are meaningful documents, survive the CCMC with only modest reductions or are capable of agreement, and ultimately result in excellent costs recovery for the successful Clients. And, of course, the costs associated with the budget preparation are recoverable, too, so effectively cost you nothing.

So next time you have a budget to prepare are you going to “have a go” or bring in the experts? The choice is always yours.