I have already drawn attention to an article by His Honour Judge Simon Brown QC in the New Law Journal called Costs management & docketed judges: are you ready for the big bang next year? which describes what is to be expected by parties to civil proceedings in respect of costs budgets. The takeaway quotation is:

The days of putting in a bill at the end of a case based on a multiple of billable hours x by £x per hour and expecting to be paid are over.

I come back to the subject in case you missed a practical example of costs budgeting in action, with a result which reflects the warnings given by Judge Brown. The case is Henry v News Group Newspapers Ltd (Rev 1) [2012] EWHC 90218 (Costs) (16 May 2012) and the title of a Legal Futures article says it all: Senior Costs Judge disallows budget overrun in landmark costs management ruling.

That article links in turn to an explanation by Andy Ellis, the costs lawyer who acted for NGN. Again, its title tells you all you need to know – Actual – Budget = Catastrophe.

As the Senior Costs Judge explained in his judgment, the case was dealt with under the Defamation Proceedings Costs Management Scheme.

Last in this set of links is one to a Daily Telegraph article headed Hourly billing for lawyers should end, says top judge which reports a speech by Lord Neuberger whose message is clear enough. The central point is reported thus:

[Lord Neuberger said] “Hourly billing at best leads to inefficient practices, at worst it rewards and incentivises inefficiency.”

He said it penalises those who are able to bring cases to a close quickly, adding: “It also penalises the able, those with greater professional knowledge and skill, as they will tend to work at a more efficient rate.

“In other words, hourly billing fails to reward the diligent, the efficient and the able: its focus on the cost of time, a truly movable feast, simply does not reflect the value of work.”

He said: “In practical terms, any business which bases its charges simply on costs does not deserve to succeed, or even, some might say, to survive.

Lord Woolf said something similar in his report which gave rise to the 1999 Civil Procedure Rules. This time, the nettle is to be grasped.

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