Epiq Systems held an extremely informative seminar on the new costs regime earlier this week. You will find at the end of this post a link to the video made on the day with the strong recommendation that you watch it.
“The thing about Dominic Regan”, somebody once said to me, “is that nearly everything comes down to costs to him”. It was meant as a compliment, and reflected the fact that much of the Civil Procedure Rules, of the case law which exists around it, and of the strategy of litigation, runs sooner or later into questions of costs. There are, of course, litigants for whom expense is no issue, cases which must be fought at any price, and large sections of the rules which regulate aspects of procedure to which costs have no direct relevance. The justice which is set squarely in the opening section of the overriding objective, however, is no justice at all if parties cannot afford it; Lord Justice Jackson’s remit, however widely drawn, was driven by the need to control costs, and the rule changes which are named after him largely reflect that.
Professor Dominic Regan was one of four expert panellists at a seminar organised by technology provider Epiq Systems in London this week. The others were Master Colin Campbell of the Senior Courts Costs Office, costs expert Michael Bacon and Allen & Overy litigation support manager Vince Neicho. The room was packed, and if much of the focus was on eDisclosure, the panel ranged across the wider implications of the new costs regime. The session was led by Epiq’s Saida Joseph.
Dominic Regan opened by emphasising that the new rules controlled costs in many ways which were not specifically labelled as costs management. Judges are required to make narrow orders dealing with specific points, and to direct that witnesses and experts deal with particular subjects; the new strictness with default – the missing of deadlines, for example – aimed towards briskness and efficiency. As for disclosure, Lord Justice Jackson saw it as “out of control”.
Master Campbell emphasised the need to get budgets right at the outset. He referred to Murray & Anor v Neil Dowlman Architecture Ltd where Coulson J said that the new rules allow the court to “approve, vary or disapprove [any proposed] revisions, having regard to any significant developments which have occurred since the date when the previous budget was approved or agreed”. Revisions may therefore be allowed, but only where there is good reason to do so. That was to be distinguished from a case such as the one before him where the original budget was wrong. he said:
In my view, in an ordinary case, it will be extremely difficult to persuade a court that inadequacies or mistakes in the preparation of a costs budget, which is then approved by the court, should be subsequently revised or rectified, for the reasons given by Mr Wygas. The courts will expect parties to undertake the costs budgeting exercise properly first time around, and will be slow to revise approved budgets merely because, after the event, it is said that particular items had been omitted or under-valued. I also agree that any other approach could make a nonsense of the whole costs management regime.
You need, it follows, to plan before you spend. What if something came up which warranted (or so you thought) a variation which could not wait for a hearing date? The least you could do would be to get a hearing date for a variation application which “perhaps” would assist your cause. It must be emphasised that we have to wait and see how judges will treat such applications.
Michael Bacon observed that there was space on Precedent H for assumptions and contingencies. Parties who did not take advantage of this faced “immense risk”, he said. One of the things which concerned him was the time which could be taken arguing about these things in front of the judge. It was supposed to be a “limited exercise” but the costs allowed for preparation of budgets were “minuscule”. It may make sense, if the court so allows, to budget for stages rather than for the whole thing.
Dominic Regan drew attention to a further benefit of getting the budget right – it was possible that a successful party would get its budget figure as its costs, as HHJ Simon Brown QC ordered in Safetynet Security Ltd v Coppage & Anor (The costs order does not appear in the judgment; it was the logical conclusion where a successful party had stuck to its budget). As Dominic put it, “the defendant’s first chance to argue about costs was also the last”.
Vince Neicho focused on the costs implications of electronic disclosure. He pointed out that parties are required by Rule 31.5 to give estimates of the broad range of costs which are likely to be incurred in respect of disclosure and that this is a free-standing obligation, distinct from the formal budget which is required when a case is under cost management. Before there can be collaboration between parties, there must be collaboration within the party – clients, solicitors, counsel, service providers, relevant expert witnesses, disclosure experts and consultants must pool their respective inputs, and must do so at a very early stage.
One obvious reason for involving the client it is that it is the client’s documents, the client’s case and the client’s money which are under discussion. There was more to it than that, however – if budgets were prepared without input from the client and “you get hammered”, how do you explain this to clients who find that they have been “litigating at their own expense” when they expected to recover costs? In many cases, Vince said, we will probably see what he called “dual budgeting”, with one budget for costs which the client might be willing to spend looking under every stone and a smaller budget for costs which it might reasonably expect to recover if successful.
As a practical matter, the assembly of a budget required some historical knowledge, in the form of metrics from past cases, as well as input from those with experience of doing this sort of thing before.
Vince urged lawyers to have an understanding of technology like predictive coding as well as the use of external providers of services. It is, he said, “no longer acceptable for lawyers to sit in darkened rooms“ doing document review without considering outsourced managed review in all its variant forms – “offshore, onshore, nearshore, not sure”. What mattered was to be aware of alternative approaches and to be able to argue cogently in favour of one of them, or perhaps more than one as alternatives.
The discussion turned to the allocation of costs to different parts of the budget. Vince Neicho drew attention to the fact that many separate components of a budget – witness statements, proofing bundles, affidavits and so on – depended heavily on identifying, reading and referring to documents. Those documents will inevitably be candidates for disclosure and it was important to decide which budget heading these activities fell under. Michael Bacon pointed out that there are hard-nosed reasons for this – the sums allocated to particular parts of the budget were discrete pots, and coming in under budget under one heading did not give you a credit to be applied against another. Furthermore, the rules now require the court to consider the aggregate of the costs, giving rise to the more-than-theoretical possibility that approval of each discrete heading will not necessarily help you if the aggregate of all the headings is seen as disproportionate. One must, Dominic Regan said, keep asking “is it proportionate?”.
This summary barely scratches the surface of the helpful and informative session. The entire event was recorded on video and Epiq Systems has made that available here. You get the slides as well as the video (I do commend this approach, incidentally) and anyone with an interest in the new costs rules (that is, anyone who practices litigation under the CPR) would do well to watch it.