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CJC Final Report on Costs


On 10 May 2023, the CJC published its final report following a consultation and review of a range of costs related topics. The report makes recommendations related to:

  • costs budgeting;
  • guideline hourly rates;
  • pre-action and digitisation; and
  • the consequences of the extension of fixed recoverable costs.

The recommendations are summarised below.

Costs budgeting

The working group unanimously concluded that:

“Since costs budgeting was adopted, there is now evidence of real and sustained progress in the discipline and understanding around costs and this has consequently improved case management and the proportionality of costs.”

The CJC made specific recommendations:

Qualified costs budgeting retention – It is recognised that “one size does not fit all”. A more tailored approach is needed for different claim types with personal Injury, clinical negligence work and other specialist work being “tentatively” identified as needing a costs budgeting regime that is different from the norm.

QOCS cases – Where QOCS applies, a full defendant budget is no longer needed and only the Precedent H front sheet of the budget should be provided to the claimant and the court.

Costs budgeting light – A costs budgeting light pilot is proposed for Part 7 multi-track claims between £100,000 and £1m. It is thought that these cases are at greatest risk of incurring disproportionate cost, but are not so high in value that full-scale budgeting needs to apply. It is recommended that judges operating specialist lists such as mesothelioma consider bespoke practice arrangements.

Staged approach to costs management – Costs and case management tasks do not have to take place simultaneously and can now be staged. Costs information is exchanged ahead of the first hearing so regard is taken of the likely cost of a step. This should lead to earlier and quicker CMCs and more agreed budgets. There is also potential for specialist costs judges to deal with costs management following case management.

Guideline hourly rates (GHRs)

Interestingly, the majority of consultation respondents considered GHRs to be a useful starting point for both summary and detailed assessment indicating the rates that the courts considered to be reasonable.

The CJC made specific recommendations:

GHRs indexation – The 2021 GHRs should be uprated retrospectively and there should be annual indexation using the Service Providers Price Index (SPPI) on 1 January each year.

Detailed review of GHRs – A detailed review of GHRs after five years (and every five years thereafter) to assess the impact of indexation, remote working and IT development, and geographical changes in banding. That a working group should be set up to consider the methodology to be used when carrying out a detailed review and whether there would be more innovative ways of obtaining appropriate and useful evidence.

Counsel’s fees – These should be capable of being assessed by reference to the GHRs as there is no justification for treating them differently from solicitor’s hourly rates.

Departure from GHRs – A test should be clearly stated so that there is clarity as to the circumstances in which departure will occur.

Pre-action and digitalisation

The objective of engaging in pre-action processes, whether digital or analogue, is to settle claims without the need for litigation. Parties should be encouraged to engage in these processes in the fullest and most effective way possible.

It is recognised that in the pre-action context of civil justice “one size does not fit all”. Costs reform is seen as a means by which parties can be encouraged to engage in pre-action processes.

It is recommended that in new pre-action protocols (PAPs), there should be provision for limited costs recovery pre-action where settlement is achieved.

With existing pre-action protocols, which provide for recovery of costs on settlement, a pilot is suggested to test the feasibility of introducing a rule so that certain types of disputes are deemed to be ‘issued’ (but no court fee would yet be paid) at the point the relevant PAP is commenced. CPR 46.14 would need to be amended to allow the courts to deal with costs issues where parties settle the claim without proceedings, but cannot agree the costs.

There is some overlap in these recommendations with those of the CJC Pre-action Protocols Working Group.

Extension of fixed recoverable costs

The working group was tasked with considering the wider implications of the FRC extension on the civil justice system. There was a general consensus that (i) FRC should be set at the right level and (ii) the levels of FRC should be subject to regular review and uprating in line with inflation.

It was noted that full account needs to be taken of the implications for the party who will have to pay their lawyer’s costs, including clarity about what those costs will be and whether that party may have to pay more than is recovered either (i) in damages, or (ii) from the other side.

The potential for this highlights the relationship between recoverable costs and claimant compensation, and has a particular significance in areas of routine civil litigation like personal injury. The likelihood of this occurring could increase from the extension of FRC (depending on the levels of FRC), as well as potential changes to GHR and costs budgeting.

The full report may be found at www.judiciary.uk/civil-justice-council-costs-review-final-report

Howard Dean

Howard Dean
Head of Costs

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