Sue Nash - founder of Litigation Costs Services and Omnia Legal Services (a costs budgeting software solution) - asks ... Costs budgeting to be extended?...

When Master of the Rolls, Lord Justice Neuberger said, “excess litigation cost is an endemic and unwelcome feature of our civil justice system” and his successor, Lord Justice Dyson has said that “costs management is the key to the Jackson Reforms” - neither made a distinction as to the type or value of a case to which costs management should be applied.

That said, when the majority of the Jackson Reforms were implemented through the enactment of the Legal Aid, Sentencing and Punishment of Offenders Order (LASPO) in April 2013, cases in the Commercial Court and Admiralty Division were exempt from mandatory costs budgeting. This was swiftly followed by an exemption for all commercial cases with a value of over £2million, a step widely seen as being a measure to avoid “forum shopping”.

The exemptions have, in my opinion, never sat with the principle of costs control espoused by the Judiciary and adopted by the Government. We have had the anomaly whereby high value clinical negligence and group litigation cases (where costs can easily amount to well over £2 million) have been subject to mandatory costs budgeting whilst a commercial case with a value of £2.5 million has not.

A sub-committee of the Civil Justice Council was formed last year to look into the exemption for commercial cases. Commercial litigators stood united against the imposition of costs management on their cases and their views were taken into account by the Committee, which reported to the Civil Justice Council in October 2013.

Subsequently, Lord Justice Richards, the Chair of the Civil Procedure Rule Committee and Lord Justice Dyson, Master of the Rolls, have recommended that the current exemptions be replaced by an all-encompassing exemption for all claims worth over £10million in any court i.e. costs management will now be applied to the majority of commercial cases.

This recommendation is being considered and there is so far no news as to whether the MoJ will accept it. Assuming they do, I believe the exemption will be kept under review and the limit could be extended further as all facets of the legal community become more comfortable with the principles and practise of costs budgeting and how it applies to their cases.