Trainees need to get to grips with costs

Law students have little or no exposure to the issue of who ends up paying them, but getting paid is just important to a firm as it is to a client.

As efficiency and recoverable time are becoming more important to lawyers and those they service, so being able to demonstrate to an employer that you are aware of the importance of costs and how to manage them will be a top quality for potential lawyers.

In any civil litigation matter, the basic rule is that the costs of the case are paid by the losing party. In response to concerns that the costs of such litigation were becoming unmanageable and disproportionate to the sums being recovered by the parties, Lord Jackson’s reforms were intended to reduce these costs in a variety of ways.

Jamie Walsh

Since April 2013, Costs Budgeting has been one of the key requirements of any civil litigation matter worth between £25,000 to £10m. The process usually arises at the initial Directions stage when the Court will require the parties to provide a detailed breakdown of the costs they’ve incurred, and importantly, the costs they expect to incur. These budgets will then be negotiated between the parties and approved by a judge. The final outcome is that this budget should impact on whether the winning party can recover the all the money they’ve incurred throughout the length of the claim, or whether they will be limited to what is in their budget.

There are two particular ways in which a trainee needs to be aware of this.

Firstly, a trainee may be involved in the preparation of budget or in instructing a costs draftsman to prepare the document. As a result, detailed knowledge of the case is going to be needed. If you’re not aware of a particular aspect of your case, such as an expert to be instructed or a certain witness to be interviewed, your budget may be insufficient. Fail to address this and you could be losing money. Costs budgeting should be treated as encouragement for solicitors to get to grips with what is going on in a matter and decide what will actually be needed to bring the matter to a conclusion.

Secondly, once the budget is approved it is a big deal. The Court expects solicitors to pay attention to the level of costs they are incurring and they best have a good reason for deviating from an approved budget. Trainees should keen to review any budget on a regular basis and consider the need to increase the figures when the budget turns out too low. 

Jamie Walsh is an LPC graduate and a costs draftsman at Alternative Costs