What is a Precedent H Cost Budget?

A legal costs budget is often referred to as a Precedent H. A costs budget is used at the outset of litigation and outlines the details the costs that the receiving party expects to recover on conclusion, and also outlines where time and efforts should be focused during the course of litigation.

Which Type of Case Requires a Precedent H to be Filed?

A Precedent H is required in all Multi-Track cases. A Costs Budget is not required in any minor claim, claims which are valued in excess of £10,000,000 or in a claim where the Court has decided that a Budget is not required.

What should a Precedent H Include?

A Precedent H costs budget should include the following:

• Your base costs incurred to date
• The future costs to be incurred for the entirety of the case up to and including Trial
• Anticipated costs should only account for what is reasonably foreseeable, and is catered for in any draft directions and the Directions Questionnaire.  The Budget cannot account for every possible eventuality in the litigation.

Additional liabilities such as the success fee or ATE premiums should not be included in the costs budget, neither should VAT. Costs for the Precedent H Budget and the Costs Management process do not form part of the main figures, but can be located in the bottom right of the front sheet of the Budget as the respective 1% and 2% figures.

In addition, the costs of interim applications are generally not included (for instance for varied directions), as these can be claimed outside the scope of a Costs Budget on conclusion of the case.

Which CPR Provisions Apply to Precedent H Budgets?

Practice Direction 3E sets out the rules for costs management. It is worth noting the recent changes to Paragraph 7.4 of the Practice Direction which you can read more about in our recent article to find out how the changes can impact on your cost budgets.

Are There Any Deadlines for Filing a Costs Budget?

There is a strict deadline for filing the Precedent H which must be met or the penalties can be severe, reducing the chance to recover legal costs from the other side. Costs Budgets must be filed alongside the Directions Questionnaire if the value of the claim is less than £50,000. If the claim value exceeds £50,000, the Costs Budget must be filed 21 days before the first Costs and Case Management Conference (CCMC). We would always recommend that the Precedent H is filed with the Directions Questionnaire to avoid the likelihood of any default arising.

How do I Prepare a Precedent H Costs Budget?

Guidance notes for preparing a Precedent H can be found here.  Our Costs Draftsman service can also help with preparation of your bill of costs.

What Happens if I Don’t File a Costs Budget?

If you do not file a Costs Budget, you will be limited to recovering Court fees only.  You can make an application for Relief from Sanctions however; this must be done urgently on realisation of any default, or in the event any party raises an issue.

Can a Precedent H be Amended?

A Precedent H can be amended. You must serve the amended budget on the other side to be agreed. If a Costs Management Order has not yet been made, then parties will simply engage in discussions on the updated Budget, or the Budget will be set at the Costs Case Management Conference.  If a Costs Management Order has been made, an application should be made to the Court for a revised budget if the other side do not agree with the amended Costs Budget.

Can I Deviate from a Costs Budget?

If you have not updated your Precedent H Budget before the end of the case, it is possible that there will be be a considerable discrepancy between incurred costs shown in the Bill of Costs and the Costs Budget.  This can be due to the passage of time that has passed between the Cost Budget preparation and any CCMC.

If your Budget is insufficient on conclusion, you will need to demonstrate a ‘good reason’ retrospectively to deviate from the Budget. But what exactly is a good reason to deviate from the costs budget? This is quite an ambiguous issue and usually a high threshold to overcome. In order to be successful in deviating from the Precedent H, you must demonstrate the following:

• When the Budget was prepared, the change in circumstances could not have been foreseen.
• Any efforts which have been made to amend the Cost Budget following the change in circumstances.

How can we Help?

The Legal Practice Support team are always happy to help with any budgeting issues, and the author can be contacted via email at stacey@legalpracticesupport.co.uk. If you would like to find out more about best practice in preparing your cost budget, please feel free to view the section on our website for further guidance.

Our Costs Director, Robert Collington, can be contacted via email on enquiries@legalpracticesupport.co.uk or by telephone on 01204 930234. You can also get in touch with us via the Contact Page on our website.