Kerry Underwood

BUDGETS: REDUCTION IN HOURLY RATE DOES NOT REDUCE OVERALL BUDGET

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In Nash v Ministry of Defence [2018] EWHC B4 (Costs)

the Senior Courts Costs Office held that a reduction in hourly rates in relation to incurred costs did not require a reduction in the budgeted costs overall or for any given phase.

Hourly rates enjoyed no particular status.

The Master said that budgeting controlled the amount of money the parties could spend, not how they spend it.

  1. “By way of example, if a party budgets for 10 hours at £500/hr plus £2,000 on Counsel for future costs in the disclosure phase, the total of £7,000 is exactly the same as if the same party had budgeted for 100 hours at £50/hr plus £2,000 on Counsel. If £7,000 is approved for the budgeted (future) costs total then the court will not interfere with how that money is spent without good reason.
  2. A budget approved in these terms does not, for example, compel that party to spend £2,000 on Counsel for future costs relating to disclosure or use the fee earners anticipated when the budget was drawn. Similarly, it does not limit that party to spend £2,000 on Counsel for future costs relating to disclosure.
  3. The budget is set following the making of a costs management order, and Solicitors must thereafter cut their cloth accordingly.
  4. Taking the example above, where a rate of £500/hr is reduced to £100/hr in the incurred costs, it cannot be logical for a budget claiming 10 hours at £500/hr plus £2,000 for Counsel (total £7,000) to be reduced to £3,000 on assessment but where a budget claiming 100 hours at £50/hour plus £2,000 for Counsel (total £7,000) would suffer no reduction at all (where say £7,000 is claimed in that phase in the bill of costs).”

 

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Written by kerryunderwood

April 25, 2018 at 8:24 am

Posted in Uncategorized

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