The rules on costs introduced by Lord Woolf’s Civil Procedure Rules mean that there are some aspects of the law in which the client may find itself advising its lawyers.
Traditionally, lawyers advised their clients on the best course of action in a dispute, leaving the uncertainty of the costs for the courts to decide. Only a limited number of lawyers and clients involved themselves in cost projections. The Civil Procedure Rules have changed all this, and now all lawyers involved in litigation have to embrace the world of cost estimation – a discipline that contractors and subcontractors have practised for many years.

The CPR introduces new approaches to costs. There is a greater emphasis on openness, and a “pay as you go” philosophy regarding costs incurred during the proceedings.

The CPR requires the parties to keep the court, and one another, informed of the costs being incurred by drawing up an “estimate of costs”. The relevant practice direction says that the court may at any time order a party to file an estimate of costs and serve it on all other parties. This estimate should provide information on all the costs already incurred and an estimate of those likely to be incurred in the future, including what a party would seek to recover in the event of being successful.

Cost estimates are important because the court can use them to decide whether a particular step in a case is cost-effective: would the likely benefits of the move justify the cost of making it? The idea is to help the courts make effective cost orders and improve their case management.

Any party that intends to claim the costs of a hearing must prepare a written statement of the costs it intends to claim in the form of a schedule. This will be used by the court to make a summary assessment of the costs payable at the end of the hearing. Usually, the loser has to pay those costs within 14 days of the order. This is the “pay as you go” philosophy at work.

  •  To improve its case management, the court can at any time order a party to prepare a schedule of costs
  •  Lawyers need to learn project management skills to compile this

Although every case is different, they all tend to follow a pattern: claim evaluation; compilation of evidence (fact and expert); service of claim; evaluation of defence; disclosure of documents; exchange of witness statements; expert meetings and exchange of expert reports; preparation for trail; and the trial itself. Each of those activities can be broken down into more detailed steps, with resources applied (in the form of lawyers, experts and other “claims” staff). The time to be spent and the cost of that professional input can also be computerised.

Welcome, all lawyers, to the world of programming – which contractors have been living in for years. Experienced lawyers should have no difficulty justifying the steps to be taken in a typical construction case. To address costs accurately, it is necessary to estimate how much time each step will take and identify which individuals will be involved at which stages. Setting out the estimated periods for completion of each step will help to ensure that the activity is completed on time.

Cost projection and programming are disciplines that can help lawyers work out the time they need to allocate to a particular activity. These techniques can also identify where the resources allocated to the dispute may be overcommitted, or they can be used to smooth out any underallocation of resources.

This means that lawyers need to start thinking in programme management terms: which tasks are on the critical path and what is their sequence, which jobs can run in parallel and which are independent, and so on.