Iain Stark, chairman of the Association of Costs Lawyers and a partner at Weightmans, explains why Harrison reinforces the need to ensure proper consideration is given to budgets.
The Court of Appeal demonstrated once and for all the importance of budgeting in Harrison v University Hospitals Coventry & Warwickshire NHS Trust  EWCA Civ 792, by deciding that parties need a ‘good reason’ to depart from the budget at detailed assessment.
Though it is a victory for common sense, the scale of the risk to solicitors is shown by our recent survey of costs lawyers, which found that just 5 per cent worked with solicitors who always stuck to their budgets, 67 per cent said their solicitor clients ’sometimes‘ went over budget, while 26 per cent said this always happened.
We expect the assumptions behind budgets will come under particular scrutiny in future as they are likely to underpin ‘good reason’ arguments. Don’t forget also to apply to update your budget as the case proceeds.
The decision that incurred costs are not subject to the ‘good reason’ rule is similarly welcome. There is a danger of claimants incurring as much as possible before the costs management order, but they then put themselves at risk of adverse judicial comments or the need for detailed assessment.
However, the court’s comment that the costs judge on detailed assessment will still have to look at whether the final figure is proportionate risks introducing an element of uncertainty in the process.