Drafting a compliant costs budget precedent remains an essential aspect of civil litigation practice in 2026. For practitioners undertaking costs work, a properly prepared Precedent H is fundamental to the recovery of legal costs and to effective costs and case management.

However, the increasing complexity of costs regulation, coupled with recent procedural updates in 2025, means that drafting a compliant Precedent H has never been more critical. Mistakes or omissions can lead to challenges from paying parties, increased costs disputes, or delays in obtaining costs recovery.

Understanding the Role of Precedent H

A Precedent H is the formal cost budget required under CPR Part 3 for most multi track claims. It sets out incurred and estimated costs by procedural phase and informs the court’s costs management order, typically made at the case management conference CCMC.

In 2025, the courts continue to take a rigorous approach to compliance. Where a party either omits filing a costs budget or serves a materially non-compliant document, the default sanction remains severe: recovery limited to court fees only, unless relief from sanctions is granted. The budget, therefore, performs both a procedural and a strategic function, particularly in complex business and property work.

Key Elements of a Compliant Precedent H

A Precedent H in 2025 should contain the following key elements:

Client and matter details – Include the client’s name, matter reference, and a description of the work undertaken.

Date of engagement and basis of charges – Clearly set out whether costs are being claimed on an hourly, fixed-fee, or contingency basis.

Itemised description of work – Break down the work by task or stage, using standard narrative headings where appropriate.

Time and fees – For hourly rates, include precise time spent and hourly rate; for fixed fees, clearly justify why the fixed fee applies.

Disbursements and VAT – List all disbursements with supporting invoices and calculate VAT separately in line with current HMRC guidance. 

Practical Drafting from a Costs Law Perspective

Precise, justifiable descriptions

Costs law requires that each entry be adequately descriptive. Generic terms like “work on file” are insufficient; the taxation officer must understand the legal purpose of the work.

Example:

• Non-compliant: “Telephone call with client.”
• Compliant: “Telephone call with client (20 minutes) to advise on interim injunction application and explain potential costs exposure under CPR Part 44.”

The reference to CPR Part 44 here demonstrates the legal justification for the time spent.

Structure work by litigation stages

Taxation practice prefers Precedent H entries structured by stage, reflecting the chronological and procedural nature of work. Standard stages include:

• Pre-action advice and letters before action
• Issuing proceedings and case preparation
• Applications and hearings
• Settlements or trial and completion

Example stage entry:

Avoid inflated or vague entries

Costs law principles emphasise reasonableness and proportionality. Entries must reflect actual time and effort, supported by contemporaneous records. Inflated or retrospective estimates are routinely disallowed.

Example:

• Non-compliant: “Telephone call with client – 1 hour”
• Compliant: “Telephone call with client (15 minutes) to discuss settlement proposal and costs implications under CPR Part 44, including advice on proportionality of claim.”

The role of costs draftsmen and costs lawyers

Costs draftsmen and costs lawyers play a crucial role in the preparation and management of legal costs, particularly in relation to Precedent H. Their expertise ensures that costs are accurately recorded, legally compliant, and maximised for recovery. They assist by transforming solicitor time records and disbursements into a coherent and structured Precedent H, organising work according to litigation or matter stages and ensuring that all recoverable costs are clearly presented in line with CPR Part 44.

Their involvement minimises the risk of reductions or disallowances. In addition, costs draftsmen apply their knowledge of costs law to ensure that claims are reasonable and defensible. They structure costs to highlight the work undertaken in a manner that supports full recovery while mitigating potential disputes with paying parties.

How can ARC Costs assist?

ARC Costs can provide expert support to law firms in managing and recovering their legal costs efficiently and compliantly. Our team can assist in the preparation of Precedent H, ensuring that all costs are accurately recorded and clearly presented.

Beyond Precedent H preparation, we can assist through the process of preparing for detailed assessment hearings, bill of costs, negotiations and points of reply. As an independent expert, we also represent Paying Parties, and our costs team are adept at Points of Dispute as well as advising on, and negotiating on your behalf if you wish, the maximum possible reductions to be achieved.

The costs lawyers in our team can further assist in more complex, high value costs matters and can represent clients at detailed assessment hearings.

For assistance on how to draft a compliant Precedent H in 2025, contact one of the team at info@arccosts.co.uk, or speak to one of our experts by calling 01204 397302.