In our experience supporting Solicitors, fee earners and Counsel with budgets across the spectrum of civil litigation, a consistent pattern emerges. Judges are looking for Costs Budgets that are grounded in reality, proportionate to the issues, and clearly explained. Once a costs budget is approved by the Court, it can become the basis for assessing future arguments over proportionality, hourly rate disputes, reasonableness of time spent, and the extent of estimated and incurred costs claimed in any final Bill (as against the original Budget).

Despite this, many Claimant budgets and Defendant budgets fail to meet judicial expectations, resulting in significant reductions at any Costs and Case Management Conference (CCMC), and in serious cases, resulting in adverse costs orders being made against a party for a Budget that has been sizeably reduced for being unrealistic. The most common shortcoming in a Costs Budget is not overvaluation, but under-explanation. A budget may be entirely sensible, but without clear assumptions or justification, judges often feel they cannot endorse it. This is particularly true in the High Court and in personal injury and clinical negligence litigation, where cost management is now routine.

What follows are the key factors that, from our experience, judges focus on when deciding whether a budget is reasonable.

1. A Costs Budget That Reflects the Overriding Objective

Judges regularly refer back to the overriding objective under The Civil Procedure Rules, CPR 1.1 when reviewing budgets. They expect parties to deal with cases justly and at proportionate cost, and the budget should reflect this.

Costs budgets often attract criticism when they show signs of internal inflation or aspirational figures. Judges tend to query anything that appears disconnected from the likely needs of the case, such as:

• excessive estimated hours without contextual explanation;
• reliance on senior fee earners for routine work, and a lack of delegation;
• hourly rates significantly above guideline figures without justification (though it is not within the power of the Court to set hourly rates at any CCMC);
• estimated totals that bear no relation to the claim’s value or complexity.

In personal injury and clinical negligence claims, there is an understandable need for expert evidence and detailed work, but this still has to be presented in a way that ties back to proportionality.

2. Realistic Hourly Rates Supported by Clear Rationale

Although hourly rate disputes technically fall outside the costs management order, judges routinely consider them as a sense-check. If the hourly rates are unrealistic, the estimated totals inevitably attract scrutiny.

Judges generally look for:

• a consistent approach across phases;
• evidence of the fee earner’s seniority and their role in the case;
• explanations for departures from guideline hourly rates;
• clear delegation showing appropriate use of lower-grade fee earners.

The High Court in Ohpen Operations UK Ltd v Invesco Fund Managers Ltd [2019] reinforced that hourly rates, while not formally set by the budget, must be plausible enough that the overall figures can be regarded as reasonable.

We regularly see phases reduced simply because the judge concludes the hourly rates are out of step with the work being undertaken or the experience required.

3. Proper Phase-by-Phase Justification

A budget stands or falls on the strength of its assumptions. Judges expect each phase to explain not only what work is anticipated, but why. They want detail, not generalisations.  This will also form the basis of any future submissions to vary a Budget (via the Precedent T process), as otherwise it is assumed that such factors would have been taken into account in the initial approved Budget.

A typical example is the disclosure phase. Instead of a vague statement such as, “Disclosure likely to be extensive,” judges expect something like:

“Disclosure is expected across multiple expert disciplines, including orthopaedics and neurology records. Based on initial material, we anticipate 3,000–4,000 pages. Additional work is expected following exchange of expert evidence.”

Similarly, assumptions for witness statements, expert evidence, or trial preparation should reflect the issues in dispute, the likely volume of material, and the complexity of the subject matter. Judges respond positively to budgets that show a clear understanding of the factual and evidential landscape.

4. Consistency With the Actual Case Being Advanced

Judges routinely cross-check the budget against pleadings, case summaries, expert reports and any preliminary issues raised by the parties. A budget must be coherent with the case theory.

If a claimant indicates that only one expert will be relied upon in the pleadings but budgets for three, a challenge is inevitable. Likewise, if the defendant budgets for minimal witness statements in a multi-witness liability dispute, judges will want to know why.

A costs budget that matches the contour of the litigation tends to attract far less judicial intervention.

 

5. Alignment With Court Orders and the Directions Timetable

Courts expect budgets to correspond closely to the case management orders in place. Work that has already been ordered must be reflected in the budget. Judges commonly explore questions such as:

• Does the budget accurately reflect the timetable for exchange of witness statements and expert evidence?
• Has the work expected before the case management conference been included?
• Are the parties budgeting for the right number of experts in accordance with the order?
• Does the budget anticipate the correct volume of trial preparation?

Failing to comply with the obligation to file a costs budget within 21 days of the CMC is one of the most frequent and avoidable budgeting mistakes. A late costs budget places the party in a weak position and often results in significant restrictions being placed on recoverable costs.

 

6. What Recent Case Law Shows About Judicial Expectations for a Reasonable Costs Budget

Case law over recent years provides considerable insight into how judges assess costs budgets.

Merrix v Heart of England NHS Foundation Trust [2017]

This decision confirmed that judges approve budgets based on reasonableness and proportionality, not perfection. Once approved, estimated phases are difficult to revisit. Judges therefore expect parties to get the budget right at the outset.

Harrison v University Hospitals Coventry [2017]

Harrison reinforced the binding nature of budgeted phases. Judges rely heavily on this authority when pushing back on budgets that include speculative or inflated figures.

Sharp v Blank [2017]

This case highlighted the risk of allocating inappropriate levels of work to senior fee earners. Courts expect work to be done at the right level, and budgets that rely too heavily on partners or Grade A fee earners for routine tasks attract reductions.

Across these cases, the judiciary stresses realism, proportionality, and evidence-based assumptions.

7. Proportionate Costs in Practice

Proportionality remains the dominant theme in cost management. Judges consider a range of factors, including:

• the value of the claim,
• the complexity of the issues,
• the volume of documentation,
• the number and type of experts required,
• the presence of preliminary issues such as causation or liability disputes,
• trial length.

Proportionality does not mean a numerical comparison between claim value and budget value. A clinical negligence claim worth £200,000 may reasonably attract a substantial budget depending on the volume of expert disciplines involved. What judges expect is a clear explanation of why the costs are necessary.

Budgets that acknowledge the need for proportionality and explain how the figures have been kept under control, tend to receive a more favourable response.

8. Clarity, Credibility and Internal Consistency

Judges see budgets every week. A well-structured, internally consistent document signals professionalism. A budget that contains calculation errors, contradicts itself, or appears hastily assembled immediately undermines confidence.

Judges respond well to:

• concise and precise assumptions,
• clear delegation of work,
• transparent totals and calculations,
• a clear distinction between incurred and estimated costs.

The more accessible the budget is to the judge, the smoother the budget hearing usually becomes.

9. Comparing Claimant and Defendant Budgets

Judges often view the budgets side-by-side. When the parties’ forecasts diverge substantially, judges will want an explanation.

For example:

• If the claimant anticipates four sets of expert evidence but the defendant budgets for one, that inconsistency must be addressed.
• If the defendant’s witness statement phase is budgeted at half the claimant’s figure despite similar issues, the judge will expect a rationale.

Mutual engagement before the hearing, such as discussing areas of agreement and narrowing points of dispute, generally leads to a more efficient budget approval process.

How ARC Costs Can Assist

From our experience in regularly preparing and negotiating costs budgets, we have found that the strongest budgets are the ones that explain the case, not just the numbers. This is precisely where ARC Costs is able to support firms effectively.

Our team assists with:

Early budget preparation

We draft budgets that reflect the realities of the case and anticipate judicial concerns before they arise.

Clear and persuasive assumptions

We prepare detailed narrative assumptions that explain the scope of work, the complexity of issues, expert disciplines, witness requirements and anticipated directions.

Realistic hourly rates and staffing plans

We ensure the budget is supported by an appropriate allocation of work to the right grade of fee earner, with clear justification for any higher-level involvement.

Reviewing claimant and defendant budgets for consistency

We compare approaches and identify where discrepancies could cause judicial concern.

Representing you at the budget hearing

Our team frequently attends budget hearings and is accustomed to explaining and defending the figures in front of the judge.

Post-order support

Once a costs management order is in place, we assist firms throughout the litigation lifecycle. We help with updating assumptions, advising on variations, and preparing documentation for detailed assessment.

ARC Costs provides practical, experienced guidance designed to ensure that parties file a costs budget that is robust, proportionate and capable of being approved by the court without unnecessary dispute.

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