Costs Budgeting and Estimates in Civil Litigation

Costs budgeting plays a central role in modern civil litigation. Courts expect parties to identify, control and justify legal costs at an early stage, and failure to do so can have serious consequences.

Specialist costs lawyers and law costs draftsmen are frequently instructed to prepare, review and advise on costs budgets and estimates to ensure compliance with the Civil Procedure Rules and to protect a party’s position on assessment.

What is costs budgeting?

Costs budgeting is the process by which parties set out their anticipated legal costs for each stage of litigation, usually at an early point in the proceedings.

The court may approve, vary or comment on those budgets, and once approved they can significantly limit the costs that may later be recovered from another party.

Costs budgeting is designed to promote:

Proportionality
Transparency
Early control of legal spend

It applies primarily in multi-track cases, subject to exceptions under the Civil Procedure Rules.

Precedent H and the budgeting process

The formal document used for costs budgeting is Precedent H. This sets out estimated costs by phase of litigation, including:

Pre-action
Statements of case
Disclosure
Witness evidence
Expert evidence
Trial preparation and trial

Precedent H must be completed accurately and supported by a clear explanation of assumptions. Poorly prepared budgets are frequently challenged, reduced, or rejected by the court.

Specialist costs professionals are often instructed to:

Draft Precedent H budgets
Review opponents’ budgets
Advise on budget challenges and replies
Assist with budget hearings

Costs budgets vs costs estimates

Costs budgets and costs estimates serve different purposes and apply in different circumstances.

A costs budget:

Is usually required where budgeting applies
Is subject to court approval
Can restrict recoverable costs

A costs estimate:

May be required where budgeting does not apply
Is not approved by the court
Still influences proportionality and reasonableness

Understanding when a budget is required, and when an estimate will suffice, is essential to managing risk in litigation.

Consequences of failing to comply with costs budgeting

Failure to comply with costs budgeting requirements can result in severe sanctions, including:

Restriction to court fees only
Disallowance of incurred or future costs
Difficulty obtaining relief from sanctions

Courts take a strict approach, particularly where parties fail to file budgets on time or submit unrealistic figures without proper justification.

Early advice from specialist costs lawyers or law costs draftsmen can help avoid costly procedural mistakes.

When specialist costs lawyers or law costs draftsmen are instructed

Specialist costs professionals are commonly instructed:

At the outset of litigation to prepare budgets or estimates
When challenging or defending an opponent’s budget
Following adverse costs management decisions
To advise on recovery risks and proportionality

Their role is to ensure compliance with procedural rules while maximising the prospects of recovering fair and reasonable costs.

For broader guidance on specialist costs services across England and Wales, see our page on specialist costs lawyers and law costs draftsmen.

Costs budgeting support nationwide

We provide costs budgeting and estimating services for solicitors and litigants across England and Wales, acting in a wide range of civil disputes.

Our work includes drafting and reviewing Precedent H budgets, advising on costs management hearings, and supporting clients through detailed assessment where budgeting issues arise.