The Senior Courts Costs Office decision in Collins v Thames Valley Police  [2026] provides important clarification for defendants dealing with fixed recoverable costs after settlement. The case addresses the interaction between Part 36, post-October 2023 FRC expansion, and police intentional tort claims, all of which frequently arise in modern paying party costs disputes. It is particularly relevant for those defending bills at detailed assessment. The Central Issue The substantive claim settled before proceedings were issued. However, costs-only proceedings were later brought under Part 8 after the expansion of fixed recoverable costs in October 2023. The key question was whether the costs should be: assessed on the standard basis, or restricted to fixed recoverable costs . The court also had to determine whether Part 36 wording displaced FRC and whether the inclusion of an intentional tort against the police removed the case from the fixed costs regime. Part 8 Costs-Only Proceedings and FRC The Senior Courts Costs Office confirmed that issuing Part 8 costs-only proceedings after October 2023 constitutes the “issue of proceedings” for the purpose of the transitional provisions. That means the procedural step, not the settlement date, determines whether FRC applies. For defendants, this reinforces the importance of analysing: when costs-only proceedings were issued whether the case falls within the extended FRC regime whether an exemption genuinely applies These arguments should be raised early in points of dispute Part 36 Does Not Automatically Disapply FRC The court confirmed that acceptance of a Part 36 offer providing for costs “in accordance with CPR 36.13 does not contract out of fixed recoverable costs. The entitlement to costs remains subject to CPR 45 unless there is clear contractual wording to the contrary. This is significant because receiving parties often argue that Part 36 entitles them to standard basis assessment. The decision confirms that Part 36 does not override the fixed regime. Intentional Torts and Police Claims The decision also addressed claims against the police involving intentional torts such as conversion or trespass to goods. Under CPR 26.9(10)(e), such claims are mandatorily allocated to the multi-track, which removes them from fixed recoverable costs. Importantly, the intentional tort need not be the dominant cause of action, inclusion alone may suffice. For paying parties, this means careful analysis of pleadings is critical before advancing a fixed costs argument. Procedural Nature of FRC Expansion The court treated the October 2023 extension of FRC as procedural rather than substantive. That allows the regime to apply even where the underlying claim settled before the reform date, provided costs-only proceedings were issued later. This strengthens transitional arguments in favour of defendants in ongoing paying party costs disputes. Strategic Implications at Detailed Assessment The decision reinforces several key defence principles: Timing of proceedings determines FRC applicability Part 36 does not disapply fixed costs without express wording Police intentional tort pleadings may remove a case from FRC Transitional provisions can favour defendants Where FRC does not apply, defendants should still consider robust challenges based on proportionality , guideline hourly rates , and broader recoverability and conduct arguments. Why This Matters Whether FRC applies can dramatically alter exposure. The difference between fixed costs and standard basis assessment may represent a substantial reduction in liability. This case confirms that defendants must scrutinise: procedural timing settlement wording pleadings allocation rules These are not technicalities — they are exposure-control tools. Key Takeaways Costs-only proceedings issued post-October 2023 may trigger FRC Part 36 does not automatically disapply fixed costs Police intentional tort claims can fall outside the FRC regime Transitional arguments may significantly reduce liability Early strategic input improves defence positioning We act for local authorities, insurers and public bodies in defending costs claims involving fixed recoverable costs, Part 36 and detailed assessment. Detailed Assessment Strategy Guides Detailed Assessment of Costs: The Complete Guide Paying Party Detailed Assessment Strategy How Paying Parties Challenge a Bill of Costs Proportionality Challenges at Detailed Assessment Fee Earner Delegation Challenges at Detailed Assessment Guideline Hourly Rates 2026 Intermediate Track Costs Tables

Paying Party Strategy and Proportionality Control Counsel’s fees are often one of the largest components of a bill of costs. For paying parties, they represent a key opportunity to reduce exposure at detailed assessment. Challenges rarely succeed through simple objection; they succeed when tied to proportionality, necessity, and the overall value of the litigation. This article explains how paying parties can challenge counsel’s fees effectively and how those arguments interact with wider issues of proportionality , delegation , and recoverability and conduct . Why Counsel’s Fees Attract Judicial Scrutiny Courts assess counsel’s fees on the same core principles that apply to all inter partes costs: reasonableness necessity proportionality Even where work has been carried out, the court will ask whether the level of counsel instructed was justified by the value, complexity, and importance of the case. This is particularly relevant on the standard basis, where any doubt is resolved in favour of the paying party. Common Grounds of Challenge Level of Counsel Instructed A frequent issue is whether leading counsel was necessary. In modest value or routine claims, the court may find that junior counsel would have been sufficient. This mirrors the wider issue of fee earner delegation , where work carried out at an unnecessarily senior level is vulnerable to reduction. Duplication Between Solicitors and Counsel Paying parties should analyse: overlapping attendances duplicated conferences solicitor time spent re-working counsel’s material Where duplication exists, reductions can be made to one or both elements. This aligns with broader detailed assessment paying party services strategy, where duplication is a central theme in reducing bills. Conferences and Refreshers Courts will consider: the number of conferences their duration whether multiple fee earners attended Excessive attendance by both solicitors and counsel is frequently reduced unless clearly justified by complexity. Proportionality of Counsel’s Fees Even where counsel’s fees are reasonable in isolation, they may still be disproportionate when viewed against: the sums in issue the stage reached the outcome achieved This reflects the modern “stand-back” approach to proportionality , where global reductions may be applied after line-by-line assessment. The Importance of Case Value High counsel’s fees in low or moderate value claims are particularly vulnerable. Courts expect the level of representation to reflect the financial and factual weight of the case. This has been reinforced in recent costs decisions where the choice of expensive representation was treated as a litigation choice, not a recoverable necessity. Interaction with Conduct and Strategy Counsel’s fees may also be affected by conduct issues. For example: unnecessary applications over-pleading tactical steps that increased costs without advancing the case These points link directly to recoverability and conduct , where unreasonable litigation behaviour can reduce otherwise recoverable costs. Evidence-Based Challenges Successful paying party challenges rely on: comparing the case to typical litigation of similar value identifying routine work carried out at senior level analysing whether the hearing required specialist advocacy demonstrating duplication or inefficiency This moves the argument from assertion to structured proportionality analysis. Tactical Timing Counsel’s fees should be addressed: in Points of Dispute in negotiations at detailed assessment Early identification strengthens settlement leverage and narrows the issues before the hearing. This is a core part of paying party costs lawyers strategy, where exposure modelling informs negotiation. Key Takeaways for Paying Parties Counsel’s fees are a primary driver of overall costs exposure Leading counsel is not automatically recoverable Duplication between solicitors and counsel is highly vulnerable Proportionality can reduce reasonable fees Conduct arguments can further limit recovery Early, evidence-based challenges improve settlement outcomes Strategic Conclusion Challenging counsel’s fees is not about disputing advocacy itself; it is about ensuring that the level of representation matches the needs of the case. When combined with proportionality , fee earner delegation , and recoverability and conduct arguments , it becomes one of the most effective tools available to paying parties at detailed assessment. Detailed Assessment Strategy Guides Detailed Assessment of Costs: The Complete Guide Paying Party Detailed Assessment Strategy How Paying Parties Challenge a Bill of Costs Proportionality Challenges at Detailed Assessment Fee Earner Delegation Challenges at Detailed Assessment Guideline Hourly Rates 2026 Intermediate Track Costs Tables s

Expert evidence is frequently one of the largest disbursement elements in a bill of costs. At detailed assessment, expert fees are not automatically recoverable simply because an expert was instructed. Paying parties can, and often do, secure significant reductions where necessity, proportionality, or scope are not properly evidenced. This article explains how expert fees are assessed, the common grounds of challenge, and the strategic approach paying parties should adopt. The Legal Framework for Expert Fees Expert fees are governed by the same core principles that apply to all costs: reasonableness necessity proportionality Even where expert evidence was permitted, the amount  claimed remains open to challenge. The court will consider: whether expert evidence was reasonably required whether the discipline and number of experts were justified whether the fees claimed are proportionate to the issues in dispute These issues sit within the wider question of recoverability and conduct . Permission Does Not Equal Recovery A common misconception is that where the court granted permission for expert evidence, the fees are automatically recoverable. That is incorrect. Permission establishes admissibility, not quantum. At detailed assessment the paying party may still argue: the expert’s hourly rate is excessive time spent is unreasonable work falls outside the permission granted the report deals with issues that were not live This distinction is frequently overlooked and provides a strong basis for reduction. Scope Creep and Work Outside the Letter of Instruction One of the most effective paying party arguments is that the expert has undertaken work beyond the permitted scope. Typical examples include: supplementary reports that were not ordered extensive liaison with solicitors or counsel work on issues that were later abandoned duplication between multiple experts Where the work goes beyond the original instruction, recoverability becomes vulnerable. This is particularly powerful when combined with detailed assessment paying party strategy arguments on necessity. Proportionality and Expert Fees Expert evidence must be proportionate to: the value of the claim the complexity of the issues the importance of the expert discipline High expert fees in modest-value claims are a primary target for reduction. Even if each individual item appears reasonable, the court may apply a global proportionality reduction, as explained in our guide to proportionality challenges at detailed assessment . You cannot itemise your way out of disproportionality. Duplication Between Experts and Legal Teams Another common ground of challenge is overlap between: multiple experts in similar disciplines expert and counsel analysis expert and solicitor review work Where the same material is analysed by several fee earners, the court may disallow part of the expert’s time. This links directly to fee earner delegation challenges and the need for proper division of labour. Hourly Rates and Market Testing Expert hourly rates are not immune from scrutiny. Paying parties should: compare rates with market norms examine the expert’s CV and specialism consider whether a lower-cost expert could have been used Where the discipline is common and the issues straightforward, premium rates are difficult to justify. Attendance at Conferences and Hearings Expert attendance at conferences with counsel or at trial is often claimed as a disbursement. Challenges commonly succeed where: attendance was not reasonably required multiple experts attended unnecessarily preparation time is excessive These items must be justified by reference to the needs of the case, not convenience. Practical Paying Party Strategy Successful challenges to expert fees focus on: ✔ necessity of the expert discipline ✔ compliance with permission orders ✔ proportionality to claim value ✔ duplication and scope creep ✔ reasonableness of hourly rates This forms part of a wider paying party detailed assessment defence and should be planned from the point the report is served. Common Mistakes by Receiving Parties Reductions frequently arise where: the letter of instruction is not disclosed time is block-billed the report addresses irrelevant issues multiple experts are used without justification fees are disproportionate to the sums in issue These evidential gaps create clear opportunities for challenge. Why This Matters for Paying Parties Expert fees can represent a significant proportion of a bill. Targeted challenges often produce substantial savings. Early analysis of: permission orders letters of instruction the scope of reports allows paying parties to frame strong Points of Dispute and improve settlement leverage. Key Takeaways Permission for expert evidence does not guarantee recovery of the fees claimed Proportionality is central to expert fee challenges Work outside the letter of instruction is vulnerable Duplication between experts and legal teams leads to reductions A structured paying party strategy can significantly reduce exposure. Detailed Assessment Strategy Guides Detailed Assessment of Costs: The Complete Guide Paying Party Detailed Assessment Strategy How Paying Parties Challenge a Bill of Costs Proportionality Challenges at Detailed Assessment Fee Earner Delegation Challenges at Detailed Assessment Guideline Hourly Rates 2026 Intermediate Track Costs Tables

Electronic bills of costs are now standard in multi-track litigation and require a structured approach to preparation and assessment. The phase, task and activity format is designed to mirror Precedent H and enables detailed comparison between the approved budget and the costs claimed. Understanding how electronic bills operate is essential for both receiving and paying parties involved in detailed assessment. What Is an Electronic Bill of Costs? An electronic bill of costs presents time in a spreadsheet format organised by phases, tasks and activities. This structure allows the work undertaken to be analysed and compared directly with the approved costs budget. The objective is transparency so that the court and the parties can identify what work was carried out, by whom and at what stage of the litigation. Phases, Tasks and Activities Electronic bills are designed to reflect the structure of Precedent H: phases correspond to the stages of litigation tasks identify the type of work undertaken activities describe the specific action performed This format allows the bill to be reviewed alongside the approved budget and its assumptions. Relationship with Precedent H The approved costs budget remains the starting point on detailed assessment. Time recorded within each phase of the electronic bill should correspond with the phases and assumptions contained in Precedent H. Where work falls outside those assumptions, the court will consider whether there is good reason to depart from the approved budget. Common Issues in Electronic Bills Issues that frequently arise on detailed assessment include: time recorded in an incorrect phase inconsistent task descriptions block billing within activities duplication of attendances excessive senior fee earner time on routine work work claimed outside the scope of the budget assumptions These matters may affect both the presentation of the bill and the assessment of recoverable costs. Analysis on Detailed Assessment A structured review of an electronic bill involves: comparing phase totals with the approved budget identifying work that does not fall within the budget assumptions analysing time by task and fee earner grade considering proportionality within each phase This phase-based approach assists the court in determining whether the costs claimed are reasonable and proportionate and should be considered alongside proportionality challenges in costs. Points of Dispute and Electronic Bills Effective points of dispute and replies to an electronic bill should address: alignment between the bill and Precedent H phases clarity of task and activity descriptions time recorded outside the approved scope delegation and fee earner grade Addressing these matters at phase level as well as by individual entry supports a structured detailed assessment. Requests for Re-presentation Where an electronic bill does not allow proper comparison with the approved budget, it may be necessary to request re-presentation. This can arise where: phases do not correspond with Precedent H task and activity information is unclear time cannot be reconciled with the budget A properly structured bill assists both the court and the parties during detailed assessment. J-Codes and Bill Structure The use of J-Codes is not mandatory. The critical requirement is that the bill presents time in a clear phase and task format that allows comparison with the approved budget. The focus on detailed assessment is therefore on transparency and structure rather than the coding system used. Preparing Electronic Bills For receiving parties, careful preparation of the electronic bill includes: ensuring phase totals match the approved budget using clear task and activity descriptions maintaining consistency between time records and the bill aligning the bill with the Precedent H assumptions This assists the court and reduces the likelihood of queries on detailed assessment. Assessing Electronic Bills For paying parties, a structured review of the electronic bill enables: comparison with the approved budget identification of work outside scope analysis of fee earner grade and delegation consideration of proportionality by phase This supports a focused and efficient approach to detailed assessment and the preparation of points of dispute and replies. How We Assist with Electronic Bills of Costs We prepare and analyse electronic bills for detailed assessment, including phase alignment with Precedent H, task and activity review and the preparation of points of dispute and replies. Our work supports both receiving and paying parties in presenting and assessing electronic bills in a clear and compliant format as part of our paying party costs services. Detailed Assessment Strategy Guides Detailed Assessment of Costs: The Complete Guide Paying Party Detailed Assessment Strategy How Paying Parties Challenge a Bill of Costs Proportionality Challenges at Detailed Assessment Fee Earner Delegation Challenges at Detailed Assessment Guideline Hourly Rates 2026 Intermediate Track Costs Tables Specialist support for detailed assessment and electronic bills of costs Clear, structured analysis of phases, tasks and budget alignment.

Case Authority Court:  Court of Appeal (England & Wales) Case:   Attersley v UK Insurance Ltd  [2026] EWCA Civ 217 The Court of Appeal considered the costs consequences where a Claimant accepts a defendant’s Part 36 offer after the expiry of the relevant period in a claim that initially fell within a fixed recoverable costs regime. The court confirmed that, in certain circumstances, a claimant who accepts a Part 36 offer late may remain limited to the fixed costs that applied when the offer was made or when the relevant period expired, even where the claim later progresses outside that regime. The decision provides important guidance for litigators dealing with the interaction between Part 36 settlement strategy and fixed recoverable costs. Introduction Part 36 offers remain one of the most powerful strategic tools available in civil litigation. The Court of Appeal’s decision in Attersley v UK Insurance Ltd  highlights the potential consequences where a claimant accepts a defendant’s offer after the expiry of the relevant period, particularly where the claim initially fell within a fixed recoverable costs regime. For defendants, insurers and other paying parties, the judgment demonstrates how early Part 36 offers can significantly restrict recoverable costs if acceptance is delayed. Solicitors and insurers frequently instruct paying party costs lawyers to analyse the costs consequences of late Part 36 acceptance and to challenge bills of costs during detailed assessment. See our guide to paying party detailed assessment strategy: https://www.sphcosts.com/excessive-costs The Role of Part 36 in Costs Strategy Part 36 of the Civil Procedure Rules provides a structured framework designed to encourage settlement. Offers made under the rule carry significant costs consequences depending on when they are accepted. Where a claimant accepts a defendant’s Part 36 offer within the relevant period, the defendant typically becomes liable for the claimant’s costs up to the date of acceptance. However, if the claimant accepts the offer after that period has expired, the court has discretion to determine the appropriate order for costs after that date. In many cases this discretion becomes particularly significant where fixed recoverable costs regimes apply. Paying parties frequently rely on specialist advice when challenging a bill of costs at detailed assessment. See: https://www.sphcosts.com/post/how-paying-parties-challenge-a-bill-of-costs-at-detailed-assessment Interaction Between Part 36 and Fixed Costs Fixed recoverable costs regimes are intended to provide certainty and predictability in certain categories of litigation. Where a claim falls within a fixed costs framework, recoverable costs are capped at prescribed amounts depending on the procedural stage reached. The Court of Appeal in Attersley  highlighted an important point: the costs consequences of late acceptance of a Part 36 offer may be determined by the fixed costs position that existed when the offer was made or when the relevant period expired. Later developments in the litigation, such as allocation to a different track or increased complexity, do not necessarily displace the earlier fixed costs framework. For a practical overview of how the intermediate track fixed recoverable costs regime operates, see: https://www.sphcosts.com/post/intermediate-track-fixed-recoverable-costs Why Late Acceptance Can Restrict Recoverable Costs The reasoning behind this approach is rooted in the structure of Part 36 and the objective of promoting early settlement. A defendant who makes an early settlement offer should be able to assess the potential costs consequences of that offer with a degree of certainty. Allowing later procedural developments to alter those consequences could undermine the predictability of the rule. Where a claimant delays acceptance of a reasonable offer, the court may determine that the costs consequences should reflect the procedural and costs position that existed when the offer should reasonably have been accepted. Strategic Lessons for Paying Parties The decision provides several important practical lessons for defendants and insurers. Early Part 36 Offers Can Limit Costs Exposure Making a well-judged Part 36 offer at an early stage of litigation can significantly reduce the potential costs exposure faced by a defendant. Where the offer is accepted late, the costs position may remain anchored to the earlier fixed costs framework rather than the more expensive regime that might apply later in the case. Late Acceptance Does Not Automatically Increase Costs Liability Claimants sometimes assume that if a case later leaves the fixed costs regime, the defendant’s costs exposure will automatically increase. The Court of Appeal decision demonstrates that such an assumption may be incorrect. The court may conclude that the claimant’s delay in accepting the offer means that the earlier fixed costs framework continues to govern the costs outcome. Settlement Timing Matters. A claimant who delays acceptance of a reasonable Part 36 offer risks losing the opportunity to recover higher costs that might otherwise have been available later in the litigation. Implications for Detailed Assessment Although fixed costs regimes are intended to avoid detailed assessment in many cases, disputes still arise regarding: • whether the claim falls within a fixed costs regime • the stage reached when an offer was accepted • the correct interpretation of the relevant Part 36 rules. In those circumstances, paying parties frequently prepare Points of Dispute for paying parties challenging the recoverability of costs claimed. See: https://www.sphcosts.com/pod Fixed Costs and the Expanding Civil Litigation Landscape The significance of these issues has increased following reforms expanding the scope of fixed recoverable costs in civil litigation. As fixed costs regimes apply to a wider range of claims, disputes concerning the interaction between Part 36 offers and fixed costs are likely to become more common. For a breakdown of the intermediate track fixed recoverable costs tables, see: https://www.sphcosts.com/post/intermediate-track-costs-table Conclusion Late acceptance of a Part 36 offer can have significant consequences for the recovery of litigation costs. In particular, where fixed costs regimes apply, a claimant may find that the recoverable costs remain limited to the framework that existed when the offer was made or when the relevant period expired. For paying parties, the decision highlights the continuing importance of early settlement strategy, careful use of Part 36 offers, and structured analysis of costs claims. These issues frequently arise during detailed assessment costs disputes, particularly where parties disagree about the applicable costs regime or the effect of late acceptance. See: https://www.sphcosts.com/detailed-assessment-costs-disputes Detailed Assessment Strategy Guides Detailed Assessment of Costs: The Complete Guide Paying Party Detailed Assessment Strategy How Paying Parties Challenge a Bill of Costs Proportionality Challenges at Detailed Assessment Fee Earner Delegation Challenges at Detailed Assessment Guideline Hourly Rates 2026 Intermediate Track Costs Tables

The level of fee earner undertaking work is a central issue in paying party costs disputes. Even where time has been reasonably incurred, the court will consider whether the work was carried out at the appropriate grade and whether proper delegation was applied. Challenges based on delegation frequently lead to substantial reductions at detailed assessment. We act for paying parties challenging excessive bills, including delegation and grade disputes at detailed assessment. Why Delegation Matters The court expects litigation to be conducted efficiently and at proportionate cost. Routine tasks carried out by senior fee earners, multiple lawyers attending the same event, or inadequate supervision structures can all justify reductions. Delegation is therefore closely linked to: proportionality Guideline Hourly Rates duplication of work necessity of attendance These issues commonly form part of Points of Dispute . The Judicial Approach to Grade and Role The court assesses not only whether work was done, but who should reasonably have carried it out. Tasks such as routine correspondence, document review, and procedural steps are rarely justified at partner or senior associate level unless supported by clear evidence. Where the grade claimed does not match the complexity of the task, reductions are likely even if the hourly rate itself falls within Guideline Hourly Rates . Duplication of Fee Earners Multiple fee earners attending conferences, hearings, or internal meetings is a common source of challenge. Paying parties will examine: whether each attendee had a defined role whether the attendance advanced the case whether a single fee earner would have been sufficient Unjustified duplication frequently results in disallowance of time or downgrading to a lower grade. Delegation and Proportionality Poor delegation is a key driver of disproportionate costs. Where the level of work and the grades deployed are out of alignment with the value and complexity of the claim, the court may apply both line-by-line reductions and global proportionality adjustments. This creates a direct link between delegation challenges and proportionality arguments. Authorisation and Recoverability of Fee Earner Time The status of the fee earner carrying out the work is also relevant to recoverability. In Mazur v Charles Russell Speechlys LLP [2025] , the High Court confirmed that the conduct of litigation is a reserved legal activity which may only be carried out by a person who is individually authorised or exempt. Supervision by a solicitor is not sufficient where the individual is, in substance, conducting the litigation. For costs purposes, this creates a potential challenge where: work said to involve the conduct of litigation is carried out by an unauthorised fee earner statements of case or formal steps are signed by someone without practising rights responsibility for litigation decisions rests with a person not entitled to conduct litigation In such cases, paying parties may argue that the work is not recoverable as solicitor’s costs or should be allowed only at a reduced level, subject to recoverability principles. The issue is one of substance rather than job title. The court will consider who exercised professional judgment and who had responsibility for the conduct of the litigation. Evidence Required to Justify Senior Involvement Receiving parties seeking to justify higher-grade work must demonstrate: complexity requiring specialist input strategic decisions made by senior fee earners supervision structures that added value tasks that could not reasonably be delegated Absent such evidence, the court is likely to allow time only at the appropriate lower grade. Commercial Impact for Paying Parties Delegation challenges are particularly effective in high-volume litigation where partner-heavy billing structures are common. Early identification of grade mismatches improves negotiation leverage and reduces exposure before a detailed assessment hearing. This is especially relevant for local authorities, insurers, and defendant teams managing multiple costs claims. Key Takeaways The court assesses who did the work, not just whether it was done Routine tasks at senior grade are vulnerable to reduction Duplication of attendance is frequently disallowed Mazur creates recoverability challenges where unauthorised persons conduct litigation Delegation arguments support proportionality reductions Detailed Assessment Strategy Guides Detailed Assessment of Costs: The Complete Guide Paying Party Detailed Assessment Strategy How Paying Parties Challenge a Bill of Costs Proportionality Challenges at Detailed Assessment Guideline Hourly Rates 2026 Intermediate Track Costs Tables

The Legal Aid Agency (LAA) has issued a further update confirming key deadlines connected to CCMS billing, contingency legal aid payments, and the end of the Average Payment Scheme in January 2026. With Average Payment Scheme recoupment due to begin shortly afterwards, civil and crime legal aid providers should now be prioritising the preparation of outstanding legal aid costs claims to avoid cashflow disruption and account deficits. Key Dates for Average Payment Scheme Recoupment Legal aid providers should ensure the following dates are firmly diarised: 22 December 2025 – Controlled work fee uplifts take effect 12 January 2026 – Average Payment Scheme ends 19 January 2026 – Final Average Payment Scheme payments made 26 January 2026 – Average Payment Scheme recoupment process begins 2 February 2026 – First recoupments applied to payments received These dates are critical for planning the submission of legal aid costs claims through CCMS. Contingency Legal Aid Billing and Prior Authority For matters billed under contingency arrangements during CCMS disruption, the LAA has confirmed: Prior authority granted by email remains valid proof of authorisation Prior authority decisions made under contingency will not be uploaded to CCMS A copy of the prior authority grant email must be submitted with the legal aid costs claim There is no requirement to reapply via CCMS where prior authority has already been granted Ensuring that prior authority evidence is clearly linked to each costs claim will help reduce delays during assessment. Average Payment Scheme Recoupment – Why Early Costs Preparation Matters The Average Payment Scheme will close on 12 January 2026, with recoupments starting from 26 January 2026. Although the LAA has built in a short gap between final payments and recoupment, firms that are not ready to submit their legal aid costs claims promptly may see recoupments applied before final bills are paid. To minimise the impact of Average Payment Scheme recoupment, providers should now: Identify all matters paid under the Average Payment Scheme Prepare and finalise legal aid costs claims in advance of January 2026 Check that all supporting documentation is complete Submit bills via CCMS as soon as they are bill-ready Proactive preparation is essential to protecting cashflow and avoiding unnecessary deficits on legal aid accounts. Legal Aid Fee Uplifts and CCMS Billing A statutory instrument introducing increases to some civil and crime legal aid fees takes effect on 22 December 2025. Providers should be aware that: Controlled work fee uplifts apply to matters starting on or after 22 December 2025 Fee uplifts must continue to be applied via the contingency process until standard CCMS billing routes are fully restored The deadline for December legal aid claims is 20 January 2026 Licensed work fee uplifts remain under development Correct application of fee uplifts within legal aid costs claims will be essential to avoid underpayment. Issues such as CCMS restoration, rejected bills, contingency billing errors or delayed payments often arise where Legal Aid costs have not been drafted and submitted in accordance with procedural requirements, which is why specialist support for Legal Aid costs drafting, CCMS claims and assessment strategy can be essential. Staying Updated on CCMS and Legal Aid Payments The LAA has confirmed that future updates will be issued on an as-needed basis, rather than bi-weekly. Providers should continue monitoring GOV.UK for guidance on CCMS billing, contingency arrangements, and legal aid payments. How SPH Costs Supports Legal Aid Costs Claims With Average Payment Scheme recoupment approaching, now is the time to ensure your legal aid costs claims are prepared and ready for submission. At SPH Costs, we support legal aid providers with: Preparation and submission of legal aid costs claims via CCMS Reviewing contingency legal aid billing and prior authority compliance Ensuring correct application of legal aid fee uplifts Reducing the financial impact of Average Payment Scheme recoupment If you would like assistance preparing your legal aid costs claims ahead of recoupment, please contact the SPH Costs team. Legal Aid costs claims frequently involve technical issues around billing, assessment, and compliance with Legal Aid Agency requirements. Specialist Legal Aid costs drafting support is often required to ensure claims are prepared and progressed correctly within the applicable framework. Our Legal Aid costs drafting services are explained in more detail on our Legal Aid Costs Drafting .

Provisional assessment under CPR 47.15 was introduced to deal with lower value detailed assessments on the papers rather than through a full oral hearing. The procedure currently applies where the bill of costs does not exceed £75,000. The Association of Costs Lawyers (ACL) is currently undertaking a survey of its members to assess how effective the provisional assessment process has been in practice. The survey also asks whether the £75,000 limit remains appropriate. When the scheme was originally piloted, it applied only to bills of up to £25,000, and the process appeared to work reasonably well. The increase to £75,000 has prompted ongoing debate, particularly regarding how the limit should be interpreted. Some judges have taken the view that the £75,000 threshold is exclusive of VAT, based on the interpretation that the definition of “costs” in the Civil Procedure Rules does not expressly include VAT, which is defined separately elsewhere in the rules. If such a strict interpretation were applied more widely, it raises interesting questions—for example whether an order for costs would need to expressly refer to both costs and VAT. Another issue often raised is whether the £1,500 plus VAT and court fee cap on the costs of provisional assessment is reasonable when dealing with bills approaching the £75,000 limit. In practice, it may be more realistic to assume that cases at the upper end of the provisional assessment threshold are more likely to proceed to an oral hearing. In that sense, provisional assessment can be viewed as a mechanism for narrowing the issues between the parties, rather than as the final determination of the dispute. This approach may carry some risk, particularly where significant costs are incurred that may not ultimately be recoverable if the matter concludes at the provisional stage. However, the process may still prove worthwhile if it helps focus the issues and ultimately leads to a better outcome at detailed assessment. For assistance with costs disputes and detailed assessment, see our guidance on paying party costs.

When Can a Costs Budget Be Revised? Costs budgets are not fixed forever. Under PD 3E, parties must revise their budget where a significant development occurs. However: Overspend alone is not a significant development A failure to understand the case at the CCMC is not a justification Late attempts to “repair” a budget are often rejected This is a key issue for paying parties seeking to limit recovery. 👉 See: Proportionality Challenges at Detailed Assessment. The Distinction Between Incurred and Budgeted Costs The court: Does not approve incurred costs at the CCMC But they remain subject to reasonableness and proportionality at assessment Receiving parties often argue that incurred costs are “immune”. They are not. Paying parties should: ✔ challenge grade ✔ challenge delegation ✔ apply proportionality ✔ rely on conduct 👉 See: Fee Earner Delegation Challenges at Detailed Assessment. Late Budget Revisions: The Court’s Approach Courts consistently hold: Revisions must be prompt They must be supported by clear evidence of a development Post-event revisions are rarely allowed Where a party seeks to amend a budget after work is done, the correct forum is detailed assessment, not retrospective budget approval. This creates an opportunity for paying parties to argue: No approved budget for the work Work falls outside scope Costs should be reduced to reasonable levels only 👉 See: Detailed Assessment Paying Party Services Amending Incurred Costs – What Actually Happens Attempts to “revise” incurred costs usually fail because: They are historic spend The court does not reopen incurred figures They are tested only at assessment This allows paying parties to: ✔ attack proportionality globally ✔ apply stand-back reductions ✔ argue poor case management 👉 See: Recoverability and Conduct Risks Paying Party Tactical Points Effective challenges focus on: No significant development Budget assumptions already covered the work Delay in seeking revision Disproportionate incurred spend Senior time for routine work These arguments frequently lead to substantial reductions at detailed assessment. Why This Matters Budget discipline is now the front-line proportionality control. For paying parties, early analysis of: budget assumptions incurred vs budgeted spend scope of revisions can materially reduce exposure. Key Takeaways ✔ Incurred costs are not approved costs ✔ Late revisions are rarely allowed ✔ Overspend ≠ significant development ✔ Detailed assessment remains the real battleground ✔ Paying parties can use budget failures to drive reductions

Context: The Rule Against Hindsight in Indemnity Costs In costs law , it is established that indemnity costs should generally be awarded only where conduct was unreasonable at the time it occurred, not with the benefit of hindsight. This reflects a fundamental fairness principle: a party should not be penalised for strategic decisions that only later appear unwise behavior must be judged based on information reasonably available at the time it was made This case reaffirmed that approach and continues to influence how indemnity costs are applied in practice. What the Decision Confirms The key principle from this decision is: Indemnity costs should not be awarded based on hindsight review of events. Rather, indemnity must be justified by conduct that is unreasonable when measured at the relevant point in time. This denies the temptation to say, after an outcome is unfavourable: “It was obvious at the end that this was a bad strategy — so indemnity is justified.” Instead, courts look at the information and context available at the moment the disputed conduct occurred. This protects strategic freedom of litigation while still enabling costs consequences for genuinely unreasonable conduct. Why This Matters in Costs Disputes Understanding this principle is not academic, it has real implications for: arguing indemnity costs claims defending against indemnity costs applications resisting indemnity at detailed assessment framing conduct evidence strategically Indemnity costs awards can shift recoverable totals dramatically, especially when combined with other challenges. A party’s conduct throughout the case becomes the battleground; how it is framed in submissions can determine whether indemnity is justified. Practical Application at Detailed Assessment The “Conduct at the Time” Test Courts look at: what information was reasonably known when decisions were taken why particular strategic choices were made whether there was a real basis for the conduct at that time if any deviation from standard practice was truly justified This test avoids penalising reasonable strategy that only later proved unsuccessful. For paying parties and respondents alike, the focus is: “What did the other side know  and reasonably do  at the time?” How Paying Parties Use This in Indemnity Challenges Practical methods for resisting indemnity costs include: demonstrating that decisions were objectively reasonable at the relevant time showing that opposing arguments rest on hindsight assumptions relating conduct to contemporaneous correspondence and case events drawing out the difference between hindsight logic and real-time decision-making The stronger your evidence on real-time justification, the harder it is for indemnity to be justified on hindsight review. When Indemnity Costs Are Still Justified Although hindsight should not be used, indemnity costs are appropriately awarded when conduct at the time was: plainly unreasonable abusive or obstructive in breach of a clear rule or court order manifestly without real basis Indemnity remains a tool to penalise truly inappropriate conduct, but not merely to reward post-hoc criticism of decisions that were reasonable at the time. Common Mistakes That Lead to Indemnity Awards Parties (and sometimes less experienced practitioners) fall into traps such as: arguing that “it was obvious this would fail” long before the hearing attacking strategic choices with hindsight language assuming a different outcome should mean indemnity failing to locate conduct in a real-time context These mistakes make indemnity awards more likely. Bringing This Into Costs Strategy Understanding the hindsight rule helps in: Resisting indemnity at assessment Framing conduct submissions effectively Preparing opposing party evidence Modelling total recoverable costs (including costs of indemnity applications) This links back into broader themes such as: assessment strategy recoverability planning paying party dispute tactics Key Takeaways The “no hindsight” rule is foundational to indemnity costs Conduct is judged in real time, not with benefit of outcome Indemnity can still be justified for truly unreasonable conduct Challengers succeed by rooting arguments in contemporaneous evidence This principle matters not just in theory, but in assessment strategy

Quick Summary of the Decision The issue in Marbrow  was whether a costs budget should be treated as inclusive or exclusive of VAT when assessing recoverability limits. The court confirmed that, unless clearly stated otherwise, budgeting figures are generally treated as exclusive of VAT, meaning VAT may be recoverable in addition to the approved phase totals. On the surface this looks like a technical budgeting clarification. In reality, it has practical consequences for forecasting, proportionality arguments , and assessment disputes. Why This Matters Beyond the Case This decision is not just about accounting treatment. It affects: How costs professionals structure Precedent H budgets How paying parties analyse exposure risk How receiving parties protect recoverability How proportionality challenges are framed at detailed assessment Misunderstanding VAT treatment can distort: total litigation cost forecasting settlement strategy the perceived gap between budgeted and claimed costs That makes this a recoverability and risk issue , not just a drafting point. The Strategic Impact on Costs Budgeting 1️⃣ Budget Presentation Risk If a budget is unclear on VAT treatment: Paying parties may argue that phase totals were intended to be VAT inclusive Receiving parties may face disputes about whether claims exceed approved limits Clarity in drafting avoids later arguments that the budget has been exceeded when VAT is added. 2️⃣ Exposure Analysis for Paying Parties From a paying party perspective , treating budgets as VAT-exclusive means: The real financial exposure is higher than the approved phase totals suggest Settlement modelling must account for VAT on top of budgeted figures Proportionality arguments based purely on budget totals may understate recoverable sums This affects how early-stage offers and reserve calculations should be approached. 3️⃣ Interaction with Proportionality VAT treatment can influence proportionality debates: Budgets approved exclusive of VAT may still lead to totals that appear high once VAT is added Paying parties may try to argue that the overall  figure is disproportionate even if phase figures were approved Understanding this interaction helps frame arguments on: Reasonableness Budget adherence Global proportionality Practical Guidance for Costs Professionals ✔ When Preparing Budgets State expressly whether figures are exclusive of VAT Ensure assumptions sections align with VAT treatment Avoid ambiguity that invites post-assessment arguments ✔ When Acting for Paying Parties Analyse whether VAT was addressed during the budgeting stage Factor VAT into exposure modelling from the outset Consider whether any ambiguity supports arguments that totals were intended as global caps ✔ At Detailed Assessment This issue can arise where: There is a dispute over whether claimed sums exceed the approved budget VAT pushes totals above phase limits Parties argue about the meaning of approved figures Being able to link budgeting treatment to recoverability principles strengthens the argument on both sides. Why This Decision Still Matter Although procedural rules continue to evolve, budgeting disputes remain common. VAT treatment is one of those “small” technical points that can shift recoverable totals significantly, particularly in multi-phase or high-value litigation. For costs practitioners, this case reinforces a wider principle: Budgeting is not just about numbers — it is about how those numbers will be interpreted later in a recoverability dispute . Understanding VAT treatment helps avoid artificial arguments about budget exceedance and ensures that financial exposure is assessed realistically from the outset. Disputes over whether VAT pushes a claim beyond an approved budget are not rare on assessment, particularly where phase assumptions are unclear Key Takeaways Costs budgets are generally treated as exclusive of VAT unless stated otherwise This affects real exposure, not just drafting mechanics Ambiguity can lead to disputes at assessment Paying parties should model VAT risk early Receiving parties should draft budgets to eliminate later interpretation arguments

In a further decision as to how a Costs Management Order (“CMO”) should be interpreted upon Detailed Assessment, Master Nagalingam has delivered a thoughtful judgment in the case of Nash v Ministry of Defence (SCCO 22/2/18). In particular he stressed the need for any agreement in relation to Budgets in advance of a CCMC, to be in clear and unambiguous terms. Further, he determined that hourly rates should not be given any pre-eminence over and above other factors at play when phase totals within a Budget were set. These issues have become increasingly important following the decision in Harrison, such that “incurred costs” to the date of the Budget fall to be assessed in the traditional way, but that “budgeted costs” (or “estimated” or “future” costs) are to be allowed as provided for within the agreed or approved Budget unless there is good reason to depart. It has become fairly common practice for the party opposing a Budget to reach some agreement (or advance proposals) on the basis that hourly rates are not a matter for determination at a CCMC and that the “paying party” would reserve its right to advance arguments on the hourly rate at assessment. The potential difficulty with this is that it can be said to undermine the whole purpose of the budgeting regime. A “receiving party” should have some certainty as to the figures within which to work in bringing the claim and could have a reasonable expectation that the figures within the approved or agreed Budget would be allowed upon assessment unless there was a good reason to depart from them. It is probably true to say therefore that in many instances the parties have a very different view as to the effect of agreement of a Budget before the CCMC. The paying party will consider it to be provisional upon a later determination of hourly rates, whilst the receiving party will consider that the figures set within the Budget have fallen within a reasonable and proportionate range and therefore should stand. In the case of RNB v London Borough of Newham (SCCO 4/8/17), Deputy Master Campbell determined that his finding in relation to the appropriate hourly rates when assessing the incurred costs was good reason for departure from the Budget in relation to budgeted costs. That case was to be the subject of an Appeal this month, but will no longer proceed following settlement between the parties. In Nash, dealing with a case in which there had been a CMO based upon a situation where the parties had agreed figures for the Budgets, the Master was asked to consider whether there was good reason to depart from the figures given for budgeted costs. The Claimant did not pursue an argument that more should be allowed upon assessment then provided for within the Budget and it was accepted that where the sums claimed in the Bill were below the budgeted amount, then that was of itself a good reason to depart from the Budget (such that only that lower amount should be recoverable). However, the Defendant argued that the Budget had been agreed strictly subject to arguments on hourly rate to be advanced at assessment and that if the hourly rates were reduced at assessment (in relation to incurred costs) then that was good reason to depart from the Budget. The suggested approach was that the Court should look at the underlying detail within the Budget (hours agreed, disbursements) and re-calculate the figures using the allowed hourly rate. The Master therefore had to look at the terms upon which the Budgets had been agreed. There was no mention in the CMO of any terms of agreement other than that the Budget had been agreed in certain amounts. The Court has power pursuant to CPR 3.15 (2) (a) to record the extent of any agreement reached between the parties. The Master considered the correspondence leading up to agreement of the Budgets, but was unable to find clear evidence as to whether the Budgets had been agreed strictly subject to determination of hourly rates or not. He therefore stressed the importance of the parties putting before the Court a proper picture of the agreement reached. It would be helpful if the CMO recorded on its face the precise terms of the agreement. Nevertheless, the Master was content that the Defendant retained the right to advance an argument for departure from the Budget based upon “good reason” and that this could be advanced in relation to hourly rates. In relation to an argument advanced by the Defendant that agreed Budgets should have some lower status than approved Budgets (because the Court had not scrutinised the underlying detail) the Master rejected that and found that in either circumstance, the status of the Budget was the same. He considered that the Court retains the right not to approve even an agreed Budget and therefore by making a CMO, the agreed Budget had implicitly been approved. The Master was also critical of the argument that the budgeted costs should be reduced on the basis of an hourly rates argument alone. Such an approach eroded the certainty of the budgeting regime. Within the context of the Rules and the decision in Harrison, the task of the Court at a CCMC was to set a figure for the budgeted costs which were within a reasonable and proportionate range. There was a high bar set for any argument of “good reason” to depart from that figure. In effect, the Defendant was asking the Court upon assessment to second-guess the approach of the Court at the CCMC as to why certain figures were allowed for each phase. Neither party had sought to vary the Budget during the course of the proceedings and in those circumstances, it was very difficult to see why there should be a departure from the budgeted amount. Hourly rates held no particular status amongst all the other underlying detail supplied in relation to the figures within the Budget and therefore there was no good reason to depart from the budgeted figures purely on that basis alone. In further support of this finding, in smaller cases only the front page of Precedent H is to be supplied (a mandatory requirement). It could not have been the intention for there to be different processes upon assessment depending upon whether a full Precedent H had been supplied or simply the front page. Where only the front page been supplied, the underlying detail was absent and therefore the approved figures must be those which fall within a reasonable and proportionate range. However, the Master did find that the paying party was entitled to advance arguments on proportionality based upon the overall figure (that is both the incurred costs and the budgeted costs together) allowed upon assessment which could provide further reductions. That may be due to circumstances being different at the time of assessment as compared to how they appeared at the time of the CCMC. Finally, the Master commented that the approach suggested by the Defendant was not in accordance with the overriding objective. In essence, it would render the budgeting process of little benefit and disproportionate expense. This case therefore demonstrates the need for care in language when agreeing Budgets. It also serves to substantially support the budgeting regime by giving receiving parties a good measure of comfort that should the case be won, there would be a strong element of certainty as to the extent of recoverable costs in line with those provided for within in the Budget. Issues of recoverability often intersect with who undertook the work, supervision, and assessment strategy. For an overview of how specialist costs professionals structure and defend costs, see our explanation of the role of costs lawyers and law costs draftsmen