The Courts have shown that they will restrict the budget in cases where unreasonable costs have been incurred. This is good news for professional firms and their insurers defending professional indemnity claims who may not have to face excessive demands for costs by claimants’ lawyers.
The decision follows a case involving a council whistle-blower who accused his employers of bullying and claimed £700,000 in damages. His lawyers submitted a costs budget in excess of £744,000 to a Costs Management Conference, including £130,000 of costs already incurred. Deputy Master Eyre said this was “excessive almost beyond belief” and cut the overall budget to £220,000.
The lawyers appealed the Costs Management Order, arguing that the Deputy Master should have focused only on costs yet to be incurred. Judge Seymour dismissed the appeal. He said that the Deputy Master was permitted to take incurred costs into account when considering the appropriate overall budget for the case.
“Lawyers’ fees and other expenses incurred by claimants can add significantly to the cost of a professional indemnity claim,” said James Burgoyne, Director – Claims & Technical, Brunel Professional Risks. “Anything that reduces the cost of defending an action will be welcomed by insurers as excessive costs inevitably have an effect on the level of future insurance premiums.”
Further information on the case has been published by law firms RPC and DWF. The case has also been reported by Local Government Lawyer and the BBC.