Practice Direction 3E and Legal Costs Budgets
What is Practice Direction 3E?
Practice Direction 3E deals with costs management and provides guidance on legal costs in civil proceedings. It sets out the principles and rules to be followed when determining the costs of civil litigation and provides a framework for the assessment of those costs.
The Practice Direction outlines the general principles to be applied when determining costs, such as the principle that the losing party must pay the costs of the winning party, and the principle that costs should be proportionate to the matter in issue. It also sets out the specific rules and procedures to be followed in assessing costs, such as the detailed assessment procedure and the small claims track procedure.
The Practice Direction is a key reference for legal practitioners, judges, and court staff involved in the determination of legal costs in England and Wales. It provides guidance on the relevant rules, procedures, and principles, and helps ensure that the assessment of recoverable costs is consistent and transparent.
Costs budgeting under CPR 3
Costs management is regulated by CPR 3.12 to CPR 3.18, which outline the rules for filing a budget and conducting a costs management conference (CCMC). It also lays down the guidelines for the court’s authority in relation to costs management orders, the procedure for conducting a costs management conference (CCMC), and the method by which a Costs Judge should evaluate costs.
In multi-track cases, the budget must be submitted either with the Directions Questionnaire if the claim is worth less than £50,000, or 21 days prior to the first CCMC if the claim is over £50,000. If a party fails to file a budget as required by CPR 3.13, they will only be entitled to recover the court fee.
2019 changes to Practice Direction 3E
The 109th update to the Civil procedure Rules provided clarity guidance on changes to Practice Direction 3E and came into force on 1st October 2019. The changes made were specifically to Paragraph 7.4, which now states: –
“As part of the costs management process the Court may not approve costs incurred up to and including the date of the costs management hearing. The Court may, however, record its comments on those costs and will take those costs into account when considering the reasonableness and proportionality of all budgeted costs.”
The changes to Practice Direction 3E in 2019 had an impact on costs budgets by requiring more detailed budgets to be filed and exchanged earlier in the litigation process. It provided clarity as to when incurred costs should transition to budgeted costs – the date of the Case and Costs Management Conference (CCMC) when budgets are approved.
The changes also included provisions for more detailed budgets, more frequent updates, and greater sanctions for non-compliance.
This can lead to increased costs in preparing and updating budgets, and potential consequences for not adhering to the requirements, but it can also increase the efficiency and predictability of the costs incurred during litigation.
The goal of these changes is to encourage greater transparency and cooperation between parties in relation to costs, which can ultimately lead to reduced costs for all parties involved.
How can Greener Costs assist?
At Greener Costs, our team of Costs Lawyers and Costs Draftsman possess many years of experience specialising in the laws surrounding legal costs services and negotiations and are able to assist clients from a range of background on a variety of cases, whether you are the paying party or receiving party.
We can assist by drafting your costs budget following the guidelines of CPR 3 and Practice Direction 3E. We can also assist with budget discussion reports, bills of costs, points of dispute and replies.
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