A costs management order is a central feature of the modern costs management regime in Uk civil litigation. Made following the costs budgeting process, it records the court’s approval of a party’s future costs and sets the parameters within which the litigation is expected to be conducted. In practice, it plays a significant role in shaping litigation strategy and controlling financial exposure.

For practitioners, the importance of a costs management order lies not only in its procedural function, but in its downstream impact on recoverable costs and the court’s approach on assessment.

The Role of a Costs Management Order within Case Management

Costs management orders sit within the courts’ wider case management powers and reflect the courts’ active involvement in controlling costs, rather than leaving cost disputes to be resolved solely at the end of proceedings.

The order gives effect to the court’s approach to costs management by translating anticipated expenditure into an approved framework. It provides a reference point against which the parties’ conduct, and spending can be measured as the case progresses, and it informs the court’s approach to costs if disputes arise later.

Although closely linked to costs budgeting, the order itself is distinct. Costs budgeting is the evaluative process; the costs management order is the formal outcome of that process.

How Costs Management Orders arise from Costs Budgeting

In cases where costs budgeting applies, the court will usually consider making a costs management order at or following the first case management conference. After the parties have filed and exchanged their budgets, and following any discussion or hearing, the court records its approval, whether full or partial, within the order.

The court may:

• Approve the budgets as submitted;
• Approve budgets subject to modification; or
• Decline to approve certain phases altogether.

The approved figures are then recorded in the order and form the basis for managing future costs. The order does not approve costs already incurred, nor does it amount to a detailed assessment.

Practical Effect on the Conduct of Litigation

Once a costs management order has been made, it has a tangible impact on how the litigation is run. Parties are expected to keep their costs within the approved figures and to conduct the case in a way that reflects the court’s view of what is proportionate.

In practical terms, this often influences decisions such as:

• the scope and timing of work undertaken at each stage;
• the extent to which expert evidence is relied upon; and
• whether certain steps are pursued at all.

On any subsequent assessment, the court will have regard to the approved budget when determining recoverable costs. While departure from the approved figures is possible, it will generally require a clear and persuasive justification.

Proportionality and the Court’s Approach to Overspend

A key objective of the regime is the control of proportionate costs. The costs management order supports this by anchoring anticipated expenditure to the value, complexity, and importance of the dispute at an early stage.

Exceeding an approved budget does not automatically prevent recovery, but it carries risk. Where a party has incurred costs in excess of the approved figures without good reason, the court may restrict recovery accordingly. This reinforces the need for ongoing monitoring and early intervention where costs begin to diverge from the approved framework.

What is a Budget Discussion Report?

The budget discussion report plays an important role in the process. By identifying which aspects of the budgets are agreed and which remain in dispute, it allows the court to focus on the issues that genuinely require determination.

Although the report does not form part of the costs management order itself, it often shapes the court’s approach and contributes to a more efficient and targeted exercise.

When a Costs Management Order may not be made

There will be cases in which the court determines that a costs management order should not be made, or that budgeting does not apply unless otherwise ordered. This may occur where the court considers the process unnecessary or disproportionate in the circumstances.

Even where no formal order is made, the court retains wide powers to control costs and to make appropriate court orders as the case develops. The absence of a costs management order does not remove the relevance of costs discipline or proportionality.

Frequently Asked Questions

Can a costs management order be varied during the proceedings?
Yes, but only in limited circumstances. A party seeking to vary a costs management order must demonstrate a significant development in the litigation that was not reasonably foreseeable at the time the order was made. The court will also expect any application to be made promptly. Delay can be fatal, particularly where the additional costs have already been incurred, and retrospective attempts to justify overspend are generally treated with scepticism. Clear evidence explaining why the approved figures can no longer be adhered to will be required.

Does a costs management order fix recoverable costs absolutely?
No. While a costs management order has a strong controlling effect, it does not operate as an absolute cap in all circumstances. On assessment, the court may depart from the approved figures where there is good reason to do so. However, that threshold is applied narrowly. Mere disagreement with the budgeted amount or a change in litigation strategy is unlikely to suffice. The existence of an approved budget places a heavy evidential burden on the party seeking to recover costs in excess of it.

Is a costs management order the same as a management order generally?
No. A costs management order is a specific form of management order concerned solely with the control of litigation costs. It sits alongside other procedural directions dealing with the conduct of the case, such as disclosure, evidence, and trial preparation. While conflicts between costs management and procedural directions are uncommon, parties are expected to comply with both, and to conduct the litigation in a way that remains consistent with the approved costs framework.

What role does proportionality play once a costs management order is in place?
Proportionality remains relevant throughout the life of the case. Although the court has approved anticipated costs at an early stage, it does not follow that proportionality is fixed at that point. On assessment, the court may still consider whether the overall level of costs incurred was proportionate to the outcome achieved. An approved budget provides a strong reference point, but it does not displace the court’s overarching duty to ensure that recoverable costs are reasonable and proportionate in the circumstances.

How can Greener Costs assist?

Costs management orders often have a decisive influence on litigation strategy and costs recovery. Engaging with the process effectively requires accurate forecasting, technical costs expertise, and careful ongoing oversight.

Greener Costs assists practitioners with costs budgeting, strategic advice in relation to costs management orders, and practical guidance on compliance and variation. By combining specialist costs knowledge with a clear understanding of litigation risk, Greener Costs supports parties in managing costs effectively and achieving proportionate outcomes.

To discuss how Greener Costs can support you with costs management orders or wider costs management issues, please contact our team for a confidential, no-obligation discussion.