Costs budgeting errors could be negligent

1st June 2015 by

Commercial lawyers could be at risk of professional negligence claims as a result of poor costs-budgeting planning and a failure to adapt to Lord Justice Jackson’s costs management reforms, according to a survey of the United Kingdom’s top 200 law firms.

In fact, of the 912 commercial lawyers surveyed, nearly 70% reported incurring costs above planned budget levels; yet, despite this, only 11% made applications to revise their budgets accordingly.

“This research suggests the majority of solicitors are either unaware that a mechanism exists for budgets to be revised or believe any such application will automatically fail so there is no point in pursuing it,” said one of the study’s authors.

“If clients are paying, win or lose, this is a potential professional negligence issue. If law firms are limited to what they recover, then they are effectively working for free.”

This difficulty comes despite Jackson’s assertion that costs management will be seen as an “entirely normal discipline” within the next decade.

Since the introduction of the reforms courts have seen a number of cases where firms have gone over budget without being able to recover costs; this is despite the sending out of letters warning of the consequences.

As such it is easy to see how irrecoverable costs could easily become a professional negligence claim issue for clients “forced” to overspend.
If you would like help in ascertaining whether you have been forced to overspend on legal costs as a result of a lawyer’s professional negligence, click here for more from Healys professional negligence lawyers.