What is a costs budget (Precedent H)?

Disclosure, witness evidence and expert reports create financial exposure before trial. Costs management makes that expenditure visible while work can still be planned, allowing the parties and judge to consider its reasonableness and proportionality.

The budget distinguishes expenditure already incurred from future commitments and connects the case plan to recoverability. It does not replace advice about funding or adverse costs risk. Recovery from an opponent remains distinct from liability to your own solicitors.

Precedent H is the prescribed budget form used in costs management. It groups costs into phases such as issue and statements of case, disclosure, witness statements, expert reports, trial preparation, trial and ADR or settlement. The form distinguishes incurred costs from estimated costs, with solicitor time and disbursements contributing to the relevant totals.

Incurred costs concern work already undertaken; estimated costs concern work still to come. VAT is excluded from the budget figures under the costs management guidance. The budget should be supported by assumptions explaining what the estimate covers. It is not simply the firm’s internal cash-flow projection or a flat allowance for all remaining work.

The general framework in CPR 3.12 applies to Part 7 multi-track claims, subject to specified exceptions and the court’s powers. Not every civil claim requires Precedent H. Claims within fixed recoverable costs and specialist proceedings require particular attention. The court can direct costs management in cases outside the usual scope, so check the actual order.

The applicable rules, practice directions and any relevant pilot must be checked for the claim. Under the general CPR 3.13 timetable, represented parties file and exchange budgets with the directions questionnaire where the stated claim value is below £50,000; otherwise, no later than 21 days before the first case management conference, unless the court orders otherwise.

A disclosure estimate depends on the documents, review method and issues. Witness costs depend on the number of witnesses and expected preparation. Expert expenditure depends on disciplines, reports and meetings. Trial costs depend on duration, preparation and representation. Explain these inputs so that a proposed phase total can be understood rather than defended as a round number.

Avoid duplicating work across phases or including unexplained contingencies. In a hypothetical dispute requiring two experts and a three-day trial, those assumptions shape several totals. If the court permits another discipline or a longer trial, revisit the plan rather than continuing against stale figures.

Parties discuss their budgets and record agreement and disputes in a budget discussion report, usually Precedent R. Under the general rules, represented parties file that report no later than seven days before the first case management conference. Costs management advocacy focuses on the disputed phase totals, supported by clear assumptions and the proposed directions.

A costs management order records agreement or approval of budgeted costs. The court does not approve costs already incurred, though it may comment on them and consider them when assessing future expenditure. Budgeting is not detailed assessment in advance: approval of a phase total does not approve every underlying hourly rate or individual time entry.

Under CPR 3.14, failure to file a required budget can result in the party being treated as having filed a budget comprising only applicable court fees, unless the court otherwise orders. Relief from sanctions is not automatic. Identify the filing requirement at the start, assign responsibility and seek prompt advice if a deadline has been missed.

CPR 3.15A requires revision of budgeted costs where significant developments warrant it. Follow the prescribed variation process promptly, identifying the development and its financial effect. An ordinary overspend or inaccurate original estimate is not automatically a significant development. Monitoring expenditure by phase makes changes visible while there is still an opportunity to address them.

On standard-basis assessment, CPR 3.18 generally prevents departure from the last approved or agreed budgeted costs without good reason. Incurred costs remain subject to assessment. The budget therefore matters when preparing bills of costs, but it does not create an entitlement to costs or remove the need to establish the work actually undertaken.

Keep budgets, assumptions, variations and orders together. Compare the final claim by phase and explain material differences. Our Precedent H preparation guide covers drafting; understanding what is a bill of costs explains why budgeting and final assessment need different documents.