New Case Law in Legal Cost Recovery: Key Judgments of 2024

Cost recovery in the UK continues to transform in response to landmark judicial decisions. In 2024, several pivotal cases have shaped the approach to cost recovery, significantly impacting the work of cost lawyers and the way legal costs are assessed and awarded. These judgments highlight the importance of understanding the nuances of cost law, and for cost lawyers, staying up to date with the latest rulings is essential to ensure they can effectively advise and represent their clients. 

1. Shaping the Future of Proportionality: Case Study on Proportionality of Costs

One of the most discussed cases in 2024 revolves around the application of the proportionality test, a recurring issue in cost recovery disputes. In this case, the court reaffirmed the significance of proportionality in assessing recoverable costs, emphasising that even if costs are deemed reasonable, they may still be subject to reduction if they are disproportionate to the issues at hand. The ruling has reiterated the need for cost lawyers to be vigilant when advising clients on cost budgets, ensuring they reflect both the complexity of the case and the proportionality standards set by the courts.

This judgment has encouraged a more cautious approach to cost management, particularly in high value cases, where the balance between reasonableness and proportionality can lead to significant adjustments in cost recovery. For cost lawyers, this decision highlights the critical role they play in justifying costs based on the scope and importance of the case, ensuring that clients are not left with unexpected reductions in their recoverable costs.

2. Fixed Recoverable Costs and the New Test for Exceptional Circumstances

With the extension of Fixed Recoverable Costs (FRC) in October 2023, disputes over when and how costs may exceed these fixed limits have surged in 2024. One notable ruling addressed the issue of “exceptional circumstances,” a key area where parties can argue that their case warrants costs beyond the fixed amounts.

The judgment clarified that proving exceptional circumstances requires more than simply demonstrating that a case is intricate or that higher costs were incurred. Instead, the court set out stricter criteria, emphasising the need for clear, evidence backed arguments to justify deviations from fixed costs. This decision has heightened the importance of strategic planning for cost lawyers, who must now prepare strong, credible justifications when seeking to exceed FRC limits, ensuring that their applications are supported by detailed evidence of why a case stands out from the norm.

3. The Growing Role of Interim Costs Orders

A significant 2024 ruling has reinforced the utility of interim costs orders, particularly in cases that are expected to be protracted. Interim costs orders allow a party to recover a portion of their legal costs before the conclusion of the case, offering much needed financial relief in lengthy  litigation.

The case highlighted the importance of early applications for interim costs, as well as the courts’ willingness to grant such orders when it can be demonstrated that a party would otherwise face undue financial strain. Cost lawyers have been at the forefront of this development, advising clients on the optimal timing and strategy for seeking interim payments, thereby ensuring that litigation remains financially viable even as cases drag on.

For clients, this has been a game changer, allowing them to mitigate the financial burden of litigation, and for cost lawyers, it reinforces their role in managing cash flow and securing financial stability for their clients throughout the litigation process.

4. Group Litigation Orders (GLOs) and Cost Management: A New Precedent

In the realm of group litigation, a 2024 case set a precedent regarding the management of legal costs in Group Litigation Orders (GLOs). The court tackled the complexities of cost sharing among multiple claimants, particularly where the legal issues vary slightly between individual cases within the group.

This decision has significant implications for cost lawyers handling GLOs, as it underscores the need for meticulous cost allocation and the careful management of joint claims. The judgment introduced clearer guidelines on apportioning costs between claimants and how these costs should be recovered from defendants. For cost lawyers, this ruling emphasises the importance of transparent cost management and the need to ensure that all parties involved in a GLO are treated fairly in terms of their financial contributions and recoveries.

5. The Importance of Costs Budgets in 2024: A Case Study on Budget Variations

Costs budgeting continues to be a critical tool in litigation, with a 2024 case highlighting the challenges of varying a previously approved budget. The court’s decision reinforced the principle that variations to costs budgets must be justified by unforeseen developments in the case, rather than as a result of poor planning or speculative over budgeting at the outset.

For cost lawyers, this ruling serves as a reminder of the importance of precise and realistic costs budgeting from the start. The case highlights the need for close monitoring of the litigation as it progresses, ensuring that any deviations from the original budget are promptly addressed and properly justified.

This decision has prompted many firms to reassess their approach to budgeting, placing greater emphasis on accurate forecasting and risk management. Cost lawyers have a pivotal role in guiding clients through the budgeting process, ensuring that budgets reflect the true scope of the case while remaining flexible enough to accommodate unexpected developments.

As 2024 unfolds, the legal cost recovery landscape in the UK is becoming somewhat convoluted, with new judicial decisions reshaping the rules of engagement for cost lawyers and their clients. Whether it’s understanding the proportionality test, managing fixed recoverable costs, or securing interim payments, the role of the cost lawyer has never been more critical.

County Cost Consultants is at the forefront of these developments, offering expert advice and representation to ensure that clients receive the best possible outcomes in their cost recovery efforts. By staying up to date with the latest case law and leveraging our extensive experience, we empower clients with confidence. Whether you’re dealing with complex litigation, group claims, or cost budgeting, County Cost Consultants is here to support you every step of the way.