The Rise of Costs Budgets: 5 Pitfalls to Watch in 2025

Cost budgeting has firmly embedded itself in civil litigation and by mid 2025 it’s safe to say it’s an essential. With the fixed recoverable costs expansion now in full swing and pre-action budgeting becoming routinely scrutinised, errors in cost planning can be costly; both in court and for clients. To help you guide this everchanging terrain, we’ve identified five key pitfalls to avoid, based on lessons learned through Court commentary and real world cases such as Kapoor v Johal [2024]. At County Cost Consultants, we’ve supported countless clients through this exact process, so here’s what you need to watch.

1. Vague or Generic Budget Entries

Judges aren’t impressed by undifferentiated entries like “considerable correspondence” or “numerous calls.” Courts expect granular explanations, from who performed the work to when and why it was necessary.

Consequently, vague entries are ripe for challenge. Costs get slashed, and credibility takes a hit.

Tips to avoid it:

• Be specific with time logging of activities from minutes to hour

• Reflect on complexity by making it clear why that work was essential or proportionate

• Use time estimates sensibly taking caution to not inflate them.

At County Cost Consultants, our draughtsmen help construct budgets that are both compliant and realistic, streamlining the assessment process.

2. Misaligned Budgets and Case Conduct

Courts are increasingly checking whether the costs actually claimed match the way the case was run. Filling budgets out of habit, not necessity, is no longer viable.

Repercussion wise, If court listed actions don’t match the budget (e.g., budgeted for 5 days prep but only 2 were needed), the surplus is at risk.

Tips to avoid it:

• Tie cost forecasts to real case strategy and likely actions

• Revise estimates as case tactics shift and file formal amendments where needed

Our consultants guide teams in drafting budgets that truly reflect litigation strategy, reducing the risk of later reductions.

3. Delayed Budget Submission

Costs budgets are typically due early in proceedings, usually within 21-28 days of allocation. Courts are losing patience with extensions.

With this in mind, late submission can lead to forced fixed cost treatment in effect, or outright budget rejection with negative cost consequences.

Tips to avoid it:

• Institute internal reminders for budget deadlines

• Use templates to speed drafting once the case is allocated

• In rare delay situations, apply immediately for directions and explain why

County Cost’s clients benefit from timely budget delivery, eliminating late filing anxiety and preserving cost recovery.

4. Ignoring Fixed Recoverable Costs (FRC) Boundaries

Many practitioners confuse fixed costs with budgeted costs. This is quite an oversight as they are different. Fixed costs are a cap, while budgets are forecasts to be assessed.

As a result, lodging a budget when FRC applies can be a procedural misstep, sometimes causing cases to be incorrectly billed.

Tips to avoid it:

• Check track allocation carefully as Fixed Recoverable Costs don’t apply in softer jurisdiction limits

• Flag the distinction to clients early, so their expectations are clear

• If FRC applies, focus on compliance with cost tables rather than budget detail

At County Cost, we routinely audit cases to ensure they’re appropriately categorised, mitigating FRC misfires.

5. Failing to Re‑budget After Change Events

Litigation can turn quickly with either new parties, large scale disclosure, unexpected experts, suddenly, your original budget no longer fits.

Continuing to rely on an outdated budget puts yourself at risk. Courts may throttle funding based on outdated information.

Tips to avoid it:

• Monitor cases actively; any major shift warrants a formal surplus budget or application under CPR 3.17

• Ensure internal flagging systems for major case movements

• Explain changes clearly in the updated budget narrative to show why extra costs are justified

We’ve helped clients successfully apply for additional budgets after key case shifts, maintaining coverage without surprise hits.

Bringing It Together with Sharper Budgets & Stronger Outcomes

Good costs management means much more than ticking procedural boxes. It’s about strategic control, transparency and supporting your case outcomes. Poor budget design is more than an administrative failure as it can lead to the erosion of tactical flexibility and ultimately, undermine cost recovery altogether.

Here’s how your firm can sharpen cost strategy in 2025:

• Review all budgets with independent eyes; a pair of critical lenses often spots issues your internal team misses

• Train staff proactively on the nuts and bolts of budgets

• Build in compliance audits enabling you to check your budgets early on and late in the case

Your Partner in Precision

At County Cost, our specialist team has been guiding firms through the cost budgeting revolution since day one. With every change in regulation, every wave of judicial commentary and every landmark case, we’ve stayed ahead, helping clients build bulletproof budgets and fortified cost recovery strategies.

As the courts continue tightening the screws, now is the moment to partner with a team who lives and breathes cost compliance and clarity. Whether reviewing your current budgets or supporting training on budgeting pitfalls, County Cost is here to make sure you operate confidently and effectively in 2025 and beyond.

Contact us today to learn how we can assist with your cost law needs. For further insight or support with your costs budgeting and strategy, get in touch with County Cost Consultants, we’re ready to help you optimise your approach.