In April 2025, a new pilot scheme began changing the way costs are managed in civil litigation. Known informally as ‘Costs Budgeting Light’, the initiative reflects an ongoing push to streamline and simplify the case management process in the courts of England and Wales.
This development comes as part of broader efforts to refine the Fixed Recoverable Costs (FRC) regime introduced in October 2023 and to address the burdens of full costs budgeting in lower-value and less complex claims.
What is Costs Budgeting Light?
The pilot scheme will trial a simplified approach to costs budgeting in claims valued up to £1 million, where traditional full-scale budgets may be disproportionate or impractical.
It will introduce two new Precedents:
- Precedent Z: A high-level costs estimate used in place of a full Precedent H.
- Precedent Zr: A revised version submitted before trial to reflect updated estimates.
The scheme is operating in selected courts and is scheduled to run from April 2025 through October 2028, subject to ongoing review.
Why the Change?
Full costs budgeting, while valuable in high-value, multi-track litigation, has been criticised for being time-consuming, complex, and costly in lower-value disputes.
The pilot seeks to:
- Reduce procedural burden on parties and the court.
- Encourage consistency and transparency in estimated costs.
- Maintain proportionality, a key principle underpinning the Civil Procedure Rules.
Who Will Be Affected?
The pilot applies to:
- Intermediate track cases, particularly those just outside the FRC regime.
- Claims valued between £100,000 and £1 million, subject to pilot court listing.
- Cases not involving complex procedural issues or extensive expert evidence.
Practical Considerations for Legal Teams
For practitioners, the pilot presents several opportunities and challenges:
- Early Familiarity: Understanding how to prepare and argue Precedent Z documents is essential.
- Client Communication: Clients will expect clear guidance on how the new approach affects budgeting and costs risk.
- Adjustment of Workflow: Firms may need to develop lighter internal budgeting models for applicable claims.
Final Thoughts
The introduction of ‘Costs Budgeting Light’ signals a pragmatic step toward more agile litigation management. It reflects a growing awareness that one-size-fits-all budgeting does not serve every case equally.
As the courts move forward with the pilot, law firms and litigants should remain flexible, informed, and ready to adapt. At Lester Aldridge, we are tracking these developments closely and advising clients on what the changes mean for both live and future disputes.
If you have a case that could fall within the new regime, our dispute resolution team is here to help you prepare.
