Articles
The Costs Budget Was Approved… So Why Is Recovery Still a Fight?
Thursday 21st May 2026
Sonny Welsh
There is sometimes a misconception that once a costs budget has been approved, the difficult part is over.
The budget is agreed or approved, the figures are in place, and everyone can move forward with a degree of comfort about what may be recovered at the end of the claim. Unfortunately, anyone who deals with costs regularly will know that it is rarely quite that simple.
An approved costs budget is important. It provides structure, gives the parties a level of certainty, and can have a significant impact on the assessment of future costs. But it does not mean that recovery is automatic. It does not turn every item of work into an untouchable figure. It does not remove the need for proper evidence, careful drafting, and sensible costs strategy.
In practice, a paying party may still challenge whether the work claimed was reasonably incurred. They may question whether the work falls within the correct phase. They may argue that the time claimed is excessive, that the work was duplicated, or that certain items were not properly budgeted at all.
The approved budget may set the framework, but the bill still has to be drafted properly within that framework. This is where problems can arise.
A budget may have been approved months or even years before the bill is prepared. The litigation may have developed in ways that were not anticipated. Work may have moved between phases. Assumptions may no longer fit neatly with what actually happened. In some cases, the receiving party may have exceeded parts of the budget and will then need to consider whether there is a proper basis for arguing a “good reason to depart” from it. That is not always straightforward.
It is also worth remembering that incurred costs remain a separate battleground. The budget may have dealt with future estimated costs, but costs already incurred at the time of budgeting are still open to detailed scrutiny. If those incurred costs are not presented carefully, they can still be reduced significantly on assessment.
This is why costs budgeting should not be treated as a one-off exercise. It should form part of the wider litigation strategy. The assumptions matter. The phase allocations matter. The ongoing monitoring matters. If the case changes materially, that may need to be addressed at the time, rather than ignored until the end of the claim.
By the time a detailed bill is being prepared, the focus should be on telling the story of the litigation clearly. The bill should reflect the approved budget, the work actually undertaken, and the reasons why the costs claimed are reasonable and proportionate.
A poorly prepared bill can weaken the value of an approved budget. A properly prepared bill can make the budget work as it was intended to.
At Smart Legal Costs Solutions, we assist solicitors with costs budgeting, bill drafting, points of dispute, replies, and detailed assessment strategy. We understand that an approved budget is only one part of the costs recovery process.
The real work is making sure that the recovery follows.
Smart Legal Costs Solutions
Legal Costs – A Smarter Way