The argument that a case is exceptionally large, expensive and difficult does not necessarily point away from costs budgeting. It may point towards it. That is the lesson of Fuschillo & Ors v Johnson & Johnson & Ors (No 2) [2026] EWHC 1925 (KB), in which Mrs Justice Hill ordered costs budgeting in the Johnson & Johnson talc group litigation on 24 July 2026.
The distinction that decided it is commercially important, and it is easy to blur:
Costs updates tell the court what has already been spent. Costs budgeting gives the court the chance to control expenditure before it is incurred.
Six-monthly updates would have provided transparency. They would not have provided control. By the time disproportionate expenditure surfaced in an update, the court would be looking at the position, in the judge’s phrase, after the horse had bolted.
The short answer
The High Court ordered costs budgeting because:
- the sums at stake and the costs likely to be incurred made budgeting itself proportionate;
- retrospective costs updates would show expenditure but would not control it;
- PD 3D paragraph 2(f) expressly identifies personal injury and clinical negligence cases worth £10 million or more as cases in which budgeting may be particularly appropriate; and
- the prospect of future disputes over variations was not, by itself, a persuasive reason to dispense with costs management.
The wider message is straightforward. A claim being worth more than £10 million is not a general exemption from active costs management.
What the case was about
The proceedings concern claims by individuals, estates and dependants alleging that exposure to mineral talc-based Johnson & Johnson Baby Powder caused malignant mesothelioma or ovarian cancer. A Group Litigation Order had been made in June 2026, and by the July case management conference the Group Register held hundreds of claimants, with substantial generic issues on contamination and causation.
The judgment dealt with several case management issues. For costs practitioners the material section is paragraphs 71 to 78, on whether the litigation should be costs managed.
What the defendants argued
The defendants asked the court to budget so that it could retain control over the parties’ costs in what all agreed was a substantial piece of litigation, and keep expenditure reasonable and proportionate.
They drew on experience from other group litigation, including the Pan NOx Emissions Litigation, where costs had been described in terms as strong as staggering and wholly unreasonable. Their point was that litigation on this scale needs active control rather than after-the-event reporting.
Why the claimants opposed it
The claimants argued that budgeting was premature and might itself be disproportionate. Their concerns were that:
- preparing and dealing with budgets would generate substantial cost in itself;
- the exercise would front-load costs;
- the future course of the litigation could change;
- variations were likely to become contested and consume court time;
- six-monthly costs updates could instead keep the court informed;
- CPR 3.12(b) takes unquantified claims stated to be worth £10 million or more outside the automatic regime; and
- a pilot in the Business and Property Courts points the other way in high-value cases altogether.
These are not trivial points. In substantial litigation a realistic Precedent H is a major exercise, with assumptions covering numerous experts, large-scale disclosure, preliminary issues, multiple hearings and a timetable running for years.
Hill J was not persuaded that any of it justified dispensing with budgeting.
Why the court ordered costs budgeting
1. Budgeting was proportionate — because of the scale, not despite it
The first reason was the scale of both the sums at stake and the costs likely to be incurred. The court did not treat the expense of budgeting as automatically disproportionate merely because the underlying litigation was already large and expensive. The likely level of future expenditure helped justify the need for control.
For costs practitioners that inversion is the point. There comes a level of anticipated spend at which meaningful costs management becomes more important, not less.
2. Transparency is not control
This is the strongest passage in the judgment. The claimants offered six-monthly costs updates. Those would have told the court what had been spent. They would not have let the court do anything about it in advance.
A costs budget is not an accounting document showing what the lawyers expect to charge. It is part of the court’s prospective control of recoverable costs. The two questions are simply different:
| Costs update | Costs budget | |
|---|---|---|
| Question answered | What have we spent? | What should we reasonably be permitted to spend? |
| Direction | Retrospective | Prospective |
| Effect on recovery | None of itself | Controls recovery phase by phase under CPR 3.18 |
| When the court can intervene | After the money is spent | Before it is spent |
They are not interchangeable, and offering the first is not an answer to a request for the second.
3. PD 3D paragraph 2(f) points squarely at cases like this
Hill J then relied expressly on Practice Direction 3D paragraph 2(f), which provides that an order for costs budgets with a view to a costs management order may be particularly appropriate in personal injury and clinical negligence cases where the value of the claim is £10 million or more. The court considered this to be such a case.
Do costs budgets apply automatically above £10 million?
No. But that is not the same as saying the court cannot order them.
CPR 3.12 takes certain claims stated to be worth £10 million or more outside the automatic costs management regime. It also allows the costs management provisions to apply to other proceedings where the court so orders, and CPR 3.13 confirms that the court may order parties to file and exchange budgets even where they would not otherwise be required to.
PD 3D then goes further and names high-value PI and clinical negligence litigation as a candidate for exactly that order.
So the correct statement of the position is not:
“Claims above £10 million are not costs budgeted.”
It is:
Claims above £10 million sit outside the automatic regime, but the court retains the power to order budgeting — and the Practice Direction expressly identifies high-value PI and clinical negligence litigation as potentially suitable for it.
The tension worth noticing
There is a genuine pull in two directions in the current rules, and Fuschillo sits at the point where they meet.
The claimants pointed to the simplified costs budgeting pilot operating in the Business and Property Courts, introduced for Part 7 multi-track claims issued between April 2025 and April 2028. Under that pilot, where a claim is worth £1 million or more the court will not costs manage unless the litigation can only be conducted justly and proportionately if it is — with its own simplified forms in place of the usual ones. There, in other words, higher value points away from costs management.
PD 3D paragraph 2(f) points the other way for personal injury and clinical negligence claims of £10 million or more, treating high value as a reason budgeting may be particularly appropriate.
Both can be true, because they address different litigation. But it means a submission built on “high-value cases are moving away from budgeting” has to reckon with a Practice Direction saying the opposite about this kind of claim. In Fuschillo, the Practice Direction aimed at the case in front of the judge carried the day.
Is very large litigation “too big to budget”?
Fuschillo suggests that is the wrong question.
Scale creates real practical difficulty for budgeting. It also creates precisely the risks costs management exists to address:
- substantial expert costs;
- extensive disclosure;
- long procedural timetables;
- multiple interim hearings;
- heavy counsel involvement;
- evolving issues;
- large teams of fee earners; and
- a real risk that expenditure becomes disproportionate before anyone intervenes.
So the question is not only how expensive will budgeting be? It is also what is the risk if these costs are not actively managed? In Fuschillo the court preferred prospective control to retrospective discovery.
What about future Precedent T variations?
The claimants also warned that budgeting would breed contested variation applications. The judge was not persuaded. The parties had largely agreed directions through to trial, and there was no apparent reason for variation disputes to be materially worse than in other substantial litigation.
More significantly, the possibility of contentious variations was not in itself a reason to dispense with budgeting. That a budget may later need changing is not evidence that setting one was pointless — CPR 3.15A exists precisely to revise a budget where significant developments warrant it, using Precedent T.
The practical answer is not to avoid budgeting because circumstances may change. It is to build the original budget properly, record the assumptions behind it, and monitor the case for developments that warrant revision.
What this means for clinical negligence costs
A qualification first: Fuschillo was not a clinical negligence case. It concerned personal injury claims arising from alleged talc exposure.
Its relevance to clinical negligence comes from the court’s express reliance on PD 3D paragraph 2(f), which puts high-value personal injury and clinical negligence claims in the same category for this purpose. That makes it directly useful when substantial clinical negligence litigation is being case managed.
Very high-value clinical claims can carry:
- multiple breach and causation experts;
- condition and prognosis evidence;
- life expectancy evidence;
- care and occupational therapy evidence;
- accommodation and physiotherapy evidence;
- neuropsychology or neuropsychiatry;
- employment evidence and deputyship issues;
- substantial schedules and counter-schedules; and
- lengthy trial preparation.
The future costs are correspondingly large. Fuschillo says that complexity and value of that kind do not necessarily argue against budgeting. They may make disciplined costs management more important — which is the same conclusion our note on clinical negligence costs budgets and the CCMC reaches from the practical end.
Preparing a Precedent H after Fuschillo
The judgment strengthens the case for treating high-value budgeting as a strategic exercise rather than an administrative one. A substantial Precedent H should be built around the actual litigation, with assumptions identifying, where relevant:
- the experts expected to be instructed;
- the anticipated number of reports and conferences;
- the scope and volume of disclosure;
- witness evidence;
- anticipated applications and preliminary issues;
- counsel involvement;
- schedules and counter-schedules;
- expected hearing lengths, trial preparation and trial length; and
- any work dependent on future case management decisions.
PD 3D itself emphasises the assumptions that significantly affect the level of costs — the duration of proceedings, the number of experts and witnesses, anticipated interim applications. That matters because a budget prepared early in substantial litigation may still be doing commercial work several years later, and a headline figure without defensible assumptions is very hard to explain once circumstances move.
Costs management does not end at the CCMC
An approved budget is the start of the discipline, not the end of it.
- CPR 3.15 provides for the court to control the parties’ budgets in relation to recoverable costs where a costs management order has been made.
- CPR 3.15A requires a party to revise budgeted costs upwards or downwards where significant developments warrant revision.
- CPR 3.18 requires the court on detailed assessment to have regard to the receiving party’s last approved or agreed budget for each phase, and not to depart from it without good reason.
The lifecycle is therefore: budget, manage, monitor, vary where necessary, and draw the bill against the final approved position.
That last step is where budgeting either pays off or unravels. A bill that cannot be read against the approved budget phase by phase invites exactly the argument CPR 3.18 was meant to foreclose — which is why the budget and the bill are one continuous exercise rather than two unrelated documents years apart.
The Opus 2 hosting point
The judgment contains a separate and useful costs ruling on the electronic platform used for disclosure and bundling. The parties agreed an Opus 2 platform was appropriate but disagreed about who should pay for it. The defendants proposed the claimants bear the hosting costs; the claimants argued that as both sides would use it, the cost should be shared.
Hill J agreed with the claimants. Hosting costs were to be borne jointly and become costs in the case, while individual or per-user access charges were to be borne by the party requiring that access, also becoming costs in the case.
A secondary point, but a practical one in document-heavy litigation where platform charges become significant in their own right — and worth settling explicitly at the CMC rather than discovering at assessment.
What Fuschillo does not decide
The judgment should not be overstated. It does not establish that:
- every £10m+ claim must now be costs budgeted;
- every high-value clinical negligence case will automatically require a Precedent H;
- the CPR 3.12 exclusions have disappeared;
- future variations will be readily approved;
- an approved phase total guarantees recovery of everything within it; or
- detailed assessment ceases to matter.
It is an exercise of case management discretion on the facts of substantial group litigation. Its value is as a clear, recent High Court example of that discretion being exercised in favour of budgeting, with express reliance on PD 3D paragraph 2(f).
Practical lessons for claimant solicitors
Do not assume £10m+ means no budget
Check the directions and consider whether the court may exercise its discretion to order budgeting. Being asked for a Precedent H at short notice in a case of this size is not a position to be in.
Prepare for the issue early
If budgeting is likely to be argued at a CMC, work out the shape of the likely Precedent H before the order is made, not after.
Make the assumptions specific
High-value claims need assumptions capable of explaining why each phase costs what it does. A phase total with a generic assumption behind it is the first thing a paying party attacks.
Treat expert-heavy phases carefully
Particularly in clinical negligence, identify the disciplines, reports, conferences, joint statements and future quantum evidence realistically rather than optimistically.
Phase-code the file from the start
If substantial litigation is likely to be costs managed, contemporaneous phase coding makes both budget monitoring and the eventual bill dramatically easier.
Monitor for significant developments
A budget prepared correctly on day one can still become inadequate if the litigation materially changes. Precedent T timing matters: served late, it invites the argument that the development cannot have been significant if it did not prompt a revision at the time.
Do not rely on retrospective spend reports
An internal costs report is useful management information. It is not a substitute for complying with a costs management order — which is, in essence, the whole holding in Fuschillo.
The main takeaways
- The High Court ordered costs budgeting in substantial group litigation.
- That budgeting itself creates cost was not enough to make it disproportionate.
- Six-monthly costs updates offered transparency but not prospective control.
- Very substantial future expenditure can support active costs management rather than undermine it.
- PD 3D paragraph 2(f) expressly identifies £10m+ PI and clinical negligence cases as potentially particularly appropriate for budgeting.
- Claims worth £10m+ are not automatically costs managed, but the court retains discretion to order budgets.
- The risk of future disputed variations is not, by itself, a persuasive reason to avoid budgeting.
- Precedent H assumptions and ongoing monitoring remain critical.
- The eventual bill should be drawn with the approved or agreed budget firmly in mind.
How DMD Costs can help
DMD Costs prepares costs budgets for claimant solicitor firms, including:
- Precedent H costs budgets and the phase-by-phase assumptions behind them;
- incurred and estimated costs reviews;
- Precedent R budget discussion reports;
- Precedent T variations;
- clinical negligence costs budgets;
- budget-to-bill reviews;
- Bills of Costs and Precedent S electronic bills;
- Points of Dispute and Replies; and
- costs negotiation.
We provide drafting support rather than advocacy. The instructing solicitor, counsel or Costs Lawyer remains responsible for attendance at the costs and case management hearing.
For high-value clinical negligence and personal injury matters, the budget is not a spreadsheet prepared to meet a filing deadline. As Fuschillo demonstrates, its purpose is considerably more serious: to give the court a means of controlling recoverable expenditure before the money has already been spent.
Budget due before a CCMC? Send us the file and we will confirm the fixed fee before work begins.
Source: Fuschillo & Ors v Johnson & Johnson & Ors (No 2) [2026] EWHC 1925 (KB), Mrs Justice Hill DBE, judgment handed down 24 July 2026; the costs budgeting section is at paragraphs 71 to 78. Rule references are to CPR 3.12, 3.13, 3.15, 3.15A and 3.18 and to Practice Direction 3D, in particular paragraph 2(f). The simplified costs budgeting pilot referred to operates under Practice Direction 51ZG1 for qualifying Part 7 multi-track claims issued between 6 April 2025 and 6 April 2028.