In his Final Report in 2010, Lord Justice Jackson criticised the current format of the Bill of Costs for being too expensive to draft, not making use of available technology and for generally presenting an unrealistic view of costs incurred. This brought about the formation of the Hutton Committee who accepted the challenge of designing a new bill of costs that would be a more effective tool in assisting the Court at Detailed Assessment.
A pilot scheme commenced in 2015, in the face of heavy resistance from the majority of the industry. Whether or not the pilot was a success is debatable, as very little data was collected. It is believed that the reason for this was that firms were choosing not to use the new format and this will no doubt continue to be the case for as long as the use of the new bill of costs remains ‘optional’.
Those who attended the 2017 Cost Conference in London will have heard Alexander Hutton QC detail the latest update to the CPR (although not yet published) and how it will confirm the use of the new electronic bill of costs to be compulsory for all work undertaken on Part 7 multi-track cases after 6th April 2018.
To ensure the new bill of costs is an accurate reflection of the Solicitor’s file, every piece of work completed will require a section marked ‘phase, task and activity’ in addition to the traditional attendance note with a description of the work and the number of units of time recorded. The ‘phase’ refers to the relevant Precedent H phase; the ‘task’ is a description of “what” is being undertaken and the ‘activity’ is a description of “how” it is being undertaken. Each ‘task’ and ‘activity’ will have a corresponding J-Code that will need to be recorded on the Bill of Costs.
In order to produce a self-populating electronic bill of costs, case management software will need to be updated to ensure each phase, activity and task assigns the correct corresponding J-Code. Although, use of the new electronic bill of costs will be mandatory, use of J-codes will not. However, the current Practice Direction 51L does state the format of any new bill of costs must have “reports summary totals in a form comparable to Precedent AB”. Therefore, if you decide not to utilise J-Codes, you will still be required to use something very similar, or you will be at risk of having a defective bill.
The key objectives of the new electronic bill of costs is to have a user-friendly self-calculating synopses of work undertaken that can produce a comparison between each phase of the budget and the final bill, together with a series of summaries which can be broken down into the phases, activities and tasks. With the current bill of costs it would be a lengthy and tedious task for a Costs Officer to try and determine how many routine and non-routine items of attendance and document time have been spent on, for example, drafting witness statements. If prepared accurately, with the new electronic bill of costs format, a Costs Officer would now be able to determine how much costs have been incurred drafting witness statements within a few clicks on a keyboard. Detailed assessment hearings will arguably be conducted in a much more timely manner and at more of a proportionate cost.
An area of confusion with the implementation of the new electronic period is how to present claims for costs which include work undertaken pre and post 6th April 2018. The two options appear to be: –
1) Two Bills – an old style format bill for pre 6th April 2018 work and the new electronic bill format for post 6th April 2018 work
2) Retrospectively applying J-Codes to pre 6th April 2018 and preparing a new electronic bill for the entirety of the case
Arguably, the first option would be the most cost effective course of action, and of course reducing costs is the primary objective of the new electronic bill. However, it’s difficult to see how the Court would be able to use this format to effectively carry out a detailed assessment whilst cross-referencing the case management order (particularly if the budget is approved before 6th April 2018).
Alternatively, the second option would allow the Court to use the new electronic bill in the way it’s designed to be used. However, the process of a Solicitor firm working through their existing caseload and retrospectively applying the correct coding to work already completed, would be an extremely costly and time-consuming exercise. A cost that will no doubt have to be borne by the receiving party.
There does not appear to be any indication presently as to which of the above two formats the Courts prefer.
Although, the new electronic Bill of Costs has been designed to automatically populate from the law firms case management system, there is still the requirement to include a narrative and chronology together with the Precedent Q and other documentation required to ensure the costs management order influences the detailed assessment proceedings. Once the self-populating bill is served the Solicitors themselves would then have to proceed through the minefield of detailed assessment proceedings. It would appear to remain cost effective to outsource all this work to a costs professional as the cost of budgeting and the cost of detailed assessment proceedings continue to be recoverable on an inter partes basis. You will still therefore be able to outsource your costs recovery work and those costs companies utilised can continue to offer a costs neutral service.
Despite the widespread agreement that the new electronic bill of costs is a more simplified version of the pilot scheme from 2015, the concerns with over-complication remain. The implementation of the new system relies on law firms to invest heavily in file handling training and adapting their case management systems. It is no secret that firms are already feeling the pinch since the last round of reforms, and given the imminent extension to fixed costs, most firms may not be able to afford the luxury of an updated bespoke case management system.
Solicitors and costs professionals can no longer bury their heads in the sand with respect to the new electronic bill of costs, and it is essential firms work with their costs companies to ensure they are ready for this new unforgiving era of costs litigation.
So in preparation have you:
- Examined the potential training requirements for your staff in respect to this change
- Considered whether your current cost provider has a proactive plan for the roll out of the Electronic Bill of costs
To ensure full compliance you can contact our experts:–
Tom Mullin – Head of Drafting [email protected]
John Gannon Head of Negotiations [email protected]