A New Beginning - John Hilton considers the issues presented by the New Bill of Costs
It’s here. The introduction of an electronic bill of costs, brought into the Civil Procedure Rules by the 92nd update, represents one of the most significant developments to costs practice in the history of the discipline.
As of 6th April 2018, the new format will be mandatory for all part 7 multi-track claims, with limited exceptions.
For all work undertaken thereafter, the bill must be presented as an electronic spreadsheet and all time entries must be captured with reference to phases, tasks and activities.
The new bill must be served and filed electronically, and there must also be a hard copy delivered to the paying party and the Court “in a manageable paper format”.
Lord Justice Jackson’s motivation for this particular reform was that bills in the conventional format were too expensive, too cumbersome and incompatible with the requirements of a modern day detailed assessment. This was particularly the case, he felt, in circumstances where costs budgets had been approved by the Court. Few would argue with this analysis, and fewer still with the clamour to make better use of modern technologies.
The new version of the bill was designed to be self-calculating, compatible with existing case management systems and to offer new depths of analysis through the specificity of the captured data. If the conventional format told us the ‘what’ and the ‘when’, then the new bill goes much further and gives us a reasonable understanding of ‘why’ the work was done. Practitioners and costs judges are now afforded the chance to look behind the data that they were previously forced to accept at face value. With these changes come heightened requirements for accuracy and accountability and these are developments that are long overdue. The death knell of the old Victorian account book is a welcome sound and it is right on schedule.
So far so good then, you might conclude. The problem though is that Jackson’s vision has, not for the first time, proved significantly more difficult to deliver in practice than in principle.
The idea that new bills could be prepared at the push of a button from a solicitor’s case management system, thereby reducing the preparation cost, was perhaps always a non-starter. Many firms, particularly in the PI sector, are still reeling from the financial consequences of the previous raft of reforms and cannot afford to invest in new IT services. Whilst solutions do exist to record and export the data into a format consistent with the new Precedent S, there are none, unfortunately, that come pre-packaged with a costs expert in tow. New technologies offer many advantages and must be embraced, but they cannot yet verify a costs order, determine an item’s recoverability, or craft a good reason argument to justify departure from an approved budget.
One must also question how the new bill was ever expected to be prepared more quickly. The example data in the Precedent S indicates that every single item, including all routine correspondence, must be individually dated in addition to the requirement for a phase, task and activity. Whether these steps are taken by the solicitor during the claim, or by the costs expert at the conclusion, additional time is the obvious trade-off. The specific requirements of the format bring welcome benefits to the assessment process, but drafting speed isn't one of them.
A further problem lies in the compatibility of the Bill with the recent changes to the calculation of costs budgeting fees at paragraph 7.2 of Practice Direction 3E. A new phase has been created within the new format which encourages the inclusion of these costs. However, as they are now capped with reference to the incurred costs “as agreed or allowed on assessment”, they cannot simply take up residence amongst the other items.
Other features of the new bill appear under-developed, such as the summary page for tasks and activities, which, somewhat inexplicably, does not allow the user to isolate the time spent by phase. Concerns exist too, regarding a lack of judicial training outside of the SCCO. And even when accounting for the inevitable learning curve, there are doubts that the new format will reduce the amount of Court hours dedicated to detailed assessment hearings.
As a new era dawns, the starting point could hardly be further from the electronic utopia that Jackson envisaged. But all hope is not yet lost. Far from it, in fact.
Paragraph 5.1 of the incoming Practice Direction to CPR 47.6 provides that a new bill may be in the format of Precedent S, or in any other spreadsheet format which:
- reports and aggregates costs based on the phases, tasks, activities and expenses defined in Schedule 2 to this Practice Direction;
- reports summary totals in a form comparable to Precedent S;
- allows the user to identify, in chronological order, the detail of all the work undertaken in each phase;
- automatically recalculates intermediate and overall summary totals if input data is changed;
- contains all calculations and reference formulae in a transparent manner so as to make its full functionality available to the court and all other parties.
The ACL produced a version of the electronic bill for the purpose of the pilot scheme back in 2016 and in doing so offered a clear improvement in terms of usability. Furthermore, in addressing an omission inexplicably unresolved by Precedent S, it provided for full integration of the Points of Dispute and Reply within the new bill itself.
But there remains significant scope for further improvement. Adaptations could be made to correct the approach to the calculation of the costs budgeting fees. Steps could be taken to embed links to the costs authority, the supporting documentation and disbursement vouchers. It might be useful too, to develop overlays and visual aids, achieved through programming and conditional formatting, which could offer a running total of the decisions taken on assessment and help guide the judge and the parties through the process.
Those engaged at the front-line should accept this loose framework an invitation to innovate. It is as close to a blank canvas as we could hope for and provides an opportunity to create an electronic format more closely aligned with its intended purpose.
The electronic bill is almost certain to experience the same hostile reception as the one that greeted costs management following its own introduction in 2013. Whether it is embraced at the same speed and to the same degree remains to be seen, though most practitioners now agree that the alternative, a vertical extension of fixed costs, is a far less palatable proposition.
If Costs Practitioners know one thing for certain, it is that change is always imminent in our profession. This time, our role cannot be overstated. It must be us who lead the way.
John Hilton is a Costs Lawyer at Civil & Commercial Costs Lawyers Ltd; www.civilandcommercial.com
Originally published in Litigation Funding, April 2018.