Opinion appears divided about the proposed new form bill of costs and the standard time recording codes which underpin it (the J-Codes). On the one hand, there is concern that they are more complicated and time consuming for practitioners; on the other, recognition that they should prove much better for clients and the courts. Debate in the Penningtons Manches commercial dispute resolution team has been lively, but there is no escaping the fact that the time recording and billing landscape is set to change in the near to medium future.
The new draft bill of costs (Precedent AA) has been designed to meet the three requirements set out in Jackson LJ’s final report in his Review of Civil Litigation Costs, back in January 2010. One of the criticisms levelled at the current system is that practitioners tend to record the amount of time spent without capturing the detail of what they were actually doing. For example, recording a full day “working on documents” helps neither the client nor the court understand what work was being done or for what reason.
The first requirement was that the new bill must provide “more transparent explanation” about what work was done and why. We have seen the first inklings of what this might look like with Precedent H and its phase codes. The J-Codes build on the Precedent H phase codes in two ways. There are new phases for funding, budgeting, cases and costs management hearings, interim applications and hearings, and costs assessment. Each phase or stage in litigation is subdivided into defined tasks (the work being done). The tasks are then further broken down into activities (how the work is being done).
To illustrate: you are reviewing the other side’s disclosure. The task code for “obtaining and reviewing documents” is JF20, which automatically contains the phase code (JF00). The activity of reviewing and analysing the documents has its own code (A104). Both these codes should be entered, ideally at the time recording stage. The devil remains in remembering to give the detail: the narrative for any activity may prove crucial for recovery of costs (whether from the client or the other side).
Jackson LJ’s second requirement was that the new bill must provide a “user-friendly” synopsis of the work done, how long it took, and why (that final word emphasising again the importance of the narrative detail). Precedent AA in its current form certainly splits the information out into (relatively) bite-sized chunks. The Excel version contains 14 sheets of varying complexity and detail, including summaries by phase, of base costs, and a comparison of actual versus budgeted costs.
The information is well presented and should give a clear overall picture of the litigation costs - although some might question whether it is any less “turgid” than its predecessor! It is however still a sizeable spreadsheet and remains difficult to print in its entirety.
The final requirement was that the bill should be inexpensive to prepare, in comparison with the present bills. In theory, the ability to export data straight from your time recording system into your detailed bill of costs should save time and money. However, there will inevitably be a cost to every business in developing, adapting or purchasing the technology to achieve this end, initially at least. The spreadsheet itself will be freely downloadable.
Fee-earners will need to think carefully about how they record their time, to which phase(s) and activities and in how much detail, but this is, in reality, nothing new. Indeed, putting the thought in simultaneously with the time should improve the quality of that first draft bill. The new bill of costs will not do away with the need for costs lawyers either: not all time will be recoverable, and there will still be issues of privilege to unpick.
The J-Codes have been ratified both by the LEDES Oversight Committee (the international e-billing standard) and by the senior judiciary. The new bill is being trialled in a six month voluntary pilot in the SCCO from 1 October 2015. Feedback will be sought at that stage, before a mandatory pilot is rolled out in April 2016. From October, parties must also provide a breakdown of costs claimed by phase in a detailed assessment where there has been a costs management order. We should be under no illusions: change is inevitable.
It is also, in our view, to be welcomed. Clients are entitled to know and increasingly do ask how exactly their money is being spent. Automation should lead to cost savings in the long-term and should also benefit firms commercially, allowing better analysis of how time is spent per phase, and potentially helping inform future costs budgets and estimates. (Distant) music to our ears!
This article was published in Commercial Litigation Journal in October 2015.