On 6 April 2018, the new electronic bill of costs will become mandatory in the courts of England and Wales, replacing the current traditional paper bill of costs - a judicial leap into the 21st Century!
The new rules will apply to bills of costs for all Part 7 multi-track claims, except for those in which the proceedings are subject to fixed costs or scale costs, cases in which the receiving party is a litigant in person or where the court has otherwise ordered.
How does the new electronic bill of costs work?
The aim of the electronic bill of costs is to utilise the work undertaken by importing the data from the solicitors’ time recording system. This should, in theory, make the process quicker and easier. If there is no time recording system in place already, then the information must be recorded manually.
The electronic bill of costs will be in the format of a spreadsheet (“Precedent S”) which can be found online at this link. The spreadsheet contains (among other items) a narrative, chronology, the legal team’s rates, details of any funding, summary of the costs as claimed and comparison against the amounts in the last approved/agreed budget. The summary of costs will need to be provided on a phase by phase basis and the spreadsheet requires a summary by task and activity.
Alternatively, if the Precedent S template is not used, an electronic bill of costs can take the form of a spreadsheet which:
- reports and aggregates costs based on the phases, tasks, activities and expenses;
- 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.
Parties are required to email the full electronic spreadsheet version when filed at court to a dedicated email address, and provide the full electronic spreadsheet version to the paying party at the same time. The parties must also serve or file in hard copy.
Where a bill of costs includes work that was incurred both before and after 6 April 2018, a party can file and serve either a paper bill or an electronic bill in respect of work done before that date, and must serve and file an electronic bill in respect of work done after that date.
Is the new electronic bill of costs a good thing?
The new electronic bill of costs is more detailed as it requires a breakdown of costs incurred on a line by line basis. The biggest concern is therefore that it will cause solicitors to spend too long on recording their time and preparing the document itself. There may also be difficulties dealing with complex circumstances such as multi party litigation, and care may need to be taken to ensure that no confidential or privileged work is included in the electronic bill of costs.
Practitioners will no doubt have to pay closer attention to time recording and the preparation of a bill of costs, but this will hopefully lead to more accurate time recording and greater transparency of costs. The electronic form should also be easier to amend and understand.
Once solicitors are familiar with the form, and how to collect and present data in the required format, the production of bills should become more efficient, particularly if the parties have the software available to input the details required.
However, it remains to be seen whether the electronic bill of costs is workable in practice. Philip Daval-Bowden, Senior Managing Partner of Masters Legal Costs Services LLP provides his views as follows:
“Whether the Costs Court and its users will be ready for a process requiring the use of pivot tables, laptops and probably at least two screens per participant (and the Costs Judge) is still to be seen. What is without doubt is that time recording will need to be more detailed capturing work phases, sub-tasks, time and narratives (and divided in the Bill by reference to pre and post budget costs, each budget category and per invoice). The idea that this Bill of Costs could be produced automatically is a minefield of privilege and technology and in my view looks to be a pipe dream. The new Bill of Costs applies to all cases whether or not they are budgeted including, for example, in the Court of Appeal so all litigators will be experiencing this new and challenging process in due course.”
How to prepare for the new electronic bill of costs
There are a number of steps that could be taken to prepare for the introduction of the new electronic bill of costs.
As the aim of the electronic bill of costs is to (ideally) pull the data from the solicitors’ time recording systems, it is worth considering whether to invest in a suitable time recording system. Solicitors should also consider how their time is recorded and whether any descriptions of phases should be amended on any existing time recording systems so that they are consistent with the format of the electronic bill of costs.
If the spreadsheet has to be updated manually, a template should be prepared and formulas accurately inputted to ensure that the correct figures are recorded in the appropriate place.
While solicitors should always be aware of accurate time recording, given that the spreadsheet requires a breakdown of costs on a phase by phase basis, close attention should be paid to the particular phases when time is recorded. Team members should always discuss the allocation of a phase when conducting a particular piece of work, so that there is consistency across the team’s time recording.