Today marks the date which some Costs Lawyers have dubbed “E-Day”; the introduction of the electronic format bill of costs. For readers unfamiliar with the new electronic bill, this is now mandatory for any cases in which work has been done after the 6th April 2018.
Whilst on the face of it a simple move to modernise and develop the process of costs recovery, the changes will have far reaching implications for firms and practitioners – both in respect of how they work, and the way in which they receive remuneration for their services.
Lord Justice Jackson outlined in his final report (December 2009) that “the bill format must be compatible with existing time recording systems, so that at any point in a piece of litigation a bill of costs can be generated automatically”.
In theory, I am sure that most would agree that Jackson LJ’s past proposal would be both useful and advantageous. However, in reality, the changes which have now come into effect assumes that each fee earner will accurately record their time to the same standard and have access to advanced (and costly) case management software.
In further development of the rules, work within the new format bill of costs must now be split into phases, tasks, activities and expenses.
Litigators will be familiar with the 10 primary phases (not including contingencies) in which work must be split when preparation of a Precedent H costs budget is necessary. Tasks are further sub-categories in which the nature of the work done within a particular phase must be defined. Activities represent a brief summary of what work has been done within in a particular phases and task i.e. the task – Plan, Prepare, Draft Review.
To put the above into perspective, a typical phased bill of costs would require work to be placed within 1 of the 10 budget phases only. With the introduction of the additional sub-categories, that same work is now required to be further broken down into 1 of 15 primary phases; 41 tasks, 10 activities and 15 expenses.
Clearly, the new requirements to claim for costs will now take on a much more involved approach from both fee earners and Costs Lawyers. This will no doubt result in preparation of an electronic bill of costs which by its own nature is many times larger than a traditional bill of costs. In addition, should a matter procced to Detailed Assessment, it is likely that any hearing will now require additional time and Court resources.
Turning to the rules, Practice Direction to CPR 47.6 sets out the circumstances in which an electronic bill of costs must be used.
5.1 “…The circumstances in which bills of costs must be electronic bills are that—
(a) the case is a Part 7 multi-track claim, except—
(i) for cases in which the proceedings are subject to fixed costs or scale costs;
(ii) cases in which the receiving party is unrepresented; or
(iii) where the court has otherwise ordered; and
(b) the bills of costs relate to costs recoverable between the parties for work undertaken after 6 April 2018 (“the Transition Date”).”
Fast-track cases are excluded. This is no doubt largely predicated on the move to make the majority of fast-track cases subject to fixed costs, as per the provisions currently contained within CPR 45.
Of course, whilst the specific exemptions are clear within the above outlined provisions, what does raise eyebrows is the wording of 5.1 (a). When considering the rules together with the fixed costs provisions of CPR 45, the word “allocated” does not feature. Whilst on the face of it the rules apply only to multi-track claims, the wording does not make it specifically clear as to whether an electronic bill of costs would be required in circumstances whereby a claim has been issued by way of Part 7, for which the multi-track is the most appropriate or normal track, but yet has not been formally allocated by the Court. In this circumstance, an approach of caution should be adopted.
Furthermore, 5.1 (a)(iii) provides that an electronic bill of costs will not be necessary “where the court has otherwise ordered”. For practitioners, and no doubt the Court, this may allow an olive branch. It may be such that any cost managing Judge specifically makes an order disposing with the need of an electronic bill of costs. I would suggest that practitioners use this rule to their advantage.
What should be made clear is that an electronic bill of costs is only required for work done after the 6th April 2018. Receiving parties are still at liberty to draw a traditional bill of costs for the work done up to the 6th April 2018, and prepare an additional “E-Bill” for the work done thereafter. Again practically, this offers practitioners a way around the requirement to undertake costly and timely preparation of an electronic bill of costs relating to all work done to date.
In summary, it is clear that the intention of Jackson LJ was to place greater importance upon fee earners to record their time accurately; supported by the relevant evidence. Whilst I personally wish to subscribe to the ideal that all fee earners will record their time in phases, tasks, activities and expenses, I suspect that this will simply not happen. Ultimately, the increasingly laborious task of quantifying and sub-categorising work will remain with the Cost Lawyer. In lieu of the above, I cannot stress enough the importance of specialist costing software and investment in staff training – two things which Glaisyers have already seen benefit from.
For more information on the change or how we can help, contact the Glaisyers’ Costs Team – 0161 833 5671.