In this blog, I focus on the costs aspects of the Practice Direction amendments contained in the 104th CPR update. Firstly, there is a change to Practice Direction 3E with a replacement Annex C Precedent R Budget Discussion Report. Not much to comment on in that regard; case law has previously dealt with issues as to incurred costs when budgeting and the splitting of profit costs from disbursements in the new form is no great shakes (when preparing a Precedent R in the past, I used to show clear workings on any proposed reductions in any event. Perish the thought that counsel or the court at a costs and case management conference actually have to have a calculator to hand!).
More significant is the extension to the wind of change relating to electronic time-recording. I have long been preaching that electronic time recording has existed for a number of decades in some form or another. With VAT issues and monthly invoicing the norm, we have rarely seen a file in this millennium that is not reasonably supported by time recording that, when pushed, can inevitably be transformed into an Excel spreadsheet.
We are getting to grips with the now compulsory (having failed to produce any meaningful take-up during its own extended pilot scheme) electronic bill of costs, which includes the sort of detail the update now suggests is appropriate for summary assessment. At the Association of Costs Lawyers (ACL) annual conference last year, the senior costs judge, Chief Master Gordon-Saker, hinted at these changes.
You might be forgiven for thinking that 1 April 2019 is D-day, but that merely spells the start of a two-year voluntary pilot scheme. If followed, it would see the introduction of electronic time-recording data as the basis for the new statements of costs for any case where costs are to be summarily assessed. It is therefore arguable that, as with the electronic bill of costs pilot, these changes will simply be ignored for two years.
There are two new N260 documents: N260A (interim applications) and N260B (costs to trial). For the N260A (interim applications), detail of activity and communication method (as appropriate) is required, but there is no requirement to provide a phase. The sense in this is that the phase is simply the interim application itself, which invariably falls outside the scope of budgeting (or within a contingent phase if it was foreseen at the time of budgeting) and is much more likely to lead to an actual summary assessment.
The N260B (costs to trial) is a more concerning approach/document. There is a need to not only show costs by phase and activity, but to be supported by a Precedent Q (budget comparison document). Counsel’s fees will also be shown by reference to phase and task. Other disbursements will be shown by phase name and expense name. The only thing that has been removed is the need to set a task code.
For both forms, a supporting document schedule will have dated entries. To all intents and purposes, these N260s are a full bill of costs for the elements of costs covered. It is arguable that you still need the underlying data that is not a requirement in each of the forms to produce the form itself and, even if the underlying data does not have this level of coding (and you can manage to produce the statement of costs without it), it will still need to be inserted for any subsequent bill of costs.
At first blush, that may seem an odd thing to say given that these are forms designed for summary assessment. However, I would suggest that there has been many a case geared up for summary assessment that has been kicked off to detailed assessment for a multitude of reasons (with this level of detail before the court at the end of a hearing seeming to be the most compelling reason yet!). It also strikes me that the N260B (costs to trial) document seems an unlikely candidate for summary assessment at all. Appreciative of the sorts of cases that are now not covered by fixed costs (or will be by the end of this pilot scheme), it strikes me that this is more of a document required in support of an order for a payment on account pending detailed assessment. This level of detail, if unconsidered, could prove to be a significant hostage to fortune moving forward into the detailed assessment process.
What is perhaps most surprising is that the parties can use the paper or PDF form only. If the electronic format is used, one must file and serve the paper/PDF form and at the same time provide the electronic spreadsheet form. In the circumstances, and having drawn electronic bills of costs for some time now, the process of paper service (and lodging) seems to me to be an entirely pointless and expensive exercise. It is unnecessarily time consuming and a waste of resources where the whole concept of these and the related changes is to create what is, in effect, a database capable of meaningful analysis by electronic manipulation. Consider any other industry where a spreadsheet is produced for parties to utilise in planning or negotiation where you are only required, or compelled, to provide a hard copy version. I have previously written on (and don’t get me started on) lawyers using electronic service issues to seek to gain a tactical advantage rather than being pragmatically sensible.
The changes, insofar as they are designed to make use of existing technologies, must only be a good thing. However, this does have the appearance of requiring too much data for its purpose. These and recent changes seem to be a driver for forcing lawyers to record time electronically, and prescriptively, with the full plethora of coding levels throughout. Surely that is not an issue that needs to be prescribed in this way.
One hopes that solicitors can get on with the job in hand, rather than expending a significant proportion of their day producing this level of coding, should it be required, in what is probably only a small proportion of cases (and I question if it is required at all; I cannot wait to see my first High Court judge conduct a summary assessment based on sheets and sheets of documentation schedules). This does remain a process of summary (and not detailed) assessment. As I said at the outset, electronic time-recording has been around for as long as I can remember; prescribing its form is arguably derisory. Those that have not chosen to utilise existing technologies in the past will continue not to do so and, arguably quite rightly, employ others who are experts to set their house in order when and where required.
My main concern is therefore a call for a full N260B in a significant case on short order. If the courts require (which I doubt) and the parties are forced to provide this level of detail, one hopes that it is not envisaged as an overnight process.
The proper use of technology is not a process where an advantage is to be had from argument over natural and acceptable elements of human error. Take as an example a solicitor dealing with a large case whilst on annual leave, or at a conference, with a multitude of calls and emails whilst away from the office. We all do such things in this day and age as a result of helpful technologies. On their return to the office, is their first task forensically to reproduce the work undertaken? I suggest that that is a job for a costs lawyer with access to the emails, documents and a simple, un-coded, block time entry after the event (and with an appropriate amount of time to undertake the task).
In the face of this criticism, it is arguably another damned if you do, damned if you don’t pilot scheme. The Hobson’s choice is to engage with the pilot scheme in an effort to prove that the level of detail required is unreasonably burdensome and unnecessary (whilst proving that providing that level of detail is possible) or simply to not take up the pilot which will, inevitably, lead to a mandatory requirement at some point in the future.
Francis Kendall is a costs lawyer, Director at Kain Knight (City) and current vice chairman of the Association of Costs Lawyers.
