In the second of two Q&A posts by Deborah Burke from Attain Legal Costs Management Ltd, Deborah discusses the new format for bills of costs and answers some practical questions about how to use it. In her first post, Deborah looked at the new J-codes.
Q: Where can I find out more about the new format?
A: In July 2015, the Hutton Committee launched a consultation on the new format bill of costs for detailed assessment, to which the first draft of the new bill and a guide for its use were annexed.
Then on 1 October 2015, a pilot for use of the new bill on a voluntary basis in relation to proceedings in the Senior Courts Costs Office, where the notice of commencement is served on or after 1 October 2015, began to run. The pilot is governed by Practice Direction 51L, to which the new format bill of costs is annexed as Precedent AA.
In response to the consultation, feedback on the new bill format has been received and is being considered. The Hutton Committee is meeting shortly to formulate a response.
Q: Last week, I heard that the new bill format had been kicked into the long grass. What’s going on?
A: PD 51L refers to the voluntary pilot scheme lasting for six months. However, even before the pilot went live the Senior Costs Judge, Master Gordon-Saker, had been lobbying for a longer voluntary pilot.
My fellow Hutton Committee members and I could see the sense in that, and so did the Civil Procedure Rule Committee. Recently, Alex Hutton QC was told by Master Gordon-Saker that the voluntary pilot would run until October 2016.
This longer lead-in gives practitioners a more realistic time frame for getting up to speed with the new format, before using it becomes mandatory. Forewarned is forearmed…
Q: If information about the work done is coming straight from my time recording into a draft bill of costs in the new format, how can I stop irrecoverable costs being claimed?
A: At the moment, the manual process of preparing a bill of costs requires someone (the fee earner, in-house draftsman or external costs expert) to examine each and every item of work in order to make sure that any item of work which falls outside the scope of the receiving party’s costs order (for whatever reason) does not end up in the bill of costs which is served on the paying party. This explains the tiny pencil ticks, crosses and scribbles on your paper file.
As more and more firms adapt to J-code time recording and the new bill format, more and more bills of costs will begin life when raw data about the time spent and disbursements incurred is transferred directly into the new bill format template.
Using J-codes cuts out the need for any manual repetition of the time recording information. It is a time and cost efficient way of getting that raw information about the work done into a first draft bill of costs for detailed assessment.
However, when a J-code is allocated to time being recorded, no thought is usually given (quite rightly) as to the future recoverability of that time. This means that there will still need to be a manual manipulation of the draft claim for costs to exclude work that shouldn’t be there.
I can hear some of you saying that manual intervention of this kind negates any benefit of using J-codes and the new bill format. I don’t agree: the significant amount of time currently spent manually transferring information from one place (your file) to another (your client’s draft bill of costs) is still hugely reduced. Starting from a point where time recording entries are already in a draft bill of costs represents a huge potential saving in the cost of preparing a bill of costs.
There is also another advantage to the new way of working. At the moment, the decision on whether to exclude or apportion time is largely made by the person preparing the bill of costs. This process is, therefore, highly dependent on the skill and understanding of the person who is manually taking information from the file to create a draft bill of costs.
Not only that, if the original decision as to recoverability of work is re-visited after manual costing has taken place and work has been excluded or apportioned, there is little alternative other than to trawl through the file again. As you won’t know the value of what you are looking for, you won’t know whether it’s worth the candle and you run the risk that the exercise will be judged disproportionate by both the court and the paying party.
The beauty of using the new bill format to create a bill of costs is that transferring your time recording straight into the bill template means that you are starting with the most complete version of your costs and, whatever you do, you will always be able to change your mind.
Q: What can I do if I know that work is going to fall outside the scope of the costs order made in my client’s favour?
A: There will be times when the fee earner knows that work done is not going to be recovered, for example when an adverse costs order is made after the amendment of a pleading. There is nothing to stop the fee earner identifying the time recording which relates to the adverse costs order as soon as the order has been made and marking it on the system. The ways of doing this will differ from system to system and fee earner to fee earner. A time recording system may enable the fee earner to add a “tag” to the work to show that it is not recoverable. If this is not possible, the fee earner may choose to add “AC” (“adverse costs”) or similar to the time recording description. There are many ways to skin this particular cat…
When the costs information is transferred into the draft bill of costs, all work that has been identified as falling outside the scope of the costs order can be selected in seconds and deleted.
Q: How do I prevent privileged information finding its way into a new format bill of costs?
A: The most important thing to remember about the new bill format is that while time and disbursement information is automatically transferred into the new bill format template from your time recording/practice management system, there is no on-going link between your time recording/practice management system and the draft bill of costs. If you reduce the value of time or disbursement items (or delete them even) in the draft bill of costs, the original information in your time recording/practice management system is unaffected and vice versa.
Once the time and disbursement information has been copied into the new bill template, the person constructing the draft bill of costs adds information about the fee earners and their hourly rates into the new bill template and the template automatically calculates the value of the costs claimed.
When using the new bill format template, the position will remain as it is now: fee earners and costs experts will need to ensure that the bill narrative and the descriptions that support time recording entries do not contain privileged information.
Q: I’ve heard that anyone using the new bill format needs to be a spreadsheet expert. Is this correct?
A: Fee earners do need to understand spreadsheet programs. This will allow them to keep control of the process, even when a costs expert (rather than the fee earner) creates a bill of costs in the new format.
Now is the time to ensure that your in-house or external costs expert is fully conversant with the new way of working. Bills of costs will still need to be certified as accurate and fee earners need to trust their costs experts to produce a claim for costs that the fee earner can safely certify.
In the longer term, it is highly likely that commercial software providers will develop user friendly versions of the new bill format which will allow a new style bill to be created with less technical expertise than is required at present.
