Almost there! Getting on for a decade after Sir Rupert Jackson started work on his “Review of Civil Litigation Costs: Final Report 2009”, the electronic bill, which he recommended should replace the traditional paper bill of costs, is about to become mandatory in the courts of England and Wales.
Why did Sir Rupert recommend an electronic bill? Is there a reason for the time it has taken for implementation? Will it achieve Sir Rupert’s long term aim:
“… to harmonise the procedures and systems which will be used for costs budgeting, cost management, summary assessment and detailed assessment”.
(See the Final Report, Chapter 45, recommendation 105.)
This blog explores these questions.
Why replace the paper based bill?
Before writing his Final Report, Sir Rupert prepared a preliminary report published on 8 May 2009, in which he criticised the paper form of bill then in use. He observed in Chapter 53 at 3.2:
“The Format of bills used today is based on the style of a Victorian Account Book. That format is not necessarily appropriate or helpful in the 21st century. What is required is a bill which gives relevant information to the court and the paying party and which is transparent. The current form of bill makes it relatively easy for a receiving party to disguise or even hide what has gone on.”
So was written the death warrant for the traditional paper bill, even if carrying out the sentence was to be delayed until a replacement bill could be created. For that reason, the signature to execute the warrant came only with amendments to the Rules of Court, which took effect on 1 October 2017 via the Civil Procedure (Amendment No. 2) Rules.
These rules as now in force, at amended CPR 47.6(a) refer to “a copy of the bill of costs as required by Practice Direction 47…” The consequential amendment to the Practice Direction (PD) implemented on 20 November 2017 in the 92nd Update under at PD 47 (1) now reads:
“5.1. In the circumstances provided for in this paragraph, bills of costs for detailed assessment must be in electronic spreadsheet format… The bills of costs relate to costs recoverable between the parties for work undertaken after 6 April 2018 (“the Transition Date”)…
5.A1. A model electronic bill in PDF format is annexed to this PD as Precedent S and a link to an electronic spreadsheet version of the same model bill is provided in paragraph 5.A2 of this Practice Direction…”
Note, however in PD 47.5A2:
- That any other spreadsheet format is permitted, which reports and aggregates costs based on the phases, tasks and expenses defined in schedule 2 to the PD and
- reports summary totals in a comparable form and
- identifies work undertaken in each phase in chronological order and
- automatically recalculates intermediate and overall summary totals and
- contains all calculations and reference formally in a transparent manner, making its functionality available to the court and all other parties.
There are exceptions, so the paper bill is not quite yet on a course of permanent extinction. They include at PD 47 5.1(a):
- Fixed/scale costs.
- Where the receiving party is unrepresented.
- Where the court has ordered otherwise.
Where work to be claimed in a bill straddles the transition date, paragraph 5.A4 provides that:
“…a party may serve and file either a paper bill or 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.”
That is the techie stuff: so far so clear, but why has almost a decade elapsed since Sir Rupert first wrote about his intention to replace the paper bill which, in the view of many, has stood the test of time, since, as he pointed out, the days of Queen Victoria?
The long wait for implementation
The logic behind the demise of the paper based bill is easy to see. With daily life now dominated by everything electronic, why should the sole survivor of the paper age in civil litigation be the Victorian account book bill? After all, were a system to be created capable of recording electronically, all relevant information about work done on a case as it has progressed and in conjunction with costs budgeting and costs management, much simplified schedules could be generated for summary and detailed assessment of the costs without using up swathes of the rainforest. In particular, the new bill would integrate with costs budgeting and Precedent H. At least, that was the theory.
Unfortunately, as so often happens, putting theory into practice proved far harder than Sir Rupert could have envisaged.
Having set up a committee (the Jackson Review EW-UTBMS Development Steering Committee, under the leadership of Alexander Hutton QC), which was enjoined to create an electronic bill, development was dogged by problems. Although Sir Rupert had recommended the abolition of the indemnity principle (whereby item by item, a paying party’s liability can be no more than the amount which the receiving party is liable to pay his or her own lawyers), the government did not accept that part of his report. That created an immediate and serious problem for the Hutton Committee in the drafting process, since it introduced the need for a minute level of detail which would have been unnecessary had there been no indemnity principle to grapple with.
There was then the issue of legal aid. How could the eight column paper bill be converted into an electronic format without it becoming totally unwieldy?
Next there was difficulty about the recording of time in phases, tasks and activities using American “J”-Codes (or the EW-UTMBS J-Code-set, to give them their full title). Whilst the codes had been endorsed by Sir Rupert and the Master of the Rolls in July 2014, literally hundreds of codes needed imputing into the bill which was making the job too cumbersome. At least, that is what its critics said.
In the result, “after a considerable amount of effort and hard graft”, as Sir Rupert rightly described the Hutton Committee’s work, the bill subsequently invented had so many columns that it could not be printed, but only viewed on screens. As such, it was not in a fit state to be made mandatory at as early a date as its principal proponent had planned.
Following a period of consultation, in a keynote address to the Law Society on 21 April 2016, it appeared to Sir Rupert that four key strands of criticism had emerged. The electronic bill was:
- Too expensive to implement.
- Too complex to work with.
- Too time consuming to transfer the word done before J-Codes into the new format.
- Too prescriptive in using J-Codes.
Sir Rupert came up with answers.
- A print version of the bill and spreadsheet should be created removing references to J-Codes.
- A voluntary pilot scheme, operating from 1 October 2015 in the Senior Courts Costs Office (SCCO), should be extended until the new bill became mandatory.
- The Civil Procedure Rule Committee (CPRC) should choose a date for mandatory implementation, with 1 October 2017 being his recommendation, with no retrospective requirement, so work undertaken before that date could be presented on paper.
The reference to the “voluntary pilot” was to a scheme authorised by PD 51L under which the SCCO from 1 October 2015, would accept electronic bills from parties who wished to use them.
Unfortunately none did, so the “original plan”, as Sir Rupert had described it, that the pilot would finish at the end of April 2016 with the new bill to become mandatory the following day, had to be abandoned. Instead, the pilot scheme struggled on, receiving an extension until 30 September 2017 but only in the SCCO, at which point it expired, its virginity intact. Although a handful of bills had made their way into the SCCO via the dedicated email address for electronic bills, none had gone the full distance. Thus, after much planning and discussion, two years of pilot scheme had resulted in not one bill having been assessed by the court: not exactly a resounding endorsement for the electronic bill! Worse still, the anticipated implementation day of 1 October 2017 had to be abandoned, as the necessary IT infrastructure in the district registries was not complete, still less had it even started to be put in.
Undaunted, the view taken by Sir Rupert and through him, by the CPRC, was that if no date was fixed for mandatory implementation, the old ways would never change. Accordingly, 6 April 2018 would be D-day.
And so it has, or will come to pass – see PD 47.5 above (as amended). From that date, in most civil litigation excepting the PD 47 5.1(a) carve-outs, turn up after that date with a paper bill for work done from 6 April onwards, and the only service you will get from the court is a match to burn your offering in the fire.
Will it work?
The answer to that is “Yes” because like the banks, as with other civil justice reforms, they are just too big to fail.
The real question is, how long will it take for the profession and the judiciary to get to grips with the new bill and with electronic assessments? That in turn leads to two sub-questions. First, is the new bill actually fit for purpose in the sense of adapting to all types of costs order? Second, will the judiciary and the courts’ IT systems be able to cope?
The work of the Hutton Committee is not in doubt. Nor is it seriously doubted, even by its detractors, that the new bill will be unable to deliver what is supposed to. The point is whether it will be able to do so at any saving at all in terms of expense and time.
Take this example. Defendant (D) is ordered to pay the claimant’s (C) costs on the standard basis, to be assessed if not agreed. No nasties there, particularly if the case has been subject to costs budgeting. The incurred costs will be assessed in the usual way and the budgeted costs ticked through, unless either party argues “good reason” successfully under CPR 3.18(b) for more (or less) than the amount of the last agreed or approved budget.
Now suppose that the claimant has succeeded against D1 with costs, has failed against D2 with costs to be paid to D2, and has won at trial against D3 who failed to beat C’s Part 36 offer, so costs after the last day for acceptance are payable on the indemnity basis. Although such a costs order is not issue based in the sense of having been consciously made under CPR 44.2(6)(f), in reality, it is. Whoever drafts the bill will need to separate the non-specific common costs which would have been incurred anyway, from the specific common costs, to ensure that D2 does not pay any costs attributable to the claims against D1 and D3. Just like under the paper system, that will require a minute examination of the work undertaken.
All clear so far?
What about the indemnity basis costs? Neither the proportionality test nor costs budgeting apply to those costs so they too will need to be separated out, since CPR 44.3(5) only applies to standard costs and the indemnity basis frees the receiving party from the operation of CPR 3.18 (see Denton v White).
Such a costs order is by no means uncommon: it is hard enough to draft a paper bill to cope with an issue based order. Will the electronic bill be able to cope? Yes it will, but it will need to be split into parts, the very thing that Sir Rupert had found offensive about the paper bill, and arguably, it will take longer and be more expensive to produce than its predecessor. And all that is with the claimant having funded the case privately. Suppose he or she had had legal aid…?
Supposing next that all these difficulties are surmountable and it is now assessment day. How will the day’s business proceed?
The intention is that the judge will work from screens, one displaying the bill and the other showing the points of dispute and replies, and in a paperless assessment, also in order to view the receiving party’s supporting documents. As adjustments are made to the bill, the parties using their own laptops will make the changes and self-calculating will avoid the need for any post-hearing meeting at which the lawyers agree the figures.
That presupposes that the courts and the judiciary, and indeed the profession, are ready. So far as the latter is concerned, training sessions have been underway for a considerable time, getting to grips with Excel spreadsheets and electronic drafting, but for the judiciary? Not much sign of any judicial training so far, although a handful of electronic bills have now been subject to provisional assessment in the SCCO.
Outside London, who knows? The dedicated email addresses for each district registry which will permit electronic filing are hard to find, if they exist at all. With judicial training conspicuous by its absence, the prospects of a seamless transition from paper to the new bill from 6 April 2018 are uncertain.
But let us suppose that at the detailed assessment day, the IT works, and that the bill and supporting documents have been lodged electronically and securely, rather than as hard copy files, as happens now. The potential advantages of electronic detailed assessment then become obvious. If the receiving party’s files are stored electronically, there will be no need for anyone to dig around in dusty boxes in order to locate documents for the benefit of the court. A folder containing, say, letters to an expert which are under challenge, can be identified and produced on the judge’s screen.
Likewise, where specific items of work are disputed, grouping documents by subject matter (such as witness statements or instructions to counsel) will be accessible by reference to coded folders, to be located at the touch of a button. That will avoid the current practice of lodging voluminous papers which are then laboriously inspected and handed up to the judge when needed.
Thus, the answer to the third question posed in this blog is “wait and see, but be cautiously optimistic”. As with Sir Rupert’s other reforms, the new bill will take time to bed in.
As for the man himself, yesterday was Sir Rupert Jackson’s valedictory in the Lord Chief Justice’s Court on his retirement, when appropriate tributes to his long career in the law were paid. Today, he joins 4 New Square as an arbitrator, in addition to becoming a judge of the Commercial Court of Kazakhstan. Sir Rupert will be with us for a while yet!
