NLJ Costs of assessment November 2015

In the world of costs, two key issues have been at the focus of lengthy debate following the introduction of costs budgeting: the introduction of J-Codes and the continued development of a new form of bill of costs designed to deal with the same.

The theory behind J-Codes is clear – properly recorded time coupled with appropriate software should result in a button-pressing exercise for the categorisation of legal spend in litigation for the purposes of budgeting, monitoring a budgeted case, and any arising detailed assessment.

The concept of any new format bill of costs flows from this process, drawing on the information that should already be available to streamline and reduce the costs of the assessment process.

As has always been recognised since the introduction of legal-based time-recording software well over 20 years ago, this has always been a realistic, if slightly utopian, goal. Any justifiably and simplistically coded file, supported by detailed and appropriate text, would have resulted in a relatively simple drafting project for a costs lawyer instructed for the purposes of detailed assessment.

Why has this not been done? The answer is both well debated and simple. For fee-earners to expend the necessary time and effort in all cases is simply not justifiable or cost effective. Only a small proportion of litigation leaves a costs award hanging for a significant period of time; most are capable of sensible negotiation and agreement. A further small proportion of that small proportion is contentious enough to merit the preparation of a detailed bill of costs and, again, only a small proportion of such cases will proceed to a full assessment hearing.

What is the time cost of coding and fully recording all time on all cases compared to undertaking the forensic and retrospective task of preparing a full bill of costs on a minute proportion of cases? The answer is simple and likely to be contentious: the former is clearly disproportionate.

Budgeting is here and aims to deal with the overall proportionality of the costs to be incurred in a case. This is achievable and business decisions can be made by clients and their legal team at an early stage in the litigation through the process. 

In my view, the costs of conducting an assessment of costs was never an issue, it was/is not a problem and therefore does not need fixing. A client once told me, and he was right, that assessment is “pure” litigation – it is only ever about quantum. Costs lawyers’ fees in the process were always up to the tests of reasonableness and proportionality, and fell to be assessed if they could not be agreed.

We know what is reasonable and likely to be allowed and our practices were always within those parameters, otherwise we would lose clients and our reputations with the judiciary quickly. The cost of budgeting is prescribed within the CPR as a percentage of the approved budget – it’s that straightforward.

To summarise, the costs of assessment have, on the whole, always been transparent, predictable and proportionate, and the cost of budgeting is prescribed at a level in line with any proportionate costs budget agreed or set by the court. The perceived benefit of any focus of J-Codes and any new bill format that may be directed at reducing the costs of budgeting and/or assessment are fixing a problem that did not exist.

It is accepted, and must be recognised, that both J-Codes and the new bill format do nothing to reduce the actual costs of litigation in the UK. Indeed the opposite effect is more likely with lawyers having to expend considerable effort in recording time to over 1,000 permutations in all managed litigation.

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08 Jun 2016

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