Rule committee: new bill will “greatly help” assessments

The revised new bill of costs should “greatly facilitate the process of detailed assessment”, allowing the paying party and costs judge to “see the big picture summaries but then drill down into the detail”, according to the Civil Procedure Rule Committee (CPRC) group that approved the recent changes to PD 51L.

Newly published papers from the July meeting of the CPRC included the background paper and approved recommendations on the bill from the sub-committee, chaired by Mr Justice Birss, which followed a major speech by Lord Justice Jackson (pictured) in April, in which he called for the J-Codes to be decoupled from the new bill.

As we reported earlier this month, the revised new bill format was introduced on 3 October along with a year-long extension to the pilot in the Senior Court Costs Office, and a stated intention to make it compulsory for all work done after 1 October 2017.

Also on the sub-committee were District Judge Chris Lethem and Andrew Underwood from the CPRC, Anne-Marie Goddard from the Ministry of Justice, Alex Hutton QC and Master Leonard from the Hutton committee, ACL chairman Iain Stark and Gary Barker, a solicitor, lecturer and one-time Law Society official who offered the perspective of small firms.

The paper said that “in the sub-committee’s view, the new New Bill alleviates the concerns which had been expressed before and meets the objectives proposed by Jackson LJ in his April speech”.

More generally, it said: “The changes which would be brought about by using the new form bill of costs have a number of distinct features. They are all deliberate although they are not always spelled out terribly clearly. Using the new bill implicitly requires practitioners to record time in a consistent, standardised and recognised industry manner. It produces costs summary information in a consistent format.

“Although a bill in the form of a PDF version has to be provided, the party also has to provide the bill in the form of an electronic spreadsheet. This is a vital part of the scheme. The spreadsheet has calculations embedded in it and automatically performs them. So, for the sake of argument, if the costs judge decides that an hourly rate for a particular individual should be reduced to a lower figure, the effect on the summary totals is instantaneously visible. In addition, for the spreadsheet to work, it will contain what is in effect the raw time recording data which is then aggregated up to produce the summary totals.

“This, and the spreadsheet’s capacity to go straight from the summaries to the underlying detail, makes the figures transparent to the paying party and the costs judge. Using such a spreadsheet is intended to greatly facilitate the process of detailed costs assessment, thereby ultimately making the process fairer as well as reducing costs. This has the added advantage of moving towards a paperless exercise in the future.”

The paper recorded that by May 2016, only one case had gone through the original new bill pilot and that case settled. “There seemed to be a chicken and egg problem in the sense that, unless the new form of electronic bill was mandatory, no-one was going to use it. However, the CPRC was naturally not keen to impose an untested bill on practitioners.

“A second and serious problem was that the form of the new bill in the pilot scheme required the use of J-Codes in order to record time. Although J-Codes were supported by some users, there were substantial objections to this from others on the basis that J-Codes were said to be needlessly complex and that imposing them in a mandatory fashion would impose significant cost, particularly on small firms, for little discernible benefit.”

The paper said that in order to use the revised bill, a firm’s time records would need to be entered into the spreadsheet. “A firm using a J-Codes based system, as many do, would either be able to do this automatically today or be able to do it without serious difficulty. Others should be able to enter the data into the new New Bill without difficulty too, by traditional manual means. The power of the approach is that if a firm records time using this set of phases, tasks and activities, entering the data into the new New Bill will be simple and possibly costs neutral going forward.”

In his speech, Jackson LJ indicated that the manner in which firms choose to structure the presentation of the data should be up to them. The sub-committee’s amended PD 51L went further “in that the PD would require the standardised data to be presented in the same format. It is the sub-committee’s unanimous view that this worthwhile and appropriate, particularly in order to confer transparency in the process”.

The paper acknowledged that another reason why a firm may not wish to use the Hutton committee’s version was that “in addition to simple totalling up, the Hutton spreadsheet contains some other automatic calculations which a user may wish not to use. For example the Hutton spreadsheet will apply an indemnity principle limit pro rata to all cost items. The point is to ensure compliance with General of Berne Insurance Co Ltd v Jardine Reinsurance Management Ltd ([1998] 2 All ER 301), which requires the indemnity principle to be applied to individual items, but it is not the only conceivable way of dealing with that issue.”

Moreover, the paper continued, it should not be assumed that the spreadsheet’s automatic functions would manage every contingency. By way of example, the spreadsheet’s automatic indemnity principle calculations may not function where costs are claimed under an issue-based costs order or an order for the costs of one part of given proceedings.

Similarly, the bill could not accommodate additional costs claimed against the Legal Aid Agency at legal aid rates. “Such problems will in practice probably have to be managed manually (much as they are now) but alternative spreadsheet formats may find ways of doing so automatically.”

 

This post was posted in ACL e-Bulletin

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Costs News
Published date
31 Oct 2016

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