Billing: a need-to-know change

With so much change in the past few years, lawyers can be forgiven for wanting to cover their ears at the mention of J-codes and the new bill of costs.

But this is a major development, and something that firms need to start thinking about now.

So what is it all about? For the uninitiated, the arrival of budgeting, with its various ‘phases’, has left the old bill of costs unfit for purpose. A dedicated committee of lawyers, costs experts and others was tasked with producing a new format, electronic bill of costs, to link in with the information required in Precedent H.

The committee published this last year, when it was subject to limited consultation.

Hand-in-hand with the new bill is a detailed set of so-called J-codes for ‘phases’, ‘tasks’ and ‘activities’. At first glance they look dauntingly complex; but they do follow a logical path. Lawyers will need to start using these codes whenever they input their time; every unit will need a J-code attributed to it.

But once inputted, the J-code information will then be multi-purpose, used for costs management, budgets, and both summary and detailed assessment. So in theory, J-codes should prove much more efficient than the current system; with the added benefit of presenting law firms with a treasure trove of data on the time it spends on various aspects of litigation – to be sliced and diced however you wish.

But there are downsides. Claimant firm Thompsons has warned of a potential ‘hefty pricetag’ for the software needed, and is concerned about the potential impact on small and medium firms, or indeed the embattled personal injury sector more broadly.

There is also a big issue in terms of the culture change needed by the profession. A two-hour conference with counsel, for example, would currently tend to be recorded as one single entry. Under the J-code system, it will take longer to record, because you would need to break the time down into, say, expert reports, witness statements, disclosure and settlement.

But then, you will need to break it down for the budget anyway.

The new bill of costs is already being piloted on a voluntary basis. The transformation into a ‘mandatory pilot’ for all cases in the Senior Courts Costs Office - if a mandatory scheme can truly be called a ‘pilot’ - was originally scheduled for this April, and has now been put back until at least October.

Reading between the lines of papers released yesterday by the Civil Procedure Rule Committee, it seems this may end up being put back further; with the Law Society’s civil justice committee having given the CPRC pause for thought.

In the minutes of the CPRC’s December meeting, the committee referred to a letter sent by the Law Society committee’s chair David Marshall to CPRC chair Lord Justice Richards. Following discussion, the CPRC acknowledged that the new bill of costs proposal had ‘major implications for the profession’, and agreed that it needed ‘careful further consideration by the Ministry of Justice and by the committee’.

Marshall tells me that he is not against the new bill or J-codes per se – and indeed some kind of reform is needed, to tie in with Precedent H. But there needs to be proper oversight of the changes by the ministry or CPRC, and proper input from the profession. To that end, Marshall says he believes the Law Society is likely to be consulting members on the issue in the coming months.

Timing will also be important to success, and there will need to be a long lead time, and plenty of publicity around these changes, which have not yet blipped on the radar of most lawyers. It is crucial that the codes are actually being used - and used correctly - by the time that the new bill of costs comes in.

What everyone wants to avoid is the situation where lawyers have to go back and attach J-codes to work they have previously done, before they can submit their bill of costs. In terms of wasted time and expense, that would be the nightmare scenario.

Rachel Rothwell is editor of Litigation Funding magazine