Second coming of costs bill offers new hope

Repetition as a device to denote a superlative is quite fashionable, if a bit irritating.Football pundit Jamie Redknapp likes to talk about ‘top top players’, while Micky Flanagan’s catchphrase ‘going out out’ has entered common usage. 

Not wanting to be left behind, the latest Hutton Committee bill of costs may be accurately described as ‘the new new bill’ and it is receiving its official Rule Committee endorsement as Precedent AB in the 86th Update to the Civil Procedure Rules. 

In May, the CPRC formed a sub-committee to reconcile disparate concerns about the new bill project (itself an original Jackson Review recommendation that was delegated to the Hutton Committee to develop). Interested bodies included the judiciary, Ministry of Justice, Law Society, Bar Standards Board and the Association of Costs Lawyers. Having pooled and considered feedback, the task remitted to the Hutton Committee was to revise and polish its first prototype bill. The fact that consensus has been achieved on the direction of travel and that the CPRC unanimously approved the revised bill for use in the next chapter of the Senior Courts Costs Office pilot from October 2016 is important. The prospect of the latest version of the bill becoming compulsory in October 2017 has greatly increased. 

The first version of the Hutton Committee bill had fallen on stony ground with most audiences, and gained little traction in the first year of the SCCO pilot. This was a shame given that some of the noisiest objections came from people who did their best to avoid looking at it and might therefore not recognise a J code from a J-cloth.  But myth-busting takes time. Meanwhile, much of the detailed criticism over the clunkiness of the first new bill was often fair and had to be addressed.  

Moreover, the profession needed a decent run-up to adjust working practices without the added burden of retrofitting old time recording into new bill categories. The CPRC has accommodated that concern by directing that any mandatory form of bill will apply to work done after 1 October 2017.

The second iteration of the new bill is slicker, slightly simpler, and not locked exclusively to J-codes. For example, the recommended number of available activities to record against has been pruned significantly.

Most importantly, law firms have become increasingly receptive to recording time in a way that can be tracked against budget and then converted into the foundation for a bill at the end of a case. 

Not having an early warning on overspend can be disastrous in costs-managed cases. Once that is acknowledged (hopefully not as a reaction to burnt fingers), it is a shorter step to implement task-based time recording that can feed the new bill with less manual intervention.

The intention behind the bill has always been to enable the parties and the court to see the wood for the trees.  The document is built as an Excel workbook which presents the costs claimed in progressively greater detail.  This enables the reader to opt to see, at the highest level of generality, the costs just of the ‘phases’ of the litigation, or to delve further and view the costs of the ‘tasks’ within each phase, or at the most detailed level the costs of the ‘activities’ carried out within each task: this last corresponds, in terms of detail, to the information included in a traditional bill of costs.

For costs-managed cases there is a table comparing budget to actual and as a nod to old school assessment, a breakdown of routine and other communications. The detailed line items form an appendix rather than the main body of the bill. A printable version has been accommodated but the need for it should recede over time.

To appreciate where the largest lumps of costs fall and how they are composed, whoever is reviewing the bill reads the background information and then drills down through the summaries until they have seen enough to take an informed decision: as a paying party what to challenge and why; as a receiving party how best to respond to challenges; and for the assessing judge, what to probe and how much to allow.

Equally importantly in case-specific circumstances is the ability to filter the data, for example, to show work done by particular people or groups and/or between certain dates. Modelling outcomes based on alternative hourly rates and, in those cases that survive LASPO abolition, alternative success fee percentages can be effected very quickly.

If costs shifting were being introduced for the first time, it would be hard to imagine any prescribed format of costs report that did not require the functionality of the new bill. The issue is that we have moved from such a low base.

There is deep knowledge in the costs profession about how to cost files in order to populate and prepare the current rigid bill, but less desire to allow paying parties under the bonnet. The larger the bill under the existing regime outside the pilot, the less practicable it is to take a ‘line-by-line’ approach to challenges and to the assessment itself.  Analysis of existing bills preparatory to framing points of dispute is time-consuming and expensive.

Hence parties, especially in commercial litigation, tend to avoid even embarking on the path to detailed assessment other than as a last resort. And who can blame them when the core document around which the assessment is based is expensive to produce and then requires a large amount of extra work to interpret and manipulate?

Even so, parties that win deserve to recover as much in costs as is reasonably justifiable and those that lose should not have to pay excessive costs just because it is too difficult and expensive to determine with any confidence which elements are unreasonable and which are not.  An unjust result can as easily arise from ill-informed negotiation as from an ill-informed court.

As a costs profession we cannot control the imposition of arbitrary standing-back exercises to gauge proportionality or the extension of fixed costs. But the minimum we should do is help to make the core document as effective a tool as possible in the resolution of costs disputes. I hope the ‘new new’ bill will come to represent a big step in the right direction.

Andy Ellis is managing director of Practico costs consultancy