? Draft New Form Bill of Costs 5 key things law firms must know
1 When is it coming into force? The draft bill of costs ( BoC ) was released on the 31 July 2015. A Practice Direction has been approved by the Civil Procedure Rules Committee ( CPRC ) to come into force in October 2015 which will permit parties to use the BoC instead of the existing model. This will be entirely voluntary at this stage. Subject to further approval by the CPRC, it is currently planned that the pilot of the BoC will operate from 1st April 2016 in relation to bills of costs dealt with by the SCCO and will apply to claims for costs where a costs management order has been made and the authority to assess (i.e. the relevant costs order) is made on or after 1st April 2016.
2 Why is it coming into force?? The Jackson reforms were designed to reduce litigation costs and to eliminate or at least seriously reduce the costs issues at the end of trials by providing for a clearly defined budget process leading to agreement of both parties and the courts as to the extent of costs to be claimed. Budgets now have to be monitored as overruns require the approval of the court. It was the view of a number of groups referred to in the Jackson Review, that the current bills of costs are undeniably expensive, cumbersome to do, not easy to digest, lacking necessary information (for example as to why particular work was done) and incapable of making use of the available technology, so that too much cost is incurred in their preparation. Now that the budgeting requirements have been in place for over two years the Jackson reforms are now therefore being further advanced by the imposition of a new BoC which in simple terms requires the new BoC to provide information in a similar format as the information required for Precedent H.
3 Use of J-Codes for time recording The BoC is based on the J-Codes, the new electronic time recoding codes produced by the Hutton Committee. The J-codes were designed to facilitate the electronic recording of work, as it proceeds, in a manner compatible with the phase, task and activity structure recommended by Jackson and already embodied in Precedent H. The BoC guidance strongly recommends the adoption and use of the J-Codes to record time as soon as possible: the longer the wait for their adoption, the more time-consuming after the event allocation of work into J-Code categories will be necessary. This is an obvious waste of time and resources. You are not alone if your firm does not currently record using J-Codes as at the moment very few law firms do. Many firms have started recording their time by the Precedent H phases and will therefore potentially be reticent to impose a further new system on their lawyers. The guidance however states that Simply using a lite version of phase/task/activity recording confined to the current Precedent H phases will help with monitoring budgeted against actual cost in the short term but it will be more costly and time intensive in the long run and will not provide fee earners with the additional benefits of reducing the time and cost of work surrounding the payment of costs. In fact the guidance goes on to say Paying parties are likely to object forcefully to paying the additional cost of an inefficient retrospective process and courts are unlikely to allow such costs on assessment. There is no doubt that the J-Codes provide a complex set of options for the fee earner and that there is no code for working on the case. Firms will undoubtedly have to invest time in training fee earners to implement and use these new codes. In the long run lawyers however may well find that the J code structure will require fewer clicks and keystrokes to complete an accurate time entry E.g. drafting the client s witness statement. Most time recording systems will require an activity to be entered such as drafting but the rest of the description will need to be typed into the narrative field. With J-codes JG10 could be selected - taking, preparing and finalising witness statement(s) from a drop-down menu and then the activity code A103 - Draft/Revise. Little, if any, information would therefore need to be added in the narrative field.
4 Precedent H and Bill comparisons The BoC contains a section whereby the Precedent H budget is directly compared with the bill. In fact the guidance states that a Practice Direction is due to come into force in October 2015 which will make it mandatory (whether the existing model or the BoC is used) to produce a comparison table between the last approved/agreed budget and the costs claimed in the bill. Comparing the Precedent H with the current bill however would seem almost impossible (or create a large amount of work for the Costs Lawyers).
5 What should Law firms be doing to prepare? There was much emphasis in the Guidance for the need to use the J-codes to reduce time and costs of producing bills which in the long term if it not done will not be deemed acceptable by the court. Firms should therefore be looking to implement the J-codes into their time recording systems as soon as is possible. Given that it is proposed that there will be direct comparisons between the Precedent H budget and the bill, even if there was no immediate requirement to use the BOC, continuing to use the old style bills will be increasingly difficult. Law firms must embrace the changes. The new BoC is complicated and the Committee themselves even admit in the Guidance that they have struggled to fully cover the issues surrounding the indemnity principle. The BoC would appear to be a complex document if it had to be completed manually for each matter. The use of specifically tailored IT must therefore be the solution. In fact the BOC Guidance states that IT should be developed to enhance the user experience and that IT skills will be brought to bear in developing more user friendly and instantly informative reports than those available within the Hutton Committee s basic, universal spreadsheet format of necessity... LHQ Software is currently a fully automated Precedent H creation (using historical budget data as a guide) and monitoring software solution. This solution covers both time recorded using the Precedent H codes and the J-Codes. As soon as the new BOC is finalised LHQ will release their automated BOC version. LHQ will then provide the market leading end to end solution...of budget creation, monitoring and an automated BOC production.