George Osborne’s spending review has included a pledge to raise the small claims limit for personal injury claims to £5,000 and scrap general damages for ‘minor’ soft tissue injuries.
Those given the job of trying to design the new bill of costs format have been cursed with a herculean task (probably the legal equivalent of mucking out the Augean stables).
At the heart of the problem is Lord Justice Jackson’s view that: “The bill format must be compatible with existing time recording systems, so that at any given point in a piece of litigation a bill of costs can be generated automatically”.
This has inevitably led to all the focus being on J-Codes so bills can be (semi-)automatically generated based on case management software.
However, it is worth considering the three requirements that he believed would “have to be satisfied” so we can consider to what extent the current bill produced for the pilot scheme meets those requirements. The first requirement was:
“The bill must provide more transparent explanation than is currently provided, about what work was done in the various time periods and why.”
I may have missed something here, but so far as I can tell, the pilot model bill does nothing to attempt to address this issue.
To be fair, I am not really sure what Jackson LJ had in mind. When I first saw this statement, my heart sank. Narratives to current bills are often verbose, selective, misleading twaddle. The idea that receiving parties should be encouraged to provide more “why” was never a great one. Certainly, some badly drafted bills lack certain information that common sense would suggest could, and should, be helpfully added. If there is a claim for work interviewing a witness despite the fact no evidence from that witness was ever served, provide in the bill at least a brief explanation as to what evidence it was hoped this witness could produce and why no actual evidence was served. The same goes, for example, to expert’s evidence not served. But, do we really need bills to pre-emptively seek to explain and justify work where there is every possibility no challenge will be made?
Nor is it obvious how the new bill provides a more transparent explanation (if that was lacking from the current version) as to “what work was done”.
The one advantage of the requirement for bills to be drafted by phase is it should become much easier to see how long has been spent of certain tasks overall. Currently, it can be an exceptionally time consuming job to establish how much time has been spent in total on, for example, drafting witness statements or preparing a schedule of loss. It is easy for excessive time to be camouflaged with 30 minutes here, 24 minutes there, etc.
It has been suggested that in the case of Stocker v Stocker  EWHC 1634 the most interesting observation by Mr Justice Warby was:
“I readily acknowledge the importance of ensuring that the costs budgeting process does not result in a party being unable to recover the costs necessary to assert their rights.”
I would entirely agree if it were not for the fact the judge has so clearly misdirected himself in relation to the post-Jackson approach to costs.
“These Rules are a new procedural code with the overriding objective of enabling the court to deal with cases justly and at proportionate cost.”
CPR 44.3(2)(a), relating to assessment on the standard basis:
“Costs which are disproportionate in amount may be disallowed or reduced even if they were reasonably or necessarily incurred”
The fact a case is subject to costs management does not mean that it is therefore immune to the new proportionality test. The same approach surely applies to both budgeting and assessment. To ensure proportionality, in both cases a figure may be allowed that is less than the “necessary” to conduct the case.
But, perhaps it is me that is wrong.
Perhaps a judge setting a budget is only concerned with fixing a figure that allows for all “necessary” work to be done. If that figure is ultimately found to be disproportionate for the facts of the case, it is then for the judge on assessment to reduce the costs below the approved budget on the basis that this amounts to a “good reason”. If that is so, it undermines two of the purported benefits of costs management: certainty for the parties as to the extent of the adverse costs they are likely to face and avoiding the need for detailed assessment.
Having said that, at this stage nothing would surprise me about the implementation process.
There has been a certain amount of twaddle written in the Comments section of this blog recently implying that the new J-Codes based bill of costs format is a conspiracy of the few (ie those with a financial interest in costs drafting/costs budgeting software) at the expense of the many (ie by introducing automated bills that will significantly reduce the work of costs draftsmen/costs lawyers).
The starting point to remember is that a new software based bill of costs format was a recommendation contained in Lord Justice Jackson’s Final Report:
“Bill of costs
The three requirements
There are three requirements which have to be satisfied:
The bill must provide more transparent explanation than is currently provided, about what work was done in the various time periods and why.
The bill must provide a user-friendly synopsis of the work done, how long it took and why. This is in contrast to bills in the present format, which are turgid to read and present no clear overall picture.
The bill must be inexpensive to prepare. This is in contrast to the present bills, which typically cost many thousands of pounds to assemble.
How to meet those requirements
In my view, modern technology provides the solution. Time recording systems must capture relevant information as work proceeds. The bill format must be compatible with existing time recording systems, so that at any given point in a piece of litigation a bill of costs can be generated automatically. Such a bill of costs must contain the necessary explanatory material, which is currently lacking from the bills prepared for detailed assessment. Crucially, the costs software must be capable of presenting the bill at different levels of generality. This will enable the solicitor to provide either (a) a user-friendly synopsis or (b) a detailed bill with all the information and explanation needed for a detailed assessment or (c) an intermediate document somewhere between (a) and (b). The software must provide for work which is not chargeable or work which is written off to be allocated to a separate file.
Armed with such a software system, solicitors should be able to produce up-to-date costs information for the client or schedules of costs for summary assessment at whatever level of generality may be required. Also, at the end of the case, the solicitors will be able to produce a detailed bill of costs, which can be used either for negotiating costs with the other side or for a detailed assessment hearing.
I therefore recommend that work should be put in hand to develop existing software systems, so that they can (a) capture relevant information as work proceeds and (b) automatically generate bills of costs at whatever level of generality may be required. Two of my assessors, Senior Costs Judge Peter Hurst and Jeremy Morgan QC, have discussed the possibility of such software being developed with a firm of law costs consultants. The current proposals are that a bill should be presented in the order “phase, task, activity”. According to these proposals, the bill is divided into five “phases”: (1) case assessment, advice and administration; (2) pleadings and interim applications; (3) disclosure; (4) trial preparation and trial; and (5) detailed assessment. Each phase is then broken down to identify different tasks. A summary sheet lists the profit costs and disbursements in respect of each task in each phase. In the body of the bill itself, each task in each phase is set out in chronological order, with an indication of the time spent and the amount claimed. A bill in this form could easily be transmitted in electronic form, provided that all those involved had compatible IT software. If bills were to be prepared along the lines suggested, and dealt with electronically, there would potentially be large savings in time and costs. One advantage of the proposed system is that costs information can be extracted at different levels of generality. The electronic formatting of bills should, in principle, provide greater transparency.
I readily accept that developing new software will be expensive. However, if successful, it will generate major savings. The huge costs of drafting bills of costs will be avoided. The suggestion made by the Association of Her Majesty’s District Judges (viz that a print out of the solicitors’ time record be used for detailed assessment) will not be adopted directly, but my proposal is a variant of that suggestion. The resulting bills will be easy to read and digest, thus meeting many of the concerns expressed during Phase 2. The work done on documents (often the largest item in any bill) will become intelligible. This will give effect to the very sensible advice given by the working group. Furthermore the software will be able to generate (a) simple schedules of costs for the purpose of summary assessment or (b) detailed bills for the purposes of negotiation or detailed assessment at the end of a case. The court must have IT systems capable of receiving bills in electronic format.”
My understanding is the Association of Costs Lawyers, together with other interested parties, proceeded to set up a working party to try to put forward proposals for putting these recommendations into practice.
Unsurprisingly, this working party included a number who already produced costs drafting software. If is doubtful that others would have had the necessary technical expertise or knowledge of the traditional requirements of bill drafting. My understanding is that those who volunteered for the working party have not been remunerated for their time. Certainly from the perspective of the Association of Costs Lawyers, the motivation for being involved in the process was to help ensure the final model bill was a workable alternative to the current format. One can only dread to think what the Rules Committee might have produced if they had been left to develop this.
Whether the model bill produced for the new pilot scheme is actually workable or produces any of the advantages envisaged by Lord Justice Jackson is a matter for debate.
A more legitimate criticism of those who have been involved in the process, is to ask what would have happened if they had not offered up their services. Is there really the slightest prospect that without their input the Rules Committee or Ministry of Justice would have had the expertise or resources to produce a new bill of costs format? It appears more likely that this would have been left indefinitely on the shelf (for good or bad).
As to whether the new bill of costs format will enable bills to be “automatically” generated, there seems no prospect of this happening any time soon. Looking at the new pilot model bill of costs, one wonders whether this is in fact a clever conspiracy to ensure bill drafting remains far too complex for anyone not working in costs law full time to ever attempt.
Costs budgeting was, in theory, meant to operate akin to summary assessment at the outset of a claim. The serious flaws with the implementation process and numerous practical problems, with which readers will be more than familiar, has made costs budgeting an expensive mess with little of the hoped for benefits being delivered.
A new shorter trial pilot scheme is being introduced into the courts in the Rolls Building that will seek to bypass these problems. This will dispense with costs budgeting, unless the parties agree otherwise. Within 21 days of the conclusion of the trial, or such other period as ordered by the court, the parties shall each file and exchange schedules of their costs incurred in the proceedings. These “should contain sufficient detail of the costs incurred in relation to each applicable phase identified by Precedent H… to enable the trial judge to be in a position to make a summary assessment thereof following judgement”. The court will summarily assess the costs save in exceptional circumstances.
The expense of costs budgeting will be avoided. The costs of assessment should be slashed.
The downside over costs budgeting is that it deprives the parties of the opportunity to know what costs they will face. Why not bring back District Judge Lethem’s routine costs capping orders?
The summary assessment of potentially significant costs will still lead to the problem of largely arbitrary figures being allowed, but the fact this will be based retrospectively on the costs actually incurred rather than based prospectively on speculative future budgets is no more likely to result in injustice that the costs budgeting process. With proportionality now being the overriding factor, and trumping reasonableness or necessity, rough justice is all that can be expected.
If the pilot scheme is successful for these types of commercial claims, and there is no reason to suppose it will not be given its simple approach, it will only be a matter of time before this is extended to other litigation.
How much simpler Lord Justice Jackson’s Report might have been if it had simply said:
“Scrap detailed assessment. Summarily assess everything upon settlement with the costs capped at a proportionate figure disregarding reasonableness or necessity.”
No need to end recoverability of additional liabilities. No need for Qualified One Way Costs Shifting. No costs budgeting. No new Bill of Costs format. No new relief from sanctions test and the Mitchell/Denton farce. Etc. Etc.
The requirement from 1 October 2015 to serve a breakdown of the costs claimed for each phase of the proceedings together with the Bill of Costs, where a costs management order has been made, is an odd one.
This is clearly intended to be an interim measure until the new Bill of Costs format is introduced where the Bill itself must be drafted by phases.
Firstly, to prepare a breakdown by phase requires either the fee earner to have accurately recorded all work by phase (highly unlikely), as the case progressed, or the costs draftsman preparing the Bill to allocate each routine communication and unit of work to the appropriate phase. Once this work has been undertaken, it is surely almost as simple to simply draft the Bill itself by phase. Why force the receiving party to do all the hard work and then not require the small additional step to be undertaken to complete the process?
Secondly, is there seriously anyone on the Rules Committee naïve enough to think that were a party discovers they are over on some phases but under on others that they will not be tempted to shift some of the work over into other phases of the breakdown in the knowledge it will be an extremely difficult task for the paying party to cross-check the accuracy against the non-phased Bill?
Thirdly, what is a judge on assessment meant to do with a breakdown showing a party has gone over for some phases but where the Bill itself is not drafted by phase? Presumably they will go through the Bill in the normal way applying reductions in the ordinary manner, but then what? How are they to tell whether they have now reduced some phases below that approved by a costs management order (which normally should not happen) or whether they are still over on others and further reductions are required? Are the advocates at the assessment meant to adjourn and work out which reductions have been made to each phase before going back before the judge to consider whether he needs to increase or decrease further? Has the slightest thought been given as to how long this would take (not to mention the problems trying to apportion routine communications to any particular phase)?
I’m becoming increasingly convinced that implementation of the Jackson reforms is not being done with any intention this should work but is a deliberate attempt to increase costs and confusion to the extent that everyone throws their hands in the air in horror and begs for fixed fees across the board.
CPR 47.6 is amended from 1 October 2015 such that the documents to be served when commencing detailed assessment will now include:
“if a costs management order has been made, a breakdown of the costs claimed for each phase of the proceedings”
(The new Model Precedent Q can be found on this link showing the format of the breakdown.)
The fact the requirement to serve the breakdown only arises when a costs management order has been made is, perhaps, odd. I wonder if the rule committee overlooked PD 44 para.3.4:
“On an assessment of the costs of a party, the court … may have regard to any other budget previously filed by that party, or by any other party in the same proceedings. Such other budgets may be taken into account when assessing the reasonableness and proportionality of any costs claimed.”
Given the accuracy of budgets is meant to be considered by phase, there equally seems to be a need for a breakdown whenever a budget has been served, regardless of whether a costs management order has been made.
Readers are probably aware of the male solicitor who, in response to an invitation to connect via LinkedIn to a female barrister, commented on the “stunning picture” on her profile. In turn she publically named and shamed him for his “unacceptable and misogynistic behaviour”.
Her LinkedIn profile has since been updated to include the following:
“I am on linked-in for business purposes not to be approached about my physical appearance. The eroticisation of women’s physical appearance is a way of exercising power over women. It silences women’s professional attributes as their physical appearance becomes the subject.”
The press have been having much fun with the story, not least when it was reported she herself had allegedly previously posted comments on social media describing photographs of men and women as being “sexy”, “stunning”, “Hot stuff!” and “oooo lalala!”.
Now, readers of this blog are old enough to make up their own minds as to the appropriateness of his original comments, her response, or whether there is any justification in the implication of hypocrisy on her part, without me needing to add my two cents worth.
Nevertheless, there are a couple of general points that arise.
There is no requirement to add a photograph to a LinkedIn profile. If a conscious decision is made to add a photograph, it cannot come as a complete shock if this prompts comment at some stage. (I once met a female costs lawyer at an Association of Costs Lawyers Annual Conference who commented I was much better looking in my online photograph than in real life.)
It can’t really come as a shock to discover that some people are looking at the profiles that appear on LinkedIn with more interest in the pictures that in the professional qualifications.
When clicking on a LinkedIn profile, the right of the page displays the profiles of “People Also Viewed”. If you are viewing the profile of a young female with accompanying attractive photograph, the other suggested profiles almost invariably suggest other profiles featuring photographs of other attractive young women. Coincidence or LinkedIn’s algorithms recognising people’s searching habits?
The other aspect of this story that interested me was how the initial incident ever arose.
The press have referred to the female barrister as a “human rights barrister”. In her LinkedIn profile she describes herself as:
“I am working towards a doctorate in Law and Sociology at the University of Cambridge researching the legal and policy approaches designed to combat female genital mutilation in England and Wales. Prior to commencing a PhD, I practised as a barrister in family law.
As an associate tenant at the Chambers of Michael Mansfield Q.C. I have a strong background in working with vulnerable women seeking legal support having undertaken pro bono work in the Middle East, Pakistan, and the Democratic Republic of Congo where I helped establish the country’s first free legal advice centre.
I write for a range of publications including the Independent, and the Guardian on civil liberties violations, and often speak at public events.”
The solicitor she approached to link to her is Head of European Intellectual Property at a City firm.
Perhaps she thought her background in family law and female genital mutilation would be the perfect skillset that a City IP solicitor would be looking for when instructing a barrister. Perhaps she is looking to move into a totally different area of law and thought that linking up with random strangers via LinkedIn would be the best way to do this.
I note her profile shows her as having over 500 connections. Having received no end of invitations via LinkedIn to connect with those I neither know nor work in the same area of law as, I never cease to me amazed by those who seem to treat LinkedIn as if it as a popularity contest with the aim of amassing the highest number of “connections” regardless of any genuine common professional link.
An interesting aside from Senior Costs Judge Master Gordon-Saker in BP v Cardiff & Vale University Local Health Board  EWHC B13 when considering a case with a pre-1st April 2013 CFA where the new proportionality test applied to work done after 1st April 2013:
“On behalf of the Defendant Mr Kiernan told me that it would not be fair to include any additional liabilities when considering the proportionality of the costs allowed for work done after 1st April 2013. He relied only on the figure of £138,202.97. As the point was not argued, I reach no conclusion as to whether when considering under the new rule the proportionality of costs incurred after 1st April 2013 additional liabilities should be taken into account.”
This suggests the point is open for argument.
The rules certainly do not appear to expressly address this point.
CPR 48.1(1) states:
“The provisions of CPR Parts 43 to 48 relating to funding arrangements, and the attendant provisions of the Costs Practice Direction, will apply in relation to a pre-commencement funding arrangement as they were in force immediately before 1 April 2013, with such modifications (if any) as may be made by a practice direction on or after that date.”
The old Costs Practice Direction at 11.5 read:
“In deciding whether the costs claimed are reasonable and (on a standard basis assessment) proportionate, the court will consider the amount of any additional liability separately from the base costs.”
If this survives, so far as pre-1st April 2013 CFA’s are concerned, it would seem to suggest under the new proportionality rule additional liabilities should not be taken into account. Master Gordon-Saker’s comments perhaps imply the matter is not quite so straightforward. Or, perhaps, he takes the judicial line that there is nothing to be gained from expressing any opinion where it is not entirely necessary.
From the Association of Costs Lawyers’ Judicial Round Table on costs management earlier this year:
Neil Rose: Has the SCCO seen any cases come through yet?
SCJ Gordon-Saker: Not one, as far as I am aware…we are still in the dark as to what will happen.
Neil Rose: Any ideas?
SCJ Gordon-Saker: I anticipate lots of histrionics.