Is the new format Bill of Costs saga reaching its conclusion?

Practitioners will be relieved to note that the ongoing saga in respect of the introduction of the new Bill of Costs looks likely to be reaching its conclusion with a new Bill of Costs most likely to be mandatory for all detailed assessments commenced from 1 October 2017.  Legal change does not happen quickly given that it was back in 2010 that in Lord Justice Jackson's review on Civil Litigation that he recommended a new Bill of Costs should be introduced.  In that report he likened the current Bill of Costs to a ‘Victorian account book' and observed the following problems:

1. Bills are expensive, cumbersome to draw and not easy to digest
2. Available technology is not used
3. Bills do not contain all the necessary information, and
4. There are mismatches between recorded time and the bills being produced.

The Story So Far and the end of J Codes

The Hutton Committee engaged in designing a new Bill of Costs. Following much consultation in July 2015 Lord Justice Jackson, Master Hurst and Lord Dyson approved the development of universal time-recording codes for litigation costs in England and Wales ('J-Codes') in an attempt to provide a more transparent, user-friendly and inexpensive Bill of Costs.[1] The initial finalised version of the new format Bill of Costs encompassed the use of 'J -Codes' and an ‘electronic spreadsheet’, which in theory, software permitting, allowed for a firm’s time-recording data to be fed into a Bill automatically.  A voluntary pilot scheme for the new format Bill commenced on 1 October 2015 and was initially due to run through to 30 March 2016 with a mandatory new format Bill coming into force in April 2016; however roll out of the new format Bill was extended twice as it was considered to be ‘too soon’ for a full-scale roll out.  Several criticisms of the new Bill format led to Lord Justice Jackson making a keynote speech in April 2016 seeking to address the controversy surrounding reforming the Bill of Costs. Lord Justice Jackson noted four key strands of criticism that had arisen since the launch of the pilot scheme, namely;

1. The proposed bill is too expensive to implement;
2. The proposed bill is too complex to work with;
3. The proposed bill is too time-consuming to transfer work done before the J-codes into the new format; and
4. The proposed bill is too prescriptive in using J-Codes[2]

In respect of the magnitude of concern over the reference to J-Codes, Lord Justice Jackson suggested that the crux of the controversy over the new Bill format surrounded the foundation of the new Bill format being built on the use of J-Codes. He concluded his speech by addressing what he deemed as a practical solution moving forward. Lord Justice Jackson proposed that the Hutton Committee’s proposed version of the bill should be adopted; however, reference to the J-codes should be removed. He suggested that the removal of reference to J-Codes allowed practitioners to prepare the Bill in a manner of their choosing, in so far as that the new format was adhered to.

The Civil Procedure Rules Committee has, as suggested by Lord Justice Jackson ‘[made] good use of the excellent work of the Hutton committee’ and endorsed a new format Bill of Costs without reference to J-Codes. The Ministry of Justice states that the replacement Bill is intended to 'alleviate concerns raised about the existing form’s reliance on J-Codes'.

The ‘New’ Bill of Costs – Precedent AB

On 3 October 2016 the 86^th update to the CPR was made and Practice Direction 51L was updated; extending the pilot scheme until 30 September 2017 and replacing the new format Bill of Costs Precedent AA with Precedent AB.

The electronic spreadsheet version may be either the spreadsheet version which can be found on the Ministry of Justice website, or any other spreadsheet, as long as the format, as defined in Schedule 1 of Practice Direction 51L is followed. Schedule 1 of Practice Direction 51L clearly sets out the format that should be followed.  The Bill should mirror the phases used in Cost Budgets together with 4 additional phases for Funding; Budgeting including cost estimates; Costs Management Conference and Costs Assessment.  Within each phase tasks should be assigned; the Precedent totals 41 tasks; for example within the Pre-Action phase there are 3 assigned tasks: Factual Investigation; Legal Investigation and Pre-action protocol work.  There are then 9 activities which cover communications and preparing/reviewing documents. Please see Precedent AB and the Schedule for more information.

With any new system the changes can appear initially daunting but in his keynote speech Lord Justice Jackson expressed the view that “while the Excel spreadsheet that creates the new format bill may look complex, the finished product is not… The triad of phases, tasks and activities provide for a high level of clarity and precision.”[3]

Implementation

From 1 October 2017 the new Bill of Costs will be mandatory in all detailed assessment proceedings.

The timetable for the Pilot Scheme is as follows: 

(a)     The Pilot Scheme in its amended form will come into effect on 3 October 2016 with a view to establishing a mandatory form of bill of costs to apply to all work done after 1 October 2017;

(b)     The Rule Committee will monitor and review the Pilot Scheme and aim to fix the mandatory form of the new bill of costs at its meeting in May 2017.[4]

It remains to be seen, throughout the duration of the extended pilot scheme, whether the removal of reference to J-Codes aids practitioners in providing the high level of clarity and precision that Lord Jackson seeks so desperately and enables them to do so in a user friendly, inexpensive and transparent manner. It is of course prudent to note that participation in the pilot scheme is currently voluntary, so watch this space as in the absence of voluntary participation a third extension may well be in the pipeline.