Lord Jackson recently gave a keynote speech where he recommended the adoption of a new format bill of costs by October 2017. A new format for the bill of costs has been mooted for some time, with a consultation period having concluded that the current format gave too little information about why costs were incurred, document time was difficult to decode, and that the bill was anachronistic. Acting on the feedback, the CRPC came up with the following requirements for a new bill format:
It must provide a transparent explanation about what work was done and why;
It must provide a user-friendly synopsis of the work done, how long it took and why;
It must be inexpensive to produce.
Lord Jackson therefore made the following recommendations.
A new format of bills should be devised which would yield more information on more levels and be more informative generally
Software be developed which would be used for time recording and capturing relevant information that would automatically generate schedules for summary assessment or bills if required.
A voluntary pilot scheme for the new bill was launched last year with a view to a mandatory pilot scheme coming into force April 2016. During the voluntary pilot, however, several criticisms of the bill emerged, specifically that it was too expensive to implement, too complex to work with, too time consuming (specifically when it came to transferring old work onto the new format), and too prescriptive. These objections lead to the extension of the voluntary pilot in December 2015.
Lord Jackson first addressed concerns relating to expense and argued that the costs of making upgrades where a company already had software would be negligible. He stressed the need for the new bill to "be flexible enough to fit with the sophisticated time recording systems of large City law firms, while also being capable of being drawn up by small high street practices." He also theorised that it should be possible to redesign the spreadsheet and print versions of the bill so as to work with or without, enabling firms to choose how to present their billing data.
Jackson then addressed charges of complexity that have been levelled at the new spreadsheet and bill. He pointed out that, while there are a lot of individual J-Codes, a practitioner would only need to use those that are relevant to their area of work. He then addressed the perceived complexity of the spreadsheet itself, which he pointed out was not the finished article before inviting those concerned to consider Precedent AA. He then addressed a simplified version of the spreadsheet produced by the ACL, which he dismissed as overly-simplistic and lacking the detail that was one of the main objectives of the reforms.
Jackson then addressed the argument that retrospectively applying the complex J-Coding system to work already done would be overly time-consuming. He accepted that this is an issue and simply stated that it would be "necessary to implement this reform in a way that avoids the need for re-structuring."
Lastly, Jackson addressed the perception that the J-Codes were overly prescriptive. He pointed out that all proposals have strengths and weaknesses, so it was not surprising that J-Codes were imperfect. He also pointed out that J-Codes were never intended to be mandatory, but argued that using them contemporaneously with the work carried out would make bill drafting considerably quicker, easier, and cheaper. He suggested, however, that alternative time-recording methods would either have to equal or exceed the standard of the J-Codes.
Looking forward, Jackson proposed that the Hutton Committee’s new version of the bill should be adopted as the new bill format, albeit with all references to J-Codes removed – “the CPR”, he said, “should allow practitioners to prepare the bill in any manner of their choosing.”
He then suggested that a digital copy of the bill should be served on the Court and the paying party with the electronic spreadsheet; that the work should follow the phase/task/activity format, and that the Precedent H guidance for the correct phase for work should be adopted. He allowed for the information to either be generated automatically using time recording software or to be entered manually, but recommended the spreadsheet as being an "excellent tool".
Jackson went on emphasise the importance of Court IT systems being able to electronically receive both costs budgets and bill of costs in the new form.
He did, however, concede that the problem of retrospective application was a serious criticism, but proposed the following course of action to mitigate this issue: the CPRC, he argued, should choose a future date for the implementation of the new bill. Work done before that date could be recorded in the old way with an old format bill, whereas work done after that date would need to be recorded in the new way and presented in a new-style bill. There would be no retrospective imposition. He proposed a date of 1st October 2017.
Lord Jackson also mentioned in passing, near the end of his speech, the possibility of capping the fees for bill preparation. He suggested that this could perhaps be represented as a percentage of the assessed bill. This is perhaps not surprising given Lord Jackson is a vocal advocate for fixed costs and the certainty they bring.
Jackson concluded by making three recommendations:
The creation of a print version of the bill and spreadsheet which removed references to J-Codes
That a date be set for when the CPRC would decide whether to implement the new bill of costs and to invite interested parties to send representations on the new bill to a new CRPC subcommittee
The extension of the voluntary pilot until such time as the new form bill becomes mandatory
Commentary
As costs practitioners it is troubling that Lord Jackson has seemingly under estimated the difficulties relating to retrospective application of the new bill of costs. His proposals suggest that, for cases with work on either side of the great divide (of which there would be thousands), two bills of costs would need to be prepared in different formats to accommodate the change in bill format. It is hard to argue that this approach is in any way efficient.
Of arguably greater concern is the bill itself, which surely fails the criteria of transparency and user-friendliness. The Hutton bill (AKA Precedent AA) can only really be described as opaque – amounting, as it does, to something akin to raw data in a spreadsheet in place of a bill. Moreover, the detailed section of the bill looks like a glorified version of a time report with a narrative and a Precedent Q attached, as opposed to a bill of costs.
This seems to be where the cost-cutting aspect of the bill has been achieved, i.e. by importing information directly from the fee earner's time reporting software, descriptions and all. You would likely end up with descriptions written hastily by a practitioner, after first selecting the correct J-Code out of several dozen options, as they undertake the arduous task of actually running the case for which they would effectively also have been tasked with preparing a bill. All of which might save time when preparing the bill, but surely at the cost of less efficient conduct and a bill with very little qualitative information.
Finally, it seems odd that Lord Jackson would liken the current bill format to an electronic Victorian account book, assess it as being outdated, and then seek to bring the process in line with the digital age using an electronic version of a spreadsheet - a concept that dates back hundreds of years and, as a computer programme, has been in use since the 1970s. I suppose what I'm driving at is that, if the aim here is to fully modernise the bill of costs, then why use Microsoft Excel to do it? If you are going to seek to impose a change this radical on a whole profession, then maybe it would not be best to do so using an unintuitive cobbled together as cheaply as possible using a programme not in any way designed for that purpose. This is, possibly the crux of the issue – the intention is possibly commendable, the cut-rate execution is anything but.
You can find a full transcript on the speech here.
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