By: 2 August 2017
Going digital

A new electronic bill of costs is expected to become mandatory in April 2018. But is the profession ready for it?

Lord Justice Jackson’s vision of a new electronic bill of costs will soon become mandatory.

Earlier this year, it was expected that the new format would be introduced in the Senior Court Costs Office (SCCO) on 1 October. However, in June, the Civil Procedure Rule Committee decided to delay the introduction to ensure that all courts are ready to accept electronic bills of costs. The aim is to implement it in April 2018, subject to the parliamentary timetable.

When the new format does eventually come in, it will signal the beginning of the end of costs being recorded in what Jackson called “the style of a Victorian account book”. He criticised the current out-dated method of recording costs for making it relatively easy for a receiving party to disguise or even hide what has gone on.

However, some have expressed fears that the electronic bill is being rushed through and will not give solicitors enough time to prepare.

Leeds & Yorkshire Lawyer asked some solicitors what they felt about the introduction of the new format. Will it just be another headache that the profession could do without at present, or will it be worth it in the end?

Francis Kendall, vice-chairman of the Association of Costs Lawyers

“The profession will welcome more time to get to grips with the electronic bill. This delay provides an opportunity both to iron out any remaining glitches and to make the bill more advanced and user friendly.

“Also, rolling it out in all courts – rather than having a twin-track approach – would be eminently sensible. It is good to see that pragmatic and sensible decisions are being made regardless of any pressure for change.

“My concern, however, is that some solicitors will just use the delay to avoid addressing this new approach to billing at all. The fact is that an electronic bill of costs is coming sooner or later and lawyers need to be ready.”

Gwendoline Davies, head of commercial dispute resolution, Walker Morris

“Lord Justice Jackson’s idea [is] to improve efficiency and transparency in relation to the costs involved in litigation, which ultimately can only be a benefit.

“The new form of electronic bill requires that time be entered by ‘phase’, ‘task’ and ‘activity’, with the phases mirroring those used in Precedent H (the costs budget). For those firms with electronic time-recording systems in place that already enable time to be recorded in this way, moving to use of the new bill should be straightforward and result in clarity and savings for clients.

“For those who do not have compatible electronic time recording systems, or those who record time manually, preparation of the new bill might involve some additional work and might therefore be a more time-consuming and expensive exercise (initially, at least).

“Overall, however, I believe that consistency, efficiency and transparency when it comes to costs budgeting and billing can only be a good thing for firms and clients alike.”

 Andrew McCauley, partner and costs lawyer, Clarion

“Short term there will be a lot of pain. Lawyers don’t like change and many will have to record their time differently.

“But long-term there will be lots of gains from it, the idea being that you will go to a costs assessment hearing and it will all be done electronically, so rather than going through boxes of paper, you open your laptop up and go through the figures on the screen.

“It should work in harmony with the costs budgeting process, albeit this is dependent on judges embracing it, and the courts having the resources to deal with an electronic assessment.

“I’m behind it, it’s the right way to work. The law is behind the technological curve and we need to upskill and do it.”

Becky Whitfield, in-house trainee costs lawyer, Atherton Godfrey

“Having experienced a trial run of the electronic format bill, my personal view is that it is going to be a total nightmare – at least in the first instance. The bill is quite large and is not so easy to follow. There is also the problem of it being electronic so we are going to have to find a way around signing the certificate electronically rather than by hand. Also, the bill will require serving electronically and there is the issue of whether or not defendants accept service by e-mail.

“I do believe that it will be good to have the electronic bill when filing for assessment, as this will make it easier for the court. They can adjust the figures on the bill in front of them on their system rather than having to go away and either the court, defendant or us having to recalculate the bill ourselves. It can all be agreed there and then without having all the hassle of getting the recalculated bill agreed between the parties and then having to file it with the court (in provisional assessment matters) – this will mean things will be dealt with more quickly.

“I think that like anything, it will take a while to get used to, but once it is up and running, hopefully it will work.”

Samantha Wragg, associate, 3volution

“Solicitors have concerns about the mandatory roll out following the lack of take up of the pilot, which has run since October 2015, and the corresponding lack of data arising from the pilot as its workability just hasn’t been tested.

“It will now be a matter of “suck it and see” with solicitors, costs lawyers and the judiciary being equally blind in the new process.

“The flexibility in the new electronic format, while helpful to solicitors, is likely to only impede the uniformity of the approach of the judiciary and the necessary training and time that is ultimately going to be required to deal with a myriad of different forms of bills, even without taking into account the variety of costs orders available, or anomalies that can arise and will arise.

“The ability to have full functionality of the electronic bill and automatic recalculation appears attractive, and ought to reduce time and costs required following detailed assessments. That is provided that the parties agree on the amended figures, and complex formulas and incompatible software don’t create numerous user errors, which will increase time spent trying to fix functionality.”

Ian McCombie, partner, commercial litigation team, Ward Hadaway

“The new electronic bill of costs is a significant step forward in the integration of the latest reforms into this crucial – but less used than previously – phase of litigation.

“The Funding and Parts Table makes it crystal clear how the funding has been provided. The breakdown of costs summarily assessed provides crucial information succinctly, which the paying party needs to be taken into account.

“The format is neatly consistent with other costs forms with which we are familiar, and ensures no important information is missing, making the lives of costs judges and paying parties that much easier.

“I think this is another good example of the product of the joint work between the judiciary and practitioners to devise methods to streamline processes, which in turn must save time and cost, for the benefit of the litigants themselves.”

Getting to grips with costs

Costs budgeting has become a sore point for many firms in recent times.

Sue Smith, the director of Alpha Costs Consultants, says that demand for costs draftsmen has risen since the introduction of the Jackson reforms in 2013.

“Initially, we didn’t think there would be demand, but we found that there was demand from solicitors to get things right. Especially with the new provisional assessment procedure.

“Solicitors had to get to grips with the changes and they’re very time-consuming and demand accuracy. We have found that our clients don’t have the time.”

Last year the Association of Costs Lawyers (ACL) said that only 2% of solicitors always stick to their cost budgets, another sign that extra help is needed in preparing costs. Smith explains that there is a whole host of reasons as to why budgets are exceeded.

“You’ve got 12 phases on a budget and if you’re over on just one or two of them, and not even by a great departure, then, well, you’re over.

“It’s sometimes up to the courts and what the judge says, and sometimes there’s no rhyme or reason to it to be honest. There’s a whole list of why a budget could be exceeded.

“One could be that’s it’s just poorly drafted, which shouldn’t happen. Sometimes unexpected steps arise in the litigation, for example a medical report is required in addition to the one already supplied for a case. In other cases, some solicitors simply don’t monitor the costs incurred; if for example a new expert is suddenly required, they don’t always seek to update the budget, but they should do.

“Judiciary inconsistency is an issue as well. Depending on the court or the district judge in question, you can get a different decision in relation to the level of budget.”

This article first appeared in Leeds & Yorkshire Lawyer