The Association of Costs Lawyers’ PD51L Bill of Costs

Guidance Notes

Background

The Association of Costs Lawyers (the “ACL”) undertook a survey of its members and produced a response to the Hutton Committee on 23 September 2015. The survey highlighted a number of concerns of the membership relating to Precedent AA.

The survey highlighted that 88% of respondents had not attempted to prepare a bill of costs using Precedent AA primarily because it appeared 'incredibly complex and time consuming' and that 'paying parties will not be able to interpret it'. This is of particular concern when a profession that would ordinarily be extremely able in comprehending complex costs documents has difficulty. It was also a concern because one of the driving factors behind the new format Bill of Costs is to save time and costs. Adding complexity and time consuming steps will inevitably have the opposite effect.

The respondents that did prepare a Bill of Costs using Precedent AA raised the same concerns as those that had not done so. In addition, there were concerns regarding the detailed assessment procedure and preparation of Points of Dispute and Replies. All these concerns have since been echoed by other areas of the legal services industry.

We took these concerns on board and have operated on a solutions based approach to ensure that the concerns are addressed whilst keeping in mind the words of Rupert Jackson in his report at Chapter 45 s6.1(i):

'A new format of bills of costs should be devised, which will be more informative and capable of yielding information at different levels of generality.'

It was also a general theme that the new Bill of Costs should be easy to read and provide transparency. In light of this, we set out to produce a new format Bill of Costs that should:

1.  Make use of technology

2.  Be easy to read (even to litigants in person)

3.  Be more informative than the old Bill of Costs

4.  Be transparent

5.  Be capable of yielding information at different levels of generality

6.  Reduce the time spent and, therefore, cost of preparing the Bill of Costs

Since preparation of the initial ACL Bill, thinking has developed and it has been said that the new format Bill of Costs should not be reliant on J-Codes. The recent amendment to PD51L provides a list of phases, tasks and activities in the schedule annexed to the practice direction. The categories within that schedule are essentially a pared down version of the J-Codes. This means we are left to use the name of each code rather than the code itself. Whilst this avoids J-codes, it does not resolve the issues regarding time recording etc.

Furthermore, feedback we received from SCCO Masters indicated that the ability to specify the number of letters and telephone calls would be advantageous.

The Solution

The ACL Bill of Costs (the “ACL Bill”) is an excel document that has been created having regard to the comments made by ACL members, SCCO Masters and the Law Society.

Whilst the Hutton Committee’s remit was determined by the comments made in Lord Justice Jackson’s review document (primarily at paragraphs 106 and 107) the ACL offers an alternative view which we believe to be easier to follow.

By its relative simplicity, the ACL Bill is intended to be a basic precedent for a claim for costs. It is intentionally far less rigid than Precedent AB. As a consequence, it might be necessary for users of the ACL Bill to adapt the document to suit the circumstances of their client's particular costs claim, much the way in which the current Precedent A is adaptable to the vast array of circumstances thrown at practitioners across many forms of litigation.

As indicated above, the feedback received from formal surveys of our membership and informal discussions with the wider community indicated to the ACL that practitioners believed the Hutton Bill to be overly convoluted. The current Precedent A Bills of Costs do not present costs lawyers and draftspersons with all the variables that may apply to their costs claim yet practitioners have learned to adapt such precedents. The ACL Bill similarly requires and encourages that degree of imagination and flexibility.

The ACL Bill is intended to be a basic format that, for some members of the judiciary, costs lawyers and draftsman will represent their introduction to the more advanced features of Excel. The ACL Bill should provide an opportunity to hone the essential skills they will need to acquire as the Civil Courts continue to embrace modern technology to advance the services they provide.

The ACL Bill has been designed to comply with Practice Direction 51L (the New Bill of Costs Pilot Scheme) (and annexed schedule) which enables Receiving Parties to utilise Precedent AB or an alternative spreadsheet. The ACL Bill starts with high level information summarising the costs and gives a greater level of detail as you progress through the document.

Basic features of the ACL Bill: -

1.  There is a traditional front-sheet;

2.  There is a traditional narrative, where funding arrangements are detailed (as is presently the case);

3.  Profit costs calculated within the body of the Bill will automatically populate into the ‘Precedent Q' creating the traditional Bill of Costs summary;

4.  Any changes made to hourly rates in the ‘Fee Earner Summary’ will be automatically reflected throughout the bill. With flexibility in mind, there are alternative methods as to how this may be achieved. Although this functionality is currently in place, it may be removed in final release because the formulas can be complex and create user errors;

5.  In the 'Precedent Q', Precedent H phased costs can be compared against total budgeted phases. However, any distinction between pre-budget (incurred) costs and post budgeted costs will require additional input;

6.  The ACL Bill is not reliant upon J-Codes but can be adapted to use them if necessary;

7.  There is a ‘Phase and Activity Summary’ and separate communications and disbursement summaries. There is scope for the use of customised codes with some small changes. If the text in column B of the 'Reference Data' tab is changed, the 'labels' will change throughout the Bill of Costs. This is not recommended because there may then be uncertainty regarding compliance with PD51L. If this change is made it should be done before drafting is commenced;

8.  The document is designed to include all the information that is necessary for the assessment of costs, from the preparation of the costs claim, to the determination of the amount between the parties by agreement, or through to a provisional or detailed assessment.

Below is a summary of each part the ACL Bill and a brief explanation of the reasoning behind each part. You will note that the breakdowns provide a deeper level of detail as you progress through the Bill of Costs to finally end on the detailed, chronological breakdown of time and disbursements. This approach is intentional in order to focus the paying party and court on the issues that will be first raised as more general points of principle in the Points of Dispute (e.g. exceeding the budget / proportionality, rates and distribution of work) and then as the review progresses the item by item points are prepared in line with the time records.

The example ACL Bill with this guidance shows all cells where user data entry is required as highlighted in orange. Where cells are not highlighted, the data is generated automatically by the ACL Bill. This highlighting is for demonstration only and should be removed if serving.

Title Page

This is a traditional title sheet as one would ordinarily expect on a court document. This is consistent with the current format and the generally accepted format for court documents. This enables the Bill of Costs to be easily identified.

This means the Bill of Costs is easy to read and familiar to the judiciary and practitioners alike.

Precedent Q

This tab shows a summary of the Bill of Costs in the traditional, profit costs, success fee, disbursements and VAT.

Also included is a summary of the costs incurred with reference to the Precedent H phases and a comparison with the last agreed or approved costs budget. This will negate the need for Precedent Q and is not a summary currently provided for within Precedent AB. The ACL believes this is of the utmost importance in light of CPR 44.4(3)(h) and CPR 44 PD 3.1 to 3.7.

Unbudgeted costs and assessment costs can be added to the ‘Precedent Q’. They are currently set to include the following phases:

Interlocutory applications (outside Contingencies) / Includes 'Interim Applications and Hearings (Interlocutory Applications)' phase only. The contingencies are provided for separately as the current schedule of phases annexed to PD51L does not include provision for multiple contingencies. It is envisaged that this will be used for additional costs claimed pursuant to PD3E para 7.9.
Funding / Includes 'Funding' phase only
Costs Management / Includes 'Budgeting incl. costs estimates' phase but no CMC costs. It is envisaged that this will be the 1% and 2%.
Costs of Assessment / Includes 'Costs Assessment' phase only to include preparation of the Bill of Costs.

This tab also allows the user to enter the date of the costs budget which should be the date around which the pre and post budget costs are split for the purpose of columns D and E in the Precedent Q.

Part Summary

This tab provides a breakdown of the different 'parts' of the bill. Here the user can specify different rates of VAT and success fee for each part (columns D and E respectively). The user can also deal with limited statute bills to the client by entering the limited amount in column G. The total summary on the Precedent Q will then be calculated with reference to the limited amount. The detail within the Precedent Q tab is not currently limited and currently claims the full, unlimited amount of costs.

Fee Earner Summary

This tab provides a breakdown of the team involved in the litigation along with each fee earner's grade or PQE. This tab also breaks the time and profit costs down according to the work undertaken by each fee earner. This breakdown is not currently available on Precedent AB.

This tab enables the court and paying party to consider distribution of work between the team and highlight, at a glance, where any inappropriate division of work has occurred; for example, where the majority of work has been undertaken by Grade A and B fee earners in a relatively simple claim.

Phase & Task Summary

As suggested by its title, this tab provides a breakdown of work according to the phases set out in the schedule to PD51L. The breakdown is split into tasks grouped under their relevant phases. It should be noted that the user is only required to enter the task code when preparing the Bill of Costs. The summaries automatically place that time under the correct phase and calculate a total for each. This reduces the number of 'labels' used for each time or disbursement entry in the Bill of Costs.

Whilst this is a relatively lengthy and complex summary, unfortunately that is the nature of J-Codes. It does, however, enable the court and paying party to view, at a glance, the areas in which the majority of costs have been incurred and where more specific points can be raised with the generality of work undertaken per phase (e.g. too much time spent on disclosure). Unused rows can be deleted or hidden if so desired. We would recommend that the full summary is provided showing where costs have not been spent as well as where they have.

Communications Summary

This tab shows all communications with each party category. As stated above, these reflect the J-Code activities.

What was once unique to the ACL Bill (and has now been adopted by the Hutton Committee and included within Precedent AB) is the summary showing PA (personal attendances), TA (telephone attendances), RL (routine letters) and RC (routine calls).

Disbursements Summary

This tab shows all disbursements which are set out in the categories reflecting the J-Codes. As indicated by the schedule to PD51L, these can be changed and different descriptions used. If the user wishes to use different descriptions / categories, he / she will need to change the descriptions within the 'Reference Data' page and the summary will update automatically.

Points of Principle

As indicated above, we have included provision for preparation of Points of Dispute and replies within the same document. This is in line with the suggestion that the process should be streamlined and that there should be continuity throughout the costs process.

This page should be relatively self explanatory and some examples of the types of disputes we anticipate seeing here are included for reference. As indicated, we anticipate that the Points of Principle will include points regarding proportionality, hourly rates and the standard preliminary points raised in detailed assessment today. In addition, it may also be appropriate to raise issues as to the time spend on certain areas with reference to the J-Codes. For example, there might be an excessive amount of time spent on disclosure or communicating with the client.

It is anticipated that enabling parties to raise these issues of generality will encourage a higher level dispute process enabling parties to deal with issues more summarily. As opposed to the detailed item by item approach currently taken.

Bill and Points of Dispute

This tab includes the detailed time narrative and disbursements which is largely the same as the previous version produced. This format will be familiar to solicitors, counsel, the judiciary and costs practitioners. The format is essentially a time record with the addition of the 'labels' set out in the schedule to PD51L.