When is the Electronic Pilot, not an Electronic Pilot?

Posted by Michelle Barron on 19th August, 2019 in Opinion and categorised in .

The new pilot for the summary assessment of costs introduced within CPR PD 51X should come as no surprise, since this was forecast in the detailed “Guidance Document to the New Format Bill of Costs”  published by the Hutton committee on 31 July 2015.

Those who will have heard me speak about the new format bill of costs, will know my views about the lack of success of that pilot, which did little to stress test or provide any real development of this dramatically different bill format, before it was introduced on a mandatory basis on 1st April 2018 (notwithstanding the postponement of the original implementation date of 31st October 2017).

I am therefore hardly surprised that this new pilot for an electronic N260 does not maximise its potential. Just like it's sibling, the new N260 is a spreadsheet. It has two versions, the N260A for interim applications and the N260B for costs up to trial. Strangely,  despite being a spreadsheet and presumably therefore an intention to make the most of its electronic functionality, it is not mandatory to file and serve these new forms in electronic form. Paragraph 7 of the pilot makes clear that both of the new forms are available in  paper/pdf formats, as well as in electronic spreadsheet form. However, “parties and their legal representatives may use the paper/pdf form only”.

Surely the benefit of this pilot (and given the drive to digitise the civil courts), would be for the court to deal with the assessment of these new forms in real-time, within the electronic form,  benefiting from all the functionality that a spreadsheet provides, enabling the assessing master or judge to leave their pocket calculator, in their pocket!

Paragraph 5 of the pilot does however specifically refer to a technological advantage, where it states “The documents schedule may be created from electronic time records by filtering the time that is recorded under the activity described in Schedule 2 to PD47 as ‘10 - Plan, Prepare, Draft, Review’.  This may then be sorted and presented first by grade of fee earner and then chronologically.” This does of course presuppose that law firms record their time using the schedule 2 activity codes. In my experience, having canvassed hundreds of Lawyers from a multitude of firms of all shapes and sizes whilst delivering training, the vast majority of solicitors practices, even those predominantly engaged in litigation, are at best recording by budget phase and it is only in the last few months that I have seen any appetite among firms generally to update their time recording and case management systems to accommodate the schedule 2 codes in greater detail. If there was one very clear message that was missing from the pilot to the electronic bill and indeed in contemplation of the pilot that is the subject of this article, it is that you will gain no benefit whatsoever from the future digital approach to cost assessment without having a sophisticated approach to time recording, namely schedule 2 coding.  Regrettably such messages that were put out by those in a position to influence the profession, pandered to the professions sensitivity about change and watered down the importance of more granular digital time recording, rather than underlying its vital importance.

I was intrigued at the approach taken to the format of these new forms. The N260A for interim applications adopts the ten activity headings within schedule 2 to CPR part 47, being not unlike its predecessor in format. The documents item tab simply requires a date and a brief description of work. There would not appear to be any provision to identify profit costs within this form as belonging to a particular phase as defined within the aforementioned schedule 2 or within Precedent H for that matter.  However, when it comes to counsel's fees and disbursements, one selects a dropdown menu to choose both the phase and task, being the ten phases within Precedent H, rather than the fifteen phases within schedule 2. I still remain baffled as to why there is no consistency in the phases between schedule 2 and Precedent H!.

Insofar as the N260A applies to budgeted multi-track cases, surely it makes sense to be able to readily identify the profit costs assessed at an interim costs assessment, so these can be discounted from the relevant phase, where the receiving party goes on to prepare a bill of costs. I accept that the subject matter of the application may make it clear which phase the application falls into and if that is true in relation to profit costs, it would be equally true in relation to counsel's fees and disbursements. If there is a logic for not identifying profit costs by phase, while being able to identify counsel's fees and disbursements by phase, it escapes me. Nothing in the guidance notes within the final tab to this spreadsheet provides any assistance by way of explanation on this point.

The N260B for assessment of costs up to trial has a different format, in that profit costs are divided into the ten budget phases within Precedent H  with a drop down within each phase to select the relevant activity.  The tab for counsel's fees and disbursements is identical to that in the N260A. The documents tab is divided again into the ten budget phases from Precedent H, with provision for a date and a brief description of work.

One thing that is inescapable from both these new forms is that they are clearly meant to apply to budgeted cases.  Moreover, Paragraph 8 of the pilot underlines this when it states “In any case which has been the subject of a costs management order, any party filing form N260B for summary assessment in accordance with Practice Direction 44 paragraph 9.5(4) must also file and serve form Precedent Q at the same time.

The purpose of filing a  Precedent Q with this form in a case subject to a costs management order, must surely be to enable a budget comparison at assessment. Therefore it must follow that there will be a summary assessment of trial costs in a multi track budgeted case at the conclusion of a trial.

Paragraph 9.2 of the Practice Direction to CPR Part 47 sets out the approach to the summary assessment of costs:

The general rule is that the court should make a summary assessment of the costs –

(a) at the conclusion of the trial of a case which has been dealt with on the fast track, in which case the order will deal with the costs of the whole claim; and

(b) at the conclusion of any other hearing, which has lasted not more than one day, in which case the order will deal with the costs of the application or matter to which the hearing related. If this hearing disposes of the claim, the order may deal with the costs of the whole claim, unless there is good reason not to do so, for example where the paying party shows substantial grounds for disputing the sum claimed for costs that cannot be dealt with summarily.

Therefore the court can, absent good reason, assess costs on a summary basis at the conclusion of a multi track trial, which is concluded within one day. There is indeed a  precedent for this in a budgeted case.

HHJ Simon Brown QC, a pioneer of costs budgeting, gave instant reward in Slick Seatings Systems and Another -v- Adams and Others [2013] EWHC B8 (Mercantile) for the Claimant keeping within the budget, by summarily assessing the Claimant’s costs at the end of the trial in the sum of £351,000, concluding:

"I am in a position, bearing in mind this is a one-day trial although a lot of activity has taken place, to summarily assess these costs because I have been actively involved in managing this case throughout. I would know more about the costings of this case than any detailed costs judge would have. Therefore, it seems to me quite right that I should assess these costs today with all that knowledge.”

I accept that in this case HHJ Simon Browne QC case managed the matter throughout and had a good knowledge of the case. However, I consider any trial judge who has considered live evidence, considered the trial bundle and listened to opening and closing speeches, as well as of course delivering a judgement at the end of the trial, is indeed in a better position than a detailed costs judge, who is assessing a bill of costs, many, many months later. There must be a considerable advantage in a trial judge, who fully understands the matter, making a contemporaneous decision on costs. In particular, a trial judge would be best equipped to reflect on any summary assessment of costs, issues of conduct and the various factors set out within CPR 44.3(5) and 44.4(3). He will also have before him counsel for both parties who will be best placed to address these issues, in assisting the trial judge in making his decision.

I have often spoken about this case long before the current summary assessment pilot, to encourage solicitors to invite a summary assessment of trial costs at the conclusion of a one-day trial, in a budgeted case. This surely must be reinforced by this new costs pilot,  which can only assist often hard-pressed litigation teams, in maximising cash flow and cutting out the expense and delays encountered during the detailed assessment process.

This article was written by Richard Allen who brings more than 30 years of unique commercial experience to Burcher Jennings. He was one of the first professionals to achieve Costs Lawyer status and is one of a select group of Costs Lawyers to have made partner in a solicitor’s practice.