An electronic costs bill is long overdue but reform does not have to mean chaos.

In a few short weeks solicitors will face yet more costs reform, as an electronic bill of costs becomes mandatory from 6 April.

Rachel Rothwell

Rachel Rothwell

With a few exceptions (such as fixed-costs cases), from that date bills of costs relating to all part 7 multi-track claims will have to be filed at court in the new electronic spreadsheet format, as well as in hard copy. The full spreadsheet version of the bill will also need to be pinged over to the paying party.

Why is this change happening? Essentially it is all about transparency: making it clearer how time has been spent in litigation, when that time is being paid for by the losing party. The detailed spreadsheet should make it easier for paying parties to challenge the amount their opponents spent on particular aspects of the case. At the same time, it should make it harder for receiving parties to fudge the figures and get away with padding bills. From the judges’ perspective, the electronic bill is intended to give a clearer overview, with the ability to zoom in easily and explore in greater detail any areas that cause a judicial eyebrow to be raised.

That is the theory. But as we have come to expect in costs reform, there are concerns about how this latest development will actually work in practice.

The fact that the bill must now be filed electronically should not worry anyone in itself. Lawyers are more than used to using software to record time, and the previous paper format, based as it was on the Victorian account book, had fallen well behind the times. Rather, the concerns relate to the complexity of the spreadsheet, the level of information needed and the way it must be recorded.

All time entries will have to be allocated to a ‘phase’, ‘task’ and ‘activity’ – each enabling the person looking at the electronic bill to view it at different levels of ‘zoom’. ‘Phases’ offer a broad picture, while ‘activities’ capture the detail. It seems that every item – even routine correspondence – needs to be individually dated and assigned; so there is a big risk that the new bill will significantly increase the time spent on inputting costs-related information.

Let’s face it, time recording is not what any solicitor joins the profession to do. It is a necessary evil and something that fee-earners want to get done in the quickest way possible. Are lawyers suddenly going to develop perfect habits on 6 April? When they finish a telephone call, will they hang up the phone and immediately input that call as an activity, task and phase? Indeed, does it make business sense for a partner billing several hundred pounds an hour to spend their time doing that? Or will the job of inputting ‘activities’ be completed later by a costs lawyer with a vivid imagination? The costs lawyer may be on a more economical hourly rate, but they may struggle to work out what the intricacies of the work performed will have been, to the required new level of detail.

Lord Justice Jackson at Law Society

Lord Justice Jackson

With the potential to frontload litigation with extra administrative work, it is no surprise that many in the profession have little enthusiasm for the new bill. Indeed, its mandatory introduction next month follows a pilot of the scheme in the Senior Courts Costs Office that saw very little takeup by lawyers; an indication of the new bill’s lack of popularity.

The status quo cannot continue, however.

Some form of electronic bill is long overdue and any format that seeks to give a greater level of detail over how costs were spent, in the interests of transparency, will inevitably lead to more work for those compiling the bill. But simplify the bill too much and you lose the detail. It is a difficult balance to strike.

Lord Justice Jackson, who proposed a new format electronic bill as part of his package of civil justice reforms, admitted that its introduction is likely to be accompanied by ‘teething problems’ and ‘irate articles in the law journals, with the usual friendly comments posted by readers’.

Speaking to me in an interview for the Gazette last week, he predicted: ‘What’s going to happen is two things. It’s going to come in and there are going to be tirades of complaints about me. In three years’ time, it will be working extremely well and everyone will forget it was part of the Jackson reforms.’

Given that teething problems seem to be fully expected, let us hope they will be identified and resolved quickly, and that judges will have received proper training on the new bill. No one wants to see a repeat of the difficult birth experienced by costs management. Costs reform does not have to mean chaos.

Rachel Rothwell is editor of Gazette sister magazine Litigation Funding, the essential guide to finance and costs.