04 Jan 2020

Guest contributor Simon Noakes of Profin Cost Solutions Ltd reviews the success of the e-bill, proportionality and the Guideline Charging Rates

My profession would be forgiven for thinking that every time a scheme is introduced to curtail litigation costs, it leads to costs actually increasing. For instance, when costs budgeting was fully introduced in April 2013, it was always logical that this would in turn generate a need for the format of the bill of costs to change. However, there has been a considerable gestation period for the electronic bill of costs. Two formats have been designed, one by the MOJ (namely Precedent S) and one by the Association of Costs Lawyers. My profession now has something akin to a Betamax -v- VHS battle on its hands (cue the younger generation consulting Wikipedia) and absent a compulsory pilot scheme, the advent of the e-bill cannot exactly be classed as a roaring success.

E-bills

The electronic bill of costs was introduced for all CPR 7 claims on 6th April 2018. As a result, unless an exemption is granted by the Court when the order for costs is made, all work undertaken post 6th April 2018 has to be included in an Excel workbook with 20+ separate spreadsheets. If and when the parties reach a Detailed Assessment Hearing, the Costs Judge is meant to note the results generated during the hearing on his computer whilst the parties adopt the same modus operandi on their wide screen laptops. The purchase of my own super-fast super-expensive large-screen MacBook has resulted in my daughter being informed that her wedding reception will now take place in a Little Chef!

Are e-bills workable in practice?

Obviously, the use of the e-bill of costs presupposes that the parties and the Costs Judge have more than a working knowledge of Microsoft Excel. One of my clients recently informed me that when he attended a costs seminar, the audience was told that the instructors had just attended a seminar on the e-bill with sixty District Judges. Of that number, only five admitted to knowing how to use Microsoft Excel and of that five, three said that they were not concerned as they were on the verge of retirement! Another client told me about a situation where another District Judge switched his computer off at the end of a Detailed Assessment Hearing without saving the e-bill that he had just assessed to then find that the two Costs Counsel before him admitted that they not been able to follow any of his decisions from about thirty minutes into the hearing and they had not changed their own spreadsheets. The District Judge and the barristers then had to recreate the District Judge’s decisions from their notes. Time will tell whether the idea of the e-bill is workable in practice or whether the Judiciary simply decide that the introduction of fixed costs solves all problems.

Proportionality

In other news, over six years after the advent of the global proportionality test, the Court of Appeal finally availed itself of the opportunity to address how that test should be applied… and predictably, they appear to have complicated matters. In Suzanne West v Stockport NHS Foundation Trust [2019] EWCA Civ 1220, the Court of Appeal stated that

“if the judge regards the overall figure as disproportionate, then a further assessment is required. That should not be line-by-line, but should instead consider various categories of cost, such as disclosure or experts’ reports, or specific periods where particular costs were incurred, or particular parts of the profit costs. At that stage, however, any reductions for proportionality should exclude those elements of costs which are properly regarded as unavoidable, such as court fees”.

Again, how this will work in practice is anyone’s guess and as one legal commentator remarked recently,

“ the answer to proportionality is that there is no answer”.

Guideline Charging Rates

In the last year, a chink of light has however appeared where the application of the Guideline Charging Rates is concerned. Mrs Justice O’Farrell commented in Ohpen Operations UK Limited v Invesco Fund Managers Limited [2019] EWHC 2504 (TCC) that

“the guideline rates are significantly lower than the current hourly rates in many London City solicitors, as used by both parties in this case. Furthermore, updated guidelines would be welcome”.

Mrs Justice O’Farrell then allowed over £700.00 per hour for a Grade A fee earner in a Magic Circle firm (although I have actually seen another firm charging over £1,000.00 per hour in a commercial case).

Whether this will lead to a review of the Guideline Charging Rates is questionable, albeit they are hopelessly out of date, having last been set in 2010. The simple addition of inflation alone would push up the rates, although to put matters into perspective, one of my clients in a defendant insurance panel firm recently commented to me that she longs for the day that she can actually charge guideline rates. However, it remains to be seen if anything changes. After all, where costs is concerned, there are in reality two speeds; dead slow and stop!