Coding costs

While many of Lord Justice Jackson’s recommendations have either been implemented or rejected, there are a few slow burners that are still being worked on. The introduction of a new-style bill of costs is one of them.

His report said that a new format for bills of costs should be devised, “which will be more informative and capable of yielding information at different levels of generality”.

The recommendations continued: “Software should be developed which will (a) be used for time recording and capturing relevant information and (b) automatically generate schedules for summary assessment or bills for detailed assessment as and when required. The long-term aim must be to harmonise the procedures and systems which will be used for costs budgeting, costs management, summary assessment and detailed assessment.”

This recently took a step closer to becoming reality
after a crucial phase in the development process received top-level sign off.

Standard bearer

The Legal Electronic Data Exchange Standard (LEDES) oversight committee ratified what has become known as J-Codes – the standardised codes that will ultimately categorise every activity within the civil litigation process for costs assessment purposes.

As the new J-Codes guidance explains: “If the advantages of the electronic production of bills are to be maximised, it is important that a fee earner’s time entries should form the basis, not only of a solicitor’s bill to the client but also of any bill to be presented for assessment by
the courts… Otherwise, as at
present, every entry in a bill for assessment is simply a manual repetition of something that has already been inputted electronically in the firm’s time recording system.

“If this duplication of effort is to be avoided, the same underlying codes have to be used by the firm’s practice management or time-recording system as are used in the preparation of bills for assessment. Since bills for assessment will all have to be presented in the same format, it is essential to develop a common set of codes which can be used to record entries in the time-recording system and from which both solicitor and client bills and bills for assessment can be generated.”

LEDES’ approval of the proposed J-Codes is crucial in ensuring that Jackson’s plans for all costs claims to be presented to the court by reference to ‘phases, tasks and activities’ can be delivered. LEDES’ membership largely comprises legal software vendors and large law firms – essentially, the key parties that will either develop or use the software on which the J-Codes are based.

Within the unified coding scheme, specific top-level ‘phase codes’ will categorise all civil litigation work performed by its overall theme, such as disclosure or work related to the production of witness statements. More granular ‘task codes’ will then classify work by what is being done, such as reviewing the other party’s statement of case.

Finally, ‘activity codes’ will set out how the work is being undertaken, such as researching a matter or drafting a document. ‘Expense codes’ will categorise disbursements, while ‘timekeeper codes’ will categorise practitioners by reference to their seniority.

Industry adoption

Ultimately, it is planned that the J-Codes will be adopted by the legal profession on an industry-wide basis, and at every stage of the civil litigation process. However, in reality, the full scope of these changes are likely to take several years to implement.

In addition, the guidelines suggest they should only initially be used in cases in which Precedent H has already been adopted. Only after piloting would the use of J-Codes be extended to other areas of litigation.

The move has the full support of the judiciary. Indeed, the Master of the Rolls, Lord Dyson, Lord Justice Jackson and senior costs judge, Peter Hurst, wrote jointly to the oversight committee to request that it ratify the J-Codes.

Costs lawyers have been at the forefront of the preparatory work that has led up to the codes’ adoption. Much of the initial groundwork for the J-Codes was carried out by an Association of Costs Lawyers working group, which in 2011 issued a report ‘Modernising Bills of Costs’. From this, Master Hurst asked Jeremy Morgan QC to set up the catchily named Jackson review EW-UTMBS development steering committee – the body that ultimately devised the J-Codes that LEDES approved. It is now chaired by Alex Hutton QC, and several costs lawyers have continued their involvement.

This is technical work that will in time be of great significance. It will promote consistency and efficiency, and help the courts and others analyse costs matters more easily. It will be worth the wait. SJ

Sue Nash is the chairman of the Association of Costs Lawyers