Costs lawyers' warnings over US experience of J-codes

Costs experts have urged law firms to look to the US and put plans in place to tackle a series of 'controversial and challenging' changes to the way costs are submitted and calculated.

The call to action comes ahead of the roll out of the new J-codes - a set of costs codes designed to enable judges to summarise and analyse time worked and costs incurred throughout a case.

The changes will coincide with a new model bill of costs in April; with the mandatory pilot scheme due to commence on 1 October 2016.

According to Partners in Costs (PIC) the new regime could prove a 'costly experiment' if firms act before considering their preferred approach in the longer term.

Teresa Aitken, a costs lawyer and the firm's director, said: 'On paper, the introduction of a set of codes which are allocated to the various costs incurred throughout the process of a case sounds ideal. Action taken, code assigned. The reality, though, is somewhat different.

'There are over a thousand different permutations of the J-codes; and whilst many of the firms that have consulted with us over recent months start off thinking that the allocation of said codes can be delegated to a non fee-earner in the office, with further explanation it becomes clear that it is only the solicitor managing the case in hand that would really be able to do so with any sort of accuracy.'

Aitken explained J-codes would be 'time consuming', and add a considerable number of non-billable hours to a lawyer's time sheet.

'Not to mention that the software recommended to engage with the new J-Codes will be costly, as well as the risk of bills being submitted for approval by the courts being reduced significantly if errors are identified,' she added.

A similar system to J-codes was introduced in the US approximately 20 years ago. While the theory behind the move has been described as sensible, US practitioners have discovered some pitfalls to the regime.

'J-codes are based on the "UTBMS codes", which have been in place in the US for 20 years now,' explained Joe Rose, a senior costs lawyer at A&M Bacon.

'However, many in the US now believe that the UTBMS codes should be dispensed with altogether, because their lack of consistency has resulted in a significant amount of wasted time and the resulting data being of little use due to a lack of consistency.'

One US Legal Auditor has estimated that 90 per cent of lawyers used the system from the outset, but this percentage is down to just 10 per cent today, leading to calls to dispense with UTBMS codes altogether.

John van der Luit-Drummond is deputy editor for Solicitors Journaljohn.vanderluit@solicitorsjournal.co.uk | @JvdLD