Very few “proper” friends of mine are active tweeters (I do have a lot of friends in real life – honest!); fewer still tweet from within my circle of professional colleagues and clients. Yet I’m forever being asked to link with work colleagues and clients on LinkedIn.  Whilst I always accept LinkedIn requests I find it to be a business/social network that lacks cohesion.

Among people who don’t use it, Twitter seems often to be written off as a home for meaningless updates of the “what I had for breakfast” variety.  OK there’s a bit of that (especially from those tweeters who are currently immersing themselves in geo-location sub-feeds like Foursquare and Gowalla), but in the main I find Twitter to be far more useful as a serious research tool, network builder and specialist news magazine than either LinkedIn or the ubiquitous Faceache.  

My guess is that a lot of people sample the Twitter website and don’t stick around for long – whereas the user experience is infinitely improved once a free or very low cost desktop and/or mobile client application for Twitter is installed.

For the desktop I use Tweetdeck, while on my iPhone the Twitter app itself is fine.

On iPad the Twitterific app is a very easy and attractive interface.  But iPad now has something vastly better.  Flipboard turns the iPad into a colour supplement quality real-time  feed of special interests as defined by Facebook friends, those you follow on Twitter and a wide range of other sections that are easily configured from selected Twitter list feeds.

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However uncomfortable an admission, coming as it does from a costs specialist, I realise there are many disincentives to using the detailed assessment procedure. Some are beyond the control of costs professionals, but others are not and need addressing.

At the end of the spectrum where we are least able to effect change, I discovered this week that the SCCO, having taken over a month to restore a part-heard hearing for a single day, relisted the appointment for February 2011! I offer this as a very small example to illustrate why parties generally seek to avoid the court’s intervention in costs disputes.

As for issues I believe we can and should tackle ourselves, one of the clearest and most serious challenges to the costs sector is how to reduce the time and cost involved in producing bills of costs for assessment – which after all is the stock in trade of all costs draftsmen.

When in 1999 the reasonable costs of preparing bills became recoverable as a matter of right under the Costs PD (in succession to what was a rarely applied exception under RSC Order 62) drafting bills moved into fee earning territory instead of being an expense to solicitors. In-house costs departments in the larger firms expanded and flourished while many of us in independent practice moved away from percentage-based fees and adopted time-based charges.

The CPR also brought with it an encouragement to the judiciary to make partial costs awards. Simple percentage-based orders are at the head of the desirability list in this area – but perhaps unsurprisingly, judges have often felt unable on the limited costs information before them to arrive at a percentage figure that justly reflected the relative success or failure of the parties. Hence the increase in issues-based costs orders which are more complex to work out and take far longer to argue over.

Better news for CFA-funded receiving parties (at least superficially) arrived with the decision of the CA in Nicholas Crane v Canons Leisure Centre (2008) 2 All ER 931. Crane resolved a spat that had been allowed to run for seven years following the introduction of recoverable success fees. Drafting bills of costs was confirmed as solicitors’ work and, even when undertaken by external consultants, could be included as base costs to which the appropriate success fee would then apply.

The Costs PD, the CPR and Crane have therefore added to the perception of a progressively disproportionate “costs of the costs” postscript to civil cases. That is not good news in a recession or in the post-election hiatus before the new Government initiates at least some elements of Jackson.

Technical advances in bill production up to now have been evolutionary rather than game changing. Such was the cottage industry image of costs drafting in the early 1990s when my firm was founded, we were seen as relative techies for using word processing on networked PCs rather than electric typewriters. The Stort Valley (where a number of South Eastern costs draftsmen hail from) was certainly no Silicon Valley.

Electronic assembly applications developed by enterprising costs firms have gained a strong foothold over the last five years. These tools undoubtedly assist in saving secretarial resource, especially in formatting bills to the arcane precedents appended to the Costs PD. They do little however to remedy the principal reason that costs drafting is unnecessarily labour intensive. Information that already exists in solicitors’ time records, normally in electronic form, has to be re-entered manually (maybe copied and pasted) into the application that publishes the bill.

Our firm’s reaction to a unique set of demands placed upon it in late 2009 provides what we believe is a fast route forward. Necessity is a powerful motivation to innovate.

Motto and Ors v Trafigura Ltd and Trafigura Beheer BV is by any measure an exceptionally large group action and one in which our firm was instructed to prepare the claimants’ bills of costs. The only way we could adhere to the very tight timetable the parties had agreed for service of the costs claim was to devise a Costs PD-compliant electronic framework for the bills and schedules and to populate it as far as was possible directly from the solicitors’ practice management system (“PMS”).

The Motto detailed assessment is midstream and it would be inappropriate to refer in any detail to the bills themselves. Suffice to say that there was immense effort and technical skill required in the production process – a complex deployment of the deeper properties of Microsoft Excel 2007. The experience has taught us that significant savings in time can now be achieved using the same techniques – even with much smaller bills. We hope this will prove a significant advance and make a strong contribution to restoring credibility to detailed assessment as a proportionate way to resolve costs disputes.

Andy Ellis is a founding director of costs consultants Ellis Grant and the costs budgeting software firm Feesability Ltd
© Andrew Ellis, August 2010

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At he beginning of February this year the Court of Appeal handed down judgment in two costs appeals that had been heard consecutively in December 2009 and which shared common issues. 

The first of these, O’Beirne v Hudson [2010] EWCA Civ 52, involved facts that will be very familiar to all practitioners running high volume low value personal injury cases.  The claimant was the driver of a car and  the victim of a rear-end shunt at a roundabout.  Proceedings were issued claiming general damages exceeding £1,000.

Before the case had been allocated to any track, the parties negotiated settlement at £400 general damages plus hire charges of £719.06 together with “the claimant’s reasonable costs and disbursements on the standard basis, to be subject to detailed assessment if not agreed.”

In the second case, Drew v Whitbread [2010] EWCA Civ 53, the claimant fell from a ladder in the course of his employment and suffered lower spinal injuries with on-going symptoms.  Proceedings were issued claiming damages exceeding £1,000.  The matter was allocated by consent to the multi-track, albeit the defendant had suggested the value of the claim was fast track.  The claim for special damage climbed to over  £30,000 and the claimant also sought a Smith v Manchester award.

Unlike in O’Beirne, the parties in Drew were unable to settle the case and the matter went to trial over two days.  The claimant succeeded on liability but with 25% responsibility for his own injuries.  Total damages were £9,291.56 which included an award under Smith v Manchester but, on the basis of the joint experts’ reports, no award was made for future losses for care.

The defendant had made a Part 36 payment into court of £6,000 which fell short of the sum awarded but made conduct points within  costs submissions under CPR 44.3, alleging failure to negotiate on the part of the claimant,  exaggeration of the claim, and unreasonable conduct over agreement of the joint experts’ reports.  The Recorder refused to make a special costs order on grounds that  it had been open to the defendant to protect its position on liability by making a Part 36 offer and found that alleged exaggeration was no more than “just the cut and thrust of litigation”.  In the otherwise normal order for the claimant’s costs of the action  to be assessed on the standard basis if not agreed, the Recorder gave express permission to the defendant “to raise on detailed assessment all issues relating to the costs incurred in relation to quantum including in particular all costs relating to correspondence with and of the medical experts since the 4 August 2006″.

On detailed assessment and the subsequent appeals the principal issue in O’Beirne was whether the costs could be assessed by reference to the small claims track regime (ie effectively fixed costs) notwithstanding the agreement of the parties that the claimant should be paid reasonable costs on the standard basis.  In Drew, the two related issues under appeal were whether and to what extent the costs judge had the power to revisit conduct issues on the detailed assessment, and assuming she could, whether trial costs could be assessed as if the matter had  been pursued  as a fast track trial (the defendant’s point being that but for the claimant’s unreasonable conduct, the trial would  have concluded in one day and not two).

The Court of Appeal’s decision in O’Beirne was that it was not open to the court to rule that the costs would be assessed on the small claims basis, because the consent order provided that they be assessed on the standard basis.  The sting in the tail of that decision is then found in paragraphs 16 and 17 of the judgment of Waller LJ where he says “… in making an assessment  the Costs Judge is entitled to take account of all the circumstances (see CPR 44.5(1)), including the fact that the case would have almost certainly have been allocated to a small claims track if it had been allocated.  In doing so he would have regard to what could or could not be recovered if the case had been so allocated.”.

Later in paragraph 19 the judgment in O’Beirne continues “There is a real distinction between directing at the outset [of a detailed assessment]  that nothing but small claims costs will be awarded and giving items on a bill very anxious scrutiny to see whether costs were necessarily or reasonably incurred, and thus whether it was reasonable for the paying party to pay more than would have been recoverable in a case that should have been allocated to the small claims track.”

Hence it is now possible to allow costs no greater than a small claims track award in cases where the parties have agreed that costs be assessed on the standard basis, provided that the allowance is made following an assessment of what costs were  reasonably incurred.  One may assume that one of the considerations on assessment will be to determine whether  the case would inevitably have been allocated to the small claims track.

The test in determining that issue  should, I venture to suggest, be the same as was applied in the pre-CPR cluster of 22 costs appeals arising  from accidents in the workplace and gathered under the title Afzal and others v Ford Motor Co Ltd and other appeals [1994] 4 All ER 720.

The costs regime at that time  in the county court was, as many will recall, to refer claims under £1,000 automatically to arbitration for summary resolution.  No costs could be recovered in such cases.  Hence, unsurprisingly, many claimant lawyers would employ the tactic of valuing even small claims at over £1,000 in order to avoid the automatic reference.  In some of these cases defendants would pay sums into court below £1,000 and then, when offers were accepted, argue on taxation (as it then was) that despite the deemed costs order (notice of acceptance) , no costs were reasonably payable.

In the Afzal cases the Court of Appeal found that if the plaintiff could not reasonably expect to be awarded more than £1,000, it was a misuse of process to claim damages limited to £3,000.  This meant that in cases where a low payment in had been accepted (even in  Green v British Gas where the figure was £875) it was permissible to deem that the case did not “involve” more than £1,000 and deem it automatically refereed to arbitration  - with no costs recoverable.

In future detailed assessments for personal injury cases that settle before any allocation and  below £1,000 general damages  I anticipate that defendants will advocate through points of dispute that the costs officer should review expert evidence and reach a finding that the claimant could not reasonably have expected to be awarded more than £1,000, that the only sustainable allocation would have been small claims track, and that in all the circumstances it would not be reasonable for the claimant to recover more than a sum equivalent to fixed costs. 

Back to Drew.  The Court of Appeal took the opportunity to clarify  and confirm the wide powers of the court on detailed assessment.   The defendant argued on detailed assessment and through the appeals  that costs should be assessed by reference to the fast track.  The claimant maintained that by virtue of Aaron v Shelton, not only should the defendant be precluded from arguing a point on assessment that had not been raised when the costs order was being made, but also that the failure to obtain a special order for costs prevented the defendant from having a second bite at those conduct arguments before the costs judge.

The Court of Appeal recognised that there may be rulings made by the trial judge that bind the costs judge but (at paragraph 26) Waller LJ went on to state  “more often than not the costs judge has material which the trial judge did not have, and thus will not be bound .”  At paragraph 31 the judgment continues “In my view it would not be consistent with the express provisions of 44.3 and 44.5 and with the court’s duty to see that costs are proportionate and reasonable to preclude a party raising a point highly material to that question because it had not been raised before a judge under 44.3.”

The fact that exaggeration was raised in Drew before the trial judge did not, it was decided,  prevent  the costs judge from considering conduct assessing whether particular items should be allowed , including (at paragraph 39) “the question whether the case in reality was a fast track case.”

Aligning Drew with the decision in O’Beirne, Waller LJ determined that it was not permissible simply to rule that the costs should be on the fast track basis.  However, had the costs judge  given separate consideration whether the trial would always have been likely to run into a second day, it would have been open to her to conclude that but for the claimant’s conduct the trial would have finished in one day.  Had that been the decision-making process then the equivalent of the O’Beirne approach may have produced a recovery no greater than fast track trial costs.

The implications for future assessments are that they are likely to be harder fought on conduct issues.  The decisions open to costs judges to limit costs in dramatic fashion (provided they do so at the end of an assessment and not at the outset) could go some way to achieving Lord Justice Jackson’s proposed tougher line on proportionality without a rule change.

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Costs management is felt by many to be the one key Jackson proposal that will be implemented swiftly.  Even under existing case management powers, courts are increasingly embracing costs budgeting, especially in larger cases.

A very recent example is in the group action brought by 70 Columbian farmers against a subsidiary of BP for damage to crops and farmland allegedly caused by the laying of the OCENSA pipeline.  Senior Master Whittaker has in that case ordered both sides’ solicitors (Leigh Day and Freshfields) to prepare costs budgets and to update them on a monthly basis.

Costs estimates have of course been an increasing feature of litigation for some time.  However, they have yet to become authoritative or reliable.  There are many reasons for this, including to some degree the inherent unpredictability of litigation.

The central problems though are of both form and (lack of) common methodology.  Too often over the last two years I have found myself in costs-capping applications trying to compare apples with oranges.  The rather amorphous nature of estimates and bills of costs as currently submitted also creates difficulty in comparing estimates with actual costs incurred on a like-for-like basis.  This is particularly felt in the majority of cases that do not reach trial when there is no easy way to disassemble an estimate to trial to show how it properly compares to the costs incurred up to settlement or other early disposal.

Thus despite the current Costs Practice Direction (“CPD”) requiring solicitors to provide an explanation on assessment if an estimate have been exceeded by more than 20%, unless the case concludes at trial the court cannot tell easily the extent to which an estimate has been exceeded.

As ever, the devil is in the detail, and the major obstacle to costs management is the absence of a consistent system of identifying cost categories from estimate to time recording through to assessment.

Solicitors tend now (and in part are required under the CPD) to set out estimates and prepare costs claims grouping items by activity (eg drafting, attending, telephoning) rather than by the tasks to which those activities were directed (eg , preparing a witness statement, compiling client’s disclosure documents).  Unfortunately this leads to most estimates and bills of costs being opaque and uninformative.

Having looked closely at the Uniform Tasked Based Management System (“UTBMS”), which was developed in the mid-1990s and is used widely in North America, it became clear during the Jackson review that a more logical form of grouping is based on task first and activity second.  It is also useful to further group tasks into a smaller number of “phases” or “aspects”.  If each set of related tasks is attached to an aspect (e.g. the aspect disclosure might be formed of the tasks including client’s disclosure, opponent’s disclosure, inspection etc) there is immediately a higher level available for measurement, comparison and analysis, allowing a view of the wood rather than the trees.

 A standardised set of tasks would enable an estimate to be prepared, time and other costs to be recorded, and a claim for costs to be prepared and then assessed by reference to such tasks.

In his final report, Lord Justice Jackson endorsed the three-tiered Aspect/Task/Activity approach (see Ch. 45, para 5.6) so that “costs information can be extracted at different levels of generality”.

Developing an agreed standardised set of tasks is thus key to this process and will need to cater for all parties to the litigation, whether they be claimant, defendant, respondent, interested party or others; and all types of litigation, to include for example normal Part 7 claims, Part 8 Claims, and appeals.

Most solicitors now record time spent on fee earning matters on sophisticated practice management systems (“PMSs”), but they invariably employ a very unsophisticated set of activity descriptions.  In order to facilitate the approach that the senior judges want, a means must be found to record for each time entry the task in respect of which the work in question was undertaken.  This is a challenge that should not be beyond legal technology but before that, an agreement over what generic task descriptions should be is the next logical step on the road to implementation.

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It’s a part-heard detailed assessment and parts of the hearing were held in private but Buxton v MGN (Master Haworth, SCCO, 18 March 2010) provided more clear support to the notion that media defendants are having greater success this year in challenging claimant costs.

Firstly the decision on rates was, in the context of libel cases, indicative of downward pressure and a more robust approach to proportionality

Grade A £350, Grade B £220, Grade C £175 and Grade D £125 – all for work in 2009 on a case that settled for £30,000 damages.

Secondly, although the costs judge was reluctant to make a global Lownds decision at the outset (not being overly shocked by base costs of £62,692 – even for a case that settled inside 10 weeks of publication), by the time the detail was examined Master Haworth was persuaded that several items of the costs claimed were “grossly disproportionate”.

Earlier that week the same solicitors, Atkins Thomson, had settled another costs claim against MGN (arising from a privacy action) for virtually half the costs first claimed.

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