Taking Solicitors to Task
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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