We speak to committee member and costs practice owner Debbie Burke about the major developments of interest in the world of costs in 2014, and the trends that could emerge over the next year
What were the key developments for you in civil litigation in 2014?
As a costs specialist, the key development for me has been the extension of the costs management regime to all issued part 7 cases with a value of up to £10 million. For my costs practice, this has increased the amount of budget work we are carrying out. For the legal market in general, this has resulted in more cases being caught in the costs management net. It’s too early to tell how that will affect the situation in the future, but I still sense a reluctance amongst lawyers to issue cases until it is absolutely necessary, simply to avoid triggering the costs management provisions.
I still sense a reluctance amongst lawyers to issue cases until absolutely necessary, simply to avoid triggering the now extended costs management provisions in part 7 cases.
The Practice Direction for costs management in part 3 of the CPR was amended to emphasise that costs management orders may be particularly appropriate in a range of other types of litigation, from unfair prejudice petitions to Inheritance Act claims. At the moment, we aren’t aware of any particular drive towards making costs management orders in other types of claim, but that’s not to say it won’t happen in the future.
Did you encounter any significant cases in 2014?
The raft of relief from sanction cases dominated all things costs this year. This culminated in the Court of Appeal’s decision in July in Denton . Between the original Mitchell judgment and the Denton appeal, there were undoubtedly some very unfortunate outcomes for individual litigants and their solicitors, and many hours of sleep were lost by the litigation community generally.
The dust has now settled and the need to comply with court rules and orders has been well and truly reinforced. Although firms can now get back to business as usual, no one wants to run the risk of having to make an application for relief.
What are the key things to look out for in 2015?
In the last couple of months, I have begun to hear more and more about the cost to legal firms of ensuring regulatory compliance. I saw some statistics recently from an outcomes-focused regulation 2012 impact survey, which suggested that almost 20% of the time of compliance officers for legal practice (COLPs) and compliance officers for finance and administration (COFAs) in a legal practice is spent dealing with compliance issues. If that is the case, then this is a serious concern going forward.
20% of COLPs and COFAs’ time is spent dealing with compliance issues … this is a serious concern going forward.
I was also listening to a PII broker recently who indicated that insurers are becoming more and more interested in eliciting information from lawyers as to how they reduce professional risk within their practice and how they might evidence their approach to reducing risk to insurers.
I expect to see more emphasis during the course of 2015 placed on the importance of lawyers learning project management skills; there is currently an SRA consultation open which is examining the role of legal project management within the new Competence Statement for solicitors. The consultation closes on 12 January 2015 (www.sra.org.uk/sra/policy/training-for-tomorrow.page).
Lawyers will need to get used to thinking differently about the way they record time and present their claims for costs … there may well be some short-term pain.
Finally, I expect to see much more said about the introduction of time recording by reference to ‘J-codes’ (ie the set of UTBMS codes developed by the Jackson Steering Committee to assist courts and other parties in performing analysis of costs at different levels), including the comparison of actual costs to budgeted costs and the way in which this will dovetail with the production of costs budgets and the new style of bills of costs for detailed assessment, which will enable the easy comparison of budgeted costs with actual costs. There may well be some short-term pain for long-term gain, as lawyers get used to a different way of thinking about the way in which they record time and present their claims for costs. At the very least, practitioners should familiarise themselves with the J-codes and investigate how they can be integrated with their practice management system.
All of these issues will have significant practical implications for solicitors and particularly civil litigators.