The impact of COVID-19 on the legal costs landscape

The COVID-19 pandemic has presented a challenging time for many industries, but how has this impacted upon the legal profession, particularly in terms of maintaining cash flow during this period of uncertainty?

We have seen many firms embracing new practices and new technology to allow them to work from home and to deal with both online and paper-based workloads. This has brought about the benefit of flexibility for many costs practitioners, allowing legal practitioners to continue working with minimal downtime.

Detailed assessment hearings were surprisingly excluded from the Civil Court Listings Priority produced on 1 April 2020 by HM Courts & Tribunals Service. Costs recovery is essential to the success of any firm and so the Court’s introduction of remote costs hearings was a welcomed move.

Guidance on the conduct of Remote Hearings

The Association of Costs Lawyers, with the support of the regional costs bench has hosted guidance on the Protocol for the Conduct of Remote Hearings issued by the Judiciary. This helpful guidance has been welcomed by the Masters at the Senior Courts Costs Office and refers to the emergency updates made to statute, specifically updates to the Civil Procedure Rules, which includes Practice Direction 51Y – ‘Video or Audio Hearings During Coronavirus Pandemic’ and Practice Direction 51ZA – ‘Extension of time limits and clarification of Practice Direction 51Y – Coronavirus’.

The guidance is intended to address not only detailed assessments but also oral review of provisional assessment hearings and those where the Court is invited to certify an amount payable from a child or protected party’s damages pursuant to CPR 46.4(4).

In terms of making requests for assessment and corresponding with the Courts, parties are advised to communicate by email only and, in the event of a hearing already being requested, to communicate with each other to agree a mode, platform and scope for the hearing. There are many platforms available for remote hearing, including the popular BT or Skype conference call, but any communication method may be considered and approved by the Court once a hearing date has been fixed.

Preliminary issues are to be identified and the Court will produce directions in instances when parties have failed to agree upon the factors mentioned above.

To reduce the level of physical papers being sent to the Court, it has become routine for the Court to direct the receiving party to file and serve documents electronically. These “e-bundles” contain “common documents” disclosable between the parties and should be filed 3 days before the hearing (or as otherwise ordered) and should comprise of a single PDF file, including an index and paginated page numbers.

Along with the e-bundle, the receiving party is to file the electronic Bill of Costs in an editable format, Points of Dispute and Replies and an “offers bundle” in single PDF files. Party details for invitation to the video hearing must also be included.

The receiving party is to email a link to the Court, leading to an online data room containing the e-bundle and other documents (the Court will provide the relevant email address for that purpose). This link is also to be provided to the paying party at the same time as filing at Court and the email will constitute effective service.

The ACL guidance advises that the contents of the e-bundle is to be agreed between the parties and should be organised so as to include;

a. Any skeleton arguments;

b. Extracts of any authorities upon which either party wishes to rely;

c. A core case documents to include: –

i. Pre-action letter of claim and letter of response;

ii. Statements of case (to include schedules and counter schedules of loss);

iii. Court Orders;

iv. Key disclosure;

v. Witness statements (relevant to the main action, and not witness statements in support of any interlocutory applications); and

vi. All disclosed experts’ reports (to include experts’ joint statements) arranged in chronological order.

d. Precedent Q (if the case was subject to a Costs Management Order);

e. The receiving party’s last approved Costs Budget;

f. Any other document to be relied upon which is disclosable to the paying party;

The above does not alter the documents which must be provided in support of the Bill of Costs as identified in CPR 47 PD 13.12. As such, the receiving party is required to make electronically available to the court, any document which it would have wished to present at a hearing attended in person. For this purpose, I have adapted to preparing a second bundle containing all “non common” documents, for disclosure to the Costs Judge only. This bundle contains items such as counsel’s advice and any attendance or file notes to be relied upon. I also find it good practice, wherever possible, for documents to be prepared in the order in which they will likely be considered by the Court, on the assumption that the Points of Dispute will be taken in turn.

Helpfully, the protocol confirms that the Court will retain responsibility for recording the hearing and will mark or amend their copy of the Bill of Costs during the course of the assessment in order to reflect the decisions made. Given that until recently, remote hearings were unchartered territory, parties are asked to recognise that assessments may not commence at the allotted time and may take longer than allowed for in the time estimate.

Extensions of time limits

The key factor of the new Practice Direction 51ZA, is that the parties can now agree extensions of time for up to 56 days without the permission of the Court, a substantial increase upon the previously allowed 28 days. In addition, the Court will take into account the impact of the COVID-19 pandemic when considering applications for extensions of time for compliance with directions, adjournment of hearings, and applications for relief from sanctions.

The emergency procedures will be continually under review, but for now will cease to have effect on 30 October 2020.

The Reality and Practicalities of the Emergency Procedures

The introduction of hearings via video conference is a necessary move to ensure that law firms are provided with essential cashflow. It could also be a step towards the possible future of litigation, but it is not without inconveniences. Both myself and fellow colleagues have experienced disruption during the course of video costs assessments, with issues such as echoing, delays or a drop in internet signal. This leads to the question of whether telephone hearings would be a more suitable platform until a universally tried and tested medium is introduced. The downside of telephone hearings is the obvious loss of facial reaction when parties are making submissions. However, this is not so much of an issue during costs hearings, which are mainly driven by written evidence rather than subject to evidence under oath.

We have seen a shift from broad brush assessments, to a process which has now become very analytical, as a result of every piece of information being readily available. This approach reinforces the importance of file management, which cannot be understated for receiving parties wishing to maximise their costs recovery.

It is now commonplace for an assessment hearing to be adjourned every 2 hours or so, which makes the process more time consuming. For larger Bills which cannot be assessed within this timeframe, the Court will often deal with preliminary issues in the first instance and give directions for a further hearing, the hope being that once the preliminary issues are clarified, the parties will go on to reach an amicable agreement without further recourse to the Court.

The common consensus arising from the industry’s experiences of the new process, is the overriding objective to assist the Court and to make the process as seamless as possible. This approach can be adopted by foreseeing the possible issues to arise during the course of the assessment and having electronic documents readily available for inspection. For example, in instances where the Court deems it appropriate to disclose a particular document to the paying party, it would be necessary to utilise a conferencing platform which allows the sharing of documents, or alternatively for a third party to be available to immediately scan the documents over to the paying party’s representative.

The key to this is specific and succinct objections from paying parties in order to allow receiving parties to tailor the e-filing as appropriate and to make the whole process manageable. We are hopeful that the judiciary will provide further guidance as to the contents of Points of Dispute following the recent decision in Ainsworth v Stewarts Law LLP [2020] EWCA Civ 178, whereby the Court of Appeal upheld a decision to strike out part of the Points of Dispute due to lack of particularisation.

As with the historical process, the fundamental way to assist the court remains incumbent upon good organisation and communication between the parties and with the Court.

Rebecca Humble is a Senior Costs Lawyer at Elite Law Solicitors and can provide specialist advice in relation to all aspects of legal costs.

If you have any queries relating to any of the issues mentioned in this article, please get in touch with Rebecca by calling 0800 086 2929 or emailing info@elitelawsolicitors.co.uk. ■