By Sean Linley, Costs Draftsman 
In AKC v Barking, Havering & Redbridge University Hospitals NHS Trust [2022] EWCA Civ 630 (10 May 2022) the Court of Appeal has upheld an earlier decision that the name of each fee earner must be identified in the electronic Bill of Costs. 
In short the position is as follows: 
Old Style Paper Bill of Costs – Must state any professional qualification of a fee earner, and unless the SCCO grade is given, the years of post-qualification experience. 
Electronic Bill of Costs (Precedent S) – Must include the name, the SCCO grade and, in so far as it adds anything to the grade, the status of each fee earner, except possibly in so far as the receiving party’s solicitors may have outsourced work to an agency. 
Where there is a defect it does not follow that a Bill of Costs should be struck out or treated as a nullity. The Court of Appeal’s view was that “a defect will, at most, warrant a lesser sanction” though it was held that the Court was “fully entitled to decide” to strike out the Claimant’s Bill of Costs and order a new compliant Bill of Costs to be served. 
The Previous Decision 
The Claimant had appealed the previous decision that their Bill of Costs was deficient in the information it gave about fee earners. 
Steyn J had found that "whilst a paper bill need not specify the SCCO grade of each fee earner (see paragraph 103 of her judgment) […] each fee earner must be named in a paper bill (paragraph 94) and that “the description of each fee earner’s status should encompass their professional qualification (if any) and (if the SCCO grade is not given) their number of years of post-qualification experience” (paragraph 101)." 
Steyn J’s view was that "paragraph 5.11(2) of Practice Direction 47 “requires both the status and the hourly rate to be given on an individual basis, rather than by reference to categories of fee earners,” implies that each fee earner has to be named (paragraph 94 of the judgment). Steyn J also thought that, if fee earners were not named, bills would be “intolerably opaque” and “the paying party and the assessing judge [would be] unable to consider ‘all the circumstances’ when reaching conclusions as to the amount of costs likely to be or to be awarded when applying CPR 44.4” (paragraph 95). Further, Steyn J said in paragraph 102: 
“As a matter of ordinary language, and particularly in the context of costs, a legal professional’s status is indicated not only by their professional qualification but also by their level of experience. An interpretation of the rules and practice direction which enables receiving parties to withhold such basic information would be liable to result in bills of costs becoming less transparent, which in turn would be likely to inhibit the ability of paying parties to make offers and of the court to assess costs.” 
In relation to the present case, Steyn J said in paragraph 104 of her judgment: 
“I consider that [AKC’s] paper bill did not comply with the requirements to specify, in respect of each individual named employee, their hourly rate(s) and status, including, for any fee earner with a professional qualification (such as a solicitor or Fellow of the Chartered Institute of Legal Executives), the number of years of post-qualification experience.” 
While Steyn J saw the proper interpretation of paragraph 5.11(2) of Practice Direction 47 as “very finely balanced”, she had “much less hesitation” in relation to electronic bills (paragraph 105 of the judgment). She held that an electronic bill must include both the names (or at least initials) of fee earners and their SCCO grades (paragraphs 109 and 111). With regard to names/initials, Steyn J said in paragraph 109: 
“This is part of the ‘detail’ which must be provided whether the Precedent S spreadsheet format or another spreadsheet format is used. Who has undertaken each item of work is a key part of the detail and, without it, the bill is opaque. In order to be fully functional, the spreadsheet must enable the paying party and the court to see what work any particular fee earner has undertaken, in the way described in the SCCO Guide ….” 
As for SCCO grades, Steyn J said in paragraph 111: 
“In Precedent S there are columns for both status and grade, reflecting the fact that these descriptions seek different information. In this context, … the word ‘grade’ is a term of art meaning SCCO grade. While the SCCO rates may be more material on summary assessment than on detailed assessment, they are relevant, at least as a starting point, and are invariably relied upon by parties, in the context of detailed assessment; and the SCCO grades provide basic information as to post qualification and litigation experience which is important in considering matters such as whether the rates claimed are reasonable, whether the work should reasonably have been delegated or is excessive in time. While I have found that it is not a breach of paragraph 5.11(2) not to provide the SCCO grades in the paper bill, electronic bills are required to be more informative and more transparent than was required for paper bills to be compliant.” 
33.In the circumstances, Steyn J concluded in paragraph 108 of her judgment: 
“In my judgment, [AKC’s] electronic bill of costs failed to provide the detail of all the work undertaken in each phase and failed to provide the reference formulae in a transparent manner. [AKC’s] electronic bill of costs does not meet the ‘full functionality’ requirement.” 
Court of Appeal 
The Court of Appeal examined issues pertaining to both the paper and electronic Bills of Costs. In respect of the paper Bill of Costs it was “accepted that Steyn J had been right that a paper bill must state any professional qualification of a fee earner and, unless the SCCO grade is given, the years of post-qualification experience.” 
The Court of Appeal continued and stated that: 
“It follows, as it seems to me, that Steyn J was also correct that the August 2019 paper bill did not fully meet the requirement to give fee earners’ status. The references in the paper bill to solicitors’ “Years Experience” can, I think, be taken to refer to post-qualification experience and, on that basis, the bill sufficiently stated the “status” of “Solicitor 1” and “Solicitor 2”. Nor does any problem arise in relation to the “Others” or “Paralegal (Special Damages, Sheffield Based Fee Earner)” who can be assumed not to have had any professional qualification. However, AKC was proceeding on the basis that a “Partner” justified a high hourly rate without either confirming that the “Partner” had a professional qualification or stating the number of years of post-qualification experience. To this extent, in my view, the paper bill failed to comply with paragraph 5.11(2) of Practice Direction 47.” 
The Court of Appeal next examined the issue of the electronic Bill of Costs. It was held thus: 
“a receiving party who elects to use the Precedent S spreadsheet format must include in his bill of costs information sufficient to enable the columns of worksheet 5 to be completed. When paragraph 5.A2 of Practice Direction 47 states that electronic bills “may be in … Precedent S spreadsheet format”, it surely cannot mean that a receiving party need complete a Precedent S only to whatever extent he chooses. It is, I think, to be inferred that a receiving party using Precedent S has to provide enough data for its worksheets to be filled in. It follows, given the columns comprised in worksheet 5 of Precedent S, that a bill adopting Precedent S must at least generally include, among other things, the “LTM Name”, “LTM Status” and “LTM Grade” (which must mean SCCO grade) of each fee earner. That is not to say that a receiving party necessarily has to complete in full both the “LTM Status” and “LTM Grade” columns in worksheet 5. As Steyn J recognised in paragraph 112 of her judgment, entering fee earners’ SCCO grades in the “LTM Grade” column may allow a receiving party to say relatively little in the “LTM Status” column. Recording that a fee earner was grade B, say, will without more imply that the fee earner was qualified as a solicitor or legal executive and had over four years’ post qualification experience, including at least four years’ litigation experience. There can be no obligation to duplicate that information in the “LTM Status” column and so it may be enough to state in that column whether the individual in question’s qualification was as a solicitor or as a legal executive.” 
It was noted that the example Precedent S did include a Medico-Legal Assistant without an LTM name, though this was anticipated to be a reflection of the fact the work would probably be undertaken by an agency and in those circumstances an LTM name may not be necessary. 
The Court of Appeal ultimately agreed with Steyn J that “without a breakdown of work undertaken by individual fee earners, it is impossible to know whether, for example, two different fee earners within the same status category each spent one hour working on a letter, on consecutive days, or whether only one fee earner spent two hours across two days working on it. This kind of information is capable of revealing that work has been duplicated, in whole or in part. It is also impossible to detect, for example, if a claim has been made that an individual fee earner undertook, say, 10 hours work on disclosure on a day when a claim has also been made for the same fee earner’s attendance at a one day hearing, giving rise to questions about the accuracy of the claim. Such anomalies are hidden if work is claimed by reference to categories of fee earner. In addition, the provision of the names of fee earners enables the paying party to check the expertise and experience of individual fee earners, when considering whether the rate claimed is reasonable.” 
The conclusion from the Court of Appeal was both clear and unequivocal: 
“The upshot is that, in my view, any electronic bill, whether in Precedent S spreadsheet format or any other spreadsheet format, must include the name, the SCCO grade and, in so far as it adds anything to the grade, the status of each fee earner except possibly in so far as the receiving party’s solicitors may have outsourced work to an agency.” 
It was further stated that this information was to be provided whether or not the Precedent S was used or “any other spreadsheet format” (which the Practice Direction does allow). 
It was held that Steyn J was “fully entitled to decide that the appropriate course in the particular circumstances was to strike out the existing bill of costs and order AKC to serve a replacement which complied with the Civil Procedure Rules.” It was, however, acknowledged thatit is very far from the case that a bill of costs which fails fully to comply with the rules should invariably be struck out, let alone treated as a nullity” and that “typically, a defect will, at most, warrant a lesser sanction.” 
The Court of Appeal have given clear guidance as the requirements for both paper and electronic Bill of Costs and where a non-compliant Bill of Costs is served then there will be consequences. What the Court of Appeal has done though is to leave a door open for receiving parties in breach, with it made clear that it is not necessarily the case that a Bill of Costs should be struck out. 
None-the-less this is an avoidable problem and competent costs professionals ought to be able to avoid the issue entirely. The old adage that prevention is better than cure rings true, though the Court of Appeal has left open the latter. 
In Steyn J’s judgment she made reference to an observation by Henry LJ in Bailey v IBC Vehicles and that reference still rings true in light of the Court of Appeal judgment: 
"An ounce of openness is cheaper than any argument". 
Should you be uncertain about any aspect of certification or of the format of the Bill of Costs then please do not hesitate to get in touch with our friendly team either via phone 01482 534567 or e-mail 
Tagged as: Bill of Costs
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