J-Codes…a Help or a Hindrance? – Part 1

Posted by Michelle Barron on 27th October, 2016 in Opinion and categorised in .

J-Codes – the newly developed universal time recording codes for litigation cases in England and Wales – were first approved in 2014. Since then, their development has made up a significant part of the work done by the Hutton Committee, which was tasked with establishing an electronic Bill of Costs to meet the recommendations from LJ Jackson’s final report.

Why are we talking about J-Codes?

This set of codes is a simple enough concept but has become central to reaping the benefits of a digitised approach to both Bill preparation and costs management (the Precedent H, costs budget). The biggest advantage of J-Codes is as a means of auto-populating a costs budget and a phased Bill of Costs. Those involved in litigation know just how much time and effort this could save but, of course, there have been objections, mainly on the basis of expense and upheaval.

How do J-Codes operate?

J-Codes are very sophisticated and allow time to be recorded by Phase, Task and Activity. There are also disbursement codes. Conveniently, this approach fits naturally with the Precedent H format. The additional detail extracted for Task and Activity provide the necessary information for processing the phased information into an electronic Bill of Costs where greater detail is required.

The new electronic bill

Despite some doubts over the past year about whether the new electronic bill would be implemented in 2016, it appeared in the 83rd amendment to the Civil Procedure Rules with the new Practice Direction 51L. With the latest amendment (the 86th), the Pilot Scheme that was introduced in PD51L has been extended by a year to fulfil LJ Jackson’s suggestion that, “the new form bill of costs should be mandatory for all work done on or after 1st October 2017.” He suggested at the same time - during his Keynote Address to the Law Society’s 2016 Civil Litigation Conference - that, “the voluntary pilot under PD 51L could be extended until that date.”

 

Why have J-Codes proved controversial?

In that same speech to the Law Society conference, LJ Jackson acknowledged that most (if not all) of the criticisms of the new format bill of costs were aimed at the J-Codes. He said, ”There are strong views on both sides of the debate. As a result of the new format bill’s foundations being built on J-Codes, this has meant that the entire bill has been criticised rather than one discrete part of it.”

Much of the criticism of J-Codes is the expense of introducing them, given the already climbing costs of case management and time recording software. However, my experience as a fee earner conducting litigation, and as a partner running a solicitor’s practice, was that most time recording systems can be modified as a matter of course to introduce user specific codes and descriptions. The cost is one of man-hours not capital expenditure and if the software cannot do this, it is probably due to be replaced in any event.

Placating the objectors

Despite the obvious logic behind them, the concern about J-Codes was enough for LJ Jackson to feel the need to allow some flexibility with respect to this core part of digitisation. In the same 2016 speech, he said that, “the Hutton Committee’s proposed version of the bill should be adopted as the new bill format, albeit with the references to the J-Codes removed. The CPR should allow practitioners to prepare that bill in any manner of their choosing; whether with the assistance of J-Codes, automatically generated by an Excel spreadsheet or by hand… Time entries can either be generated automatically by time recording software or inputted manually by those who prefer to record their work done on paper. For those using J-Codes, the Hutton Committee spreadsheet provides an excellent tool for preparing the bill.”

So, the message is that, while the electronic Bill is here to stay, it is not dependant on J-Codes and if practitioners wish to use an Excel spreadsheet of their own choosing, or even the back of an envelope (not recommended by us…) that is fine too. However, while existing methods might seem easier now, there is no doubt that early adoption of J-Codes will be an advantage. As the Hutton Committee has stated, “the longer the wait to adopt them, the more time-consuming and arduous the process will be of producing the BoC.”

What advantages do J-Codes have?

While costs budgeting is still being undertaken, I believe that the biggest advantage of J-Codes is providing the detail to track ongoing work to ensure any approved or agreed budget phase is not exceeded before an application to vary the budget can be made. We all remember only too well the fallout from Mitchell - retrospective applications are to be avoided.

J-Codes generate detail, tie up with the assumptions within an earlier budget and offer evidence of, and comparison between, work estimated and work actually incurred to support an application to vary. From a practice management viewpoint, there is never a disadvantage in having a wealth of information relating to time recording. After all, you never know when it may be needed. During my years as a partner I once asked my accounts department to break down the time recording of our fee earners into categories - such as client, opponent, other parties and documents among others - to assist in auto-preparing a statement of costs. I was informed, much to my delight, that this information was already ascertainable from existing codes.

A genuinely useful tool

My view is that J-Codes are an invaluable tool in running litigation, both to meet the demands of costs budgeting and the future demands of the electronic bill of costs. Particularly so as the electronic bill of costs will be compulsory from October 2017. Despite LJ Jackson seeking to placate the objectors, J-Codes should not be dismissed too hastily – they are a useful tool with a real purpose, rather than change for change’s sake.

In Part 2, I will look at the 86th amendment in greater detail and the future of costs and practice management, especially against the introduction of fixed costs.

This article was written by Richard Allen who brings 30 years of unique commercial experience to Burcher Jennings. He was one of the first professionals to achieve Costs Lawyer status, and is one of a select group of Costs Lawyers to have made partner in a solicitor’s practice. Richard is Practice Manager for the Cambridge office.