I am often instructed by clients who have prepared their own schedule of costs rather than a professionally drafted bill of costs to engage in negotiations, and very often this results in schedules being withdrawn failing agreement being reached and the costs assessment process having to start again. There are various ramifications behind this approach often taken by receiving parties, which causes not only delays but further issues to overcome starting afresh.

Schedules of costs can be a relatively cheap, easy and therefore, appealing way to conclude cost claims with your opponent however these come with a very clear health warning.

When schedules of costs are prepared, they are very often prepared hastily by fee earners using their own time recording systems. On the contrary, full bills of costs are prepared by professional cost draftsmen or cost lawyers and are forensically prepared; which does take more time but that cost is recoverable, however a more accurate account of costs that have been incurred is provided. This very often includes time which has not been recorded or has been missed by the fee earner when conducting the claim. It is the cost draftsman’s responsibility to account for and claim the full extent of reasonable costs in the matter excluding costs which should not be claimed (eg. summarily assessed) or costs which would not be recoverable i.e. funding costs. Maximising recovery is the sole focus.

Very often a paying party requests an informal schedule, in our experience this serves very little purpose other than to give the paying party breathing space.  Once served upon the paying party a schedule does nothing other than sit in the paying parties “To Do List” with no priority given – can any law firm in these times afford for this to happen? A control needs to be maintained from the outset, arguably the schedule served informally removes that control from the receiving party.

The obvious pitfalls in preparing a schedule is that no urgency, pressure, or time limits apply for the paying party to address these costs. Further, no detailed assessment costs can be recovered, as detailed assessment proceedings have not been commenced; the delay could prejudice interest recovery and if outsourced at a later date, costs of instructing an expert to negotiate a schedule aren’t recoverable until commencement of detailed assessment. The risk of short-changing or underselling their service is very live and some horrific horror stories have been experienced, which included one firm who were opposed to having Bills prepared and were convinced schedules (the costs of which are not recoverable) were the way to proceed. Of particular note, was a client with 20 plus schedules outstanding to be addressed, many of which were well over 6 months old and ran into 6 figure sums combined. It took subsequent bill preparation, negotiations and assessments to conclude matters despite the schedules being at the Defendant’s request. I would suggest that no law firm could afford such a risk  – it is like giving your front door keys away.

At R costings all of our draftsmen have over 10 years’ experience in dealing with costs and have, through their learnings and experiences been able to prepare forensic detailed bills often greatly exceeding clients ‘work in progress’ ledgers identifying time spent and unrecorded, and identifying missed disbursements, which are then served formally with a Notice of Commencement upon the paying party; at that time we request an immediate interim payment placing strict time limits upon the paying party to address matters and produce points of dispute which are generally required within 21 days. This allows the receiving party to be on the front foot from the outset and dictate to some extent the progress of the claim in accordance with the CPR and recent case of Masten v London Britannia Hotel Ltd. Interim payments once received will allow a flexibility to grant an extension of time for points of dispute but only by a reasonable amount. This secures an early injection of cash to the receiving party and keeps the case moving swiftly toward settlement.

Points of dispute can be promptly replied to if the intervening negotiations fail and either a provisional assessment or a detailed assessment hearing can be requested thereafter with continued and proportionate negotiations entertained. There is a very strict cap on costs of assessment allowed with matters proceeding to Provisional Assessment capped at £1500 plus vat and the more this is eaten into, global recovery is diluted.

Whilst all attempts are made to secure you an interim payment in the course of negotiations, interim payments are strongly advised to be requested by the receiving party at the time the claim concludes whether it be from the opponent or requested from the court as part of the order. The next opportunity for an application to be made would be under CPR 47.16 and would be at a time that an application had already been requested for a detailed assessment hearing. There is discretion in exceptional circumstances. With the increasing delays in detailed assessment hearings being listed nationwide partly due to COVID-19, listings for substantial matters could be some six or seven months down the line. It is essential that timetables are kept to strictly and do not stray and that pressure is maintained, and matters are moved reasonably and as swiftly as possible.

The introduction of Costs Budgeting has created a wider transparency and dare I say it, some certainty as to what costs will be allowed and with the wider and greater acceptance that 2010 guideline hourly rates no longer apply, there has always been that rule of thumb and myth that generally 75-80% of costs are recoverable on an inter parte basis. This would however appear to be somewhat extinguished from data our firm has compiled over the last few years with the non-recoverable costs figure reducing somewhat to much lower levels following detailed assessment hearings and provisional assessments that have been carried out by the courts nationwide, which is largely a direct result of Costs Budgeting for which LJ Jackson is applauded.

If the desired approach is to prepare an informal schedule of costs, we advise that it is always marked up without prejudice, that all disbursements have been included as any missed will of course affect recovery of profit costs considerably and that retainers and rates are given full consideration prior to their preparation which if prepared incorrectly could have a drastic effect (not to forget consideration of relevant case law and particularly the recent cases of PLK & Ors and Cohen v Fine & Ors regarding likely rates and CPR 44.4 enhancements). We are of course able to assist in the preparation of cost schedules where this is the chosen route, and schedules will be expertly prepared, with consideration to all the above factors to ensure we maximise your costs recovery. We will also put in place a plan with you as to time requirements to ensure retained control over the process so as to not labour the recovery of costs.

The old saying cash is King very clearly applies to any business and even more so in the times we all face, but remember, to recover your cash you must keep hold of your key!

For further information or any queries please contact Paul at paul@rcostings.co.uk

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