It is standard practice for Fee Earners to record their time in 6 minute units for work undertaken on cases. The main reason for the same is to ensure that an accurate record is made so the same can be billed to their client/paying party.
However, given the recent extension of the fixed costs rules, the question arises as to whether time recording is still as important as it once was? More so if the Solicitor knows that they are not going to recover their costs on the standard hourly rate basis.
The importance of time recording has been the subject of recent case law. In Deutsche Bank AG –v- Sebastian Holdings Inc [2023] EWHC 9 (SCCO) the Claimant sought costs in the global sum of circa £53 million. The Defendant sought to criticise the way in which the Claimant’s Solicitors had recorded their time, to include insufficient descriptions of time and a failure to properly illustrate how the time recorded had been spent. Unfortunately at the assessment it became clear that the Claimant had failed to support the time claimed with clear and detailed supporting file notes. As such, the Court reduced the overall costs by 32%. This then resulted in the Claimant’s assessment costs being hit by a significant reduction of 30%.
Similarly, in Ikin & ors –v- Shawbrook Bank [2023] EWHC 1075 (Costs) the Claimants were awarded costs in their favour and 8 bills of costs were served. The Defendant sought to challenge the profit costs claimed. When Senior Costs Judge Gordon-Saker came to assess the first bill, there were serious problems identified in that no time records were produced and no time was recorded in the Claimants’ solicitors’ file, save for one attendance note. The Claimants conceded that, with one exception, all of the time in the bill had been estimated. It also became apparent that the work was “completely unsupported” by the file.
The Senior Costs Judge accepted that “If there is a letter in the file drafted by the receiving party’s solicitor and no record of how long it took to draft, the draftsman has little option other than to estimate how long it would probably have taken. However, the convention is to mark estimated time in a bill with an (e)”, but that such time is approached with a degree of caution in line with Brush –v- Bower Cotton & Bower [1993] 4 All ER 741. He also stated that: “Where there is no record or evidence that work had been done and no reason to infer that work had been done, then, clearly, no work should be claimed.” In the case being considered he found that there was ‘imaginary’ work claimed.
In this case the Court ordered the Claimants’ solicitor to file and serve a witness statement explaining why the bill in this case contained misdescriptions of the work done and why the Claimants’ solicitor had certified the bill as accurate. Thereafter the Claimants’ solicitor was ordered to attend for cross-examination. The solicitor explained that they had instructed a firm of cost draftsmen to prepare the bills, and accepted that she had not checked each item in the bill on a line by line basis, but had relied upon “the expertise of the costs draftsman”. Two of the bills were assessed and the rest agreed with a mean recovery rate of 30% of the costs claimed.
The court then considered whether to apply a reduction for misconduct with reference to CPR 44.11. Senior Costs Judge Gordon-Saker was forthright in his view that the Claimants’ solicitor’s conduct was unreasonable or improper, stating: “Claiming the cost of work where there was no evidence in the file that the work had been done and nothing to allow a reasonable inference that the work had been done is, in my judgment, both unreasonable and improper for the purposes of r.44.11. It permits of no reasonable explanation (so is unreasonable) and has the hallmark of conduct which the consensus of professional opinion would regard as improper.”
As a result of the Claimants’ misconduct the costs otherwise payable were reduced by a further 40% of the assessed or agreed sum, and added to that the court deviated from the usual position that the Claimants would recover their costs of assessment. Instead, the Claimants’ solicitor was ordered to pay 75% of the Defendant’s costs of the assessment proceedings on the indemnity basis.
Likewise in Lyle –v- Bedborough [2022] EWHC 1628 (SCCO). The Master was assessing a Bill of Costs of £169,523.16.3, but there was an absence of attendance notes and a reliance on time records. It transpired on assessment that the timings were taken from the time recording systems. The court held that in the absence of attendance and file notes then inevitably any doubt goes towards the paying party on the standard basis.
As can be seen by the recent case law the failure to accurately record time can also impact the recoverability of the receiving party’s assessment costs. It is not just the Bill which will ultimately be reduced on assessment.
Finally, this year the issue of time recording has made headlines after a newly qualified Solicitor who falsely recorded time across a number of files was struck off by the Solicitors Disciplinary Tribunal. The Solicitor was found to have created time records which were “inaccurate, misleading and in excess of the time actually spent”.
It matters not whether a claim is to be the subject of fixed costs. There are many instances where a claim starts out as a fixed costs claim, but then ultimately due to exceptions in the rules, costs are assessed on the standard basis. In these instances where there has been a failure to accurately record the time, this could lead to Fee Earners becoming unstuck. Similarly, if the matter proceeds to a Solicitor Act assessment then a well recorded file will be essential.
As evidenced by the recent case law, the importance of accurate time recording should not be understated and should be at the forefront of all Fee Earners minds. It is imperative that clear and contemporaneous file notes are prepared which accurately describe how the time was spent on each task and on each date. Further, given the implications of Ikin –v- Shawbrook Bank, Fee Earners should be extremely cautious when claiming estimated time.