Where Are the Costs? Looking Beyond Fee Earner Time

Where Are the Costs?

When thinking about the costs in a personal injury or clinical negligence claim, it is easy to focus on fee earner time. That is, after all, the most visible element of a Bill of Costs. But solicitor time is only part of the picture.

There may also be substantial expenditure on Counsel, medico-legal experts, medical records, expert agencies, document management, indexing and pagination, as well as the processes required to prepare a case for litigation and, ultimately, trial.

So where do the costs actually arise? And, importantly, are there areas where technology can make a meaningful difference to the time and resources required?

Looking at the costs by phase

One way of exploring this is to look at the allocation of solicitor time within Costs Budgets.

We considered three examples from Costs Budgets prepared by Peak Costs.

The first was a clinical negligence claim valued at more than £10 million. The total solicitor time incurred and anticipated was 1,558.2 hours, of which 97.6 hours were allocated to disclosure. That represents approximately 6.3% of the total hours.

The second was a personal injury claim with a pleaded value of more than £200,000. The total solicitor time was 942.9 hours, with 64.4 hours allocated to disclosure; approximately 6.8%.

The third was a personal injury claim with a pleaded value of £75,000. Here, 749.4 hours were claimed overall, with 80.6 hours allocated to disclosure, representing approximately 10.8%.

These are individual examples rather than a statistically representative sample, so they should not be treated as demonstrating a general relationship between claim value and disclosure costs. They do, however, illustrate something important.

The £75,000 claim had more disclosure hours than the claim valued at more than £200,000.

Claim value, therefore, does not necessarily tell us where the work, or the costs, will arise. The volume and complexity of the documentary evidence, the issues in dispute, the number of parties and witnesses, and the expert evidence required may all have a significant bearing on the amount of work involved.

Disclosure is also a useful example because it sits at the intersection between substantive legal work and the processes needed to support it. Before a solicitor can analyse a large body of records, relevant material first has to be obtained, processed, organised, reviewed and understood.

What do the Points of Dispute tell us?

A Costs Budget tells us what work is anticipated. Points of Dispute can tell us something different: which aspects of that work a Paying Party considers to be unnecessary or excessive.

We looked at three sets of Points of Dispute. Three cases are obviously not enough to draw statistical conclusions, but they do provide some useful examples of the types of work that can attract scrutiny.

The challenges included obtaining and chasing medical records and other evidence, reviewing records and preparing summaries, compiling Lists of Documents, document handling and correspondence, as well as work which the Defendant considered should have been undertaken by a lower-grade fee earner or administrative staff.

In one example, 20 units of communications and attendances with a GP were challenged. The Defendant's position was that chasing records and responses was not sufficiently productive or progressive to justify recovery in full.

In another case, there were also challenges to 4.7 hours spent reviewing school records and preparing a summary, and 3.2 hours spent reviewing the file and drafting correspondence to a GP seeking significant event-related papers.

A third example involved a substantial personal injury claim which had been subject to a Costs Management Order and subsequently settled for £11.8 million. Of 1,372 hours claimed overall, 369.4 hours, approximately 27%, fell within the disclosure phase.

Here, a pagination fee of £348.44 plus VAT was challenged. The Defendant relied upon CPR 3, Practice Direction 3D, paragraph 10, arguing that assembling and copying bundles was not fee earner work and that pagination formed part of mechanical bundling and should therefore not be recovered.

However, a Point of Dispute is an opponent's contention, not an assessment finding. The examples above do not establish that the work was unreasonable or that the reductions proposed will ultimately be made.

What they do show is the nature of the questions that can arise when costs are scrutinised: what was the fee earner actually doing, why was the work necessary, and was it undertaken at the appropriate level?

Those questions become particularly interesting when the work involves large volumes of information and processes which sit around the substantive legal analysis.

Where might technology assist?

The Budget data and Points of Dispute point towards a potential opportunity that goes beyond simply asking whether fewer hours could have been recorded.

Consider the documentary evidence involved in a clinical negligence or substantial personal injury claim. There may be medical records, GP records, hospital records, school records, witness evidence, correspondence, expert material and other documents. Before the legal significance of that material can be considered, someone has to get it into a form in which it can be used.

That may involve obtaining records, checking what has been received, identifying gaps, sorting and organising documents, reviewing material, locating relevant information and preparing summaries.

Some of those tasks are inherently legal and require professional judgment. Others are more process-driven or document-heavy.

It is this distinction that makes technology particularly interesting.

AI-assisted tools may be capable of helping to identify relevant information within large volumes of material, organise documents, produce initial summaries or assist with aspects of document review and management. The potential benefit is not necessarily the replacement of legal work. Rather, it may be a reduction in the time and resources required to get information to the point where a lawyer can apply their professional judgment to it.

That distinction matters.

The potential cost saving is one of the most significant benefits of AI-assisted litigation support. By undertaking tasks more quickly and efficiently, AI can reduce the amount of fee-earner time required. Where that happens, the resulting reduction in time costs should be recognised as a genuine saving.

The use of technology does not of course automatically determine whether a cost is recoverable between the parties. The nature and purpose of the work, why it was required, who undertook it and whether the costs were reasonable and proportionate remain relevant considerations.

The more useful question may therefore be: can the same necessary outcome be achieved more efficiently?

Where does FinLegal fit?

This is where platforms such as FinLegal become relevant to the discussion.

The potential application is not simply about using AI to undertake substantive legal analysis. It is about the processes surrounding that analysis: dealing with documentary material, extracting relevant information and making large volumes of material more manageable.

The most interesting potential for AI may therefore lie not in replacing professional expertise, but in changing the economics of the work that surrounds it.

So, where are the costs?

There is no single answer.

The three Costs Budgets considered here demonstrate that the proportion of solicitor time allocated to disclosure can vary considerably between individual cases, and that claim value alone does not determine where costs will arise.

The Points of Dispute provide another perspective. They demonstrate the types of work that may come under scrutiny: obtaining and chasing evidence, reviewing and summarising records, compiling documents, managing documentary material and undertaking tasks which a Paying Party considers could have been carried out at a lower level.

For firms considering how AI and other technology might be used, this suggests that the starting point should not necessarily be, "How can we reduce our legal costs?"

Instead, it may be more useful to ask:

• What work is actually being undertaken?
• Which parts require professional legal judgment?
• Which parts are repetitive, process-driven or document-heavy?
• How much time is spent getting information into a usable form?
• Could technology assist with those processes without compromising quality or oversight?

Understanding where the time and resources are actually being spent is the first step.

The future conversation around AI in litigation may therefore be less about whether technology can replace lawyers and more about whether it can improve the processes that allow lawyers to do their jobs.

In a costs-conscious litigation environment, that is a question worth asking.

This article is general information, not legal or costs advice. For costs advice, drafting or budgeting, speak to Peak Costs at Peak Costs | Costs Lawyers & Legal Costs Experts.

Written By Samantha Rowles, Senior Costs Consultant, Peak Costs

Samantha is a highly experienced costs lawyer with 19 years' experience in costs litigation. She specialises in complex, high-value personal injury, clinical negligence and commercial disputes, managing matters from inception through to detailed assessment. Samantha has extensive experience acting for both receiving and paying parties, giving her a well-rounded, strategic and commercially focused approach to costs litigation.