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Gray Rule
October 2014 | VOLUME 15, NUMBER 4
Gray Rule
Legal Project Management and Pricing—Understanding the UK Jackson Reform
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»Law Firm Business Professionals: New Roles, New Titles, New Respect?
»Legal Project Management and Pricing—Understanding the UK Jackson Reform
»An Introduction to Lean Six Sigma As Applied to the Law Firms
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Legal Project Management and Pricing—Understanding the UK Jackson ReformVincent Cordo, Global Director of Client Value, Reed Smith, Pittsburgh, PA
The objective of the Jackson Reform is cost management of litigation cases. This article will highlight rules that have a significant impact on how civil litigation is conducted in the UK. They provide lessons and thoughts for U.S. litigators as well. Those who are most successful are focusing on Legal Project (i.e., matter) Management and leveraging nonattorney LPM support to provide key account management.

With the industry focus on client value and alternative fees, matter management is essential to achieving service level commitments and client/law firm key performance metrics. This is where Legal Project Management (LPM) comes in.

Some in the American legal industry may have heard of the Jackson Reform by now. For those who have not, the objective of the Jackson Reform is cost management of litigation cases. These rules have significant impact on how civil litigation is conducted in the UK. LPM and Alternative pricing are being adopted globally, and it is important to tie together the good process and procedures the industry is putting in place to ensure success and to avoid reinventing the practice.

In November 2008, then Master of the Rolls, Sir Anthony Clarke, appointed Lord Justice Jackson to lead a fundamental review of the rules and principles governing the costs of civil litigation and to make recommendations in order to promote access to justice at proportionate cost. Lord Justice Jackson published his final report of his fundamental review of the rules and principles governing the costs of civil litigation in January 2010, and the report's recommendations went into effect in England and Wales on April 1, 2013. Lord Justice Jackson prepared a paper for the Civil Justice Council event in March 2014. The Jackson report identified the following as the "essential" elements of cost management:

(1) The parties prepare and exchange litigation budgets or (as the case proceeds) amended budgets.

(2) The court states the extent to which those budgets are approved.

(3) The court manages the case so that it proceeds within the approved budgets.

(4) At the end of the litigation, the recoverable costs of the winning party are assessed in accordance with the approved budgets.

PHASE specific time recording is the ability to record time by reference to a specific phase of the matter. There are two sets of codes available—Court-related matters ("Jackson") and Arbitration ("Arbitration").

This provides a management tool to measure the "spend" of a component phase of the budget, a system which assists with monitoring and controlling costs—staying 'on target' with budget.

Cost management automatically applies to all multitrack cases commenced on or after April 1, 2013 (with certain exceptions, such as Commercial Court and cases where claims exceed £2 million). The court has power to order cost management in any case. The current exemptions are under review and a wider application of the regime seems likely. So industry experts really need to be ready to address this.

Certain matters do not follow the Jackson or Arbitration phases: judicial review, Companies Act applications, anti-suit injunctions, and other potential opt-outs might include non-contentious matters: transactional, regulatory, and inquiries. However, it is good practice to formulate tailored "custom" phased codes on these matters for client care and law firm profitability purposes.

No system is perfect and it will only be as good as the information recorded in it. A more thoughtful approach to time recording is required. Separate time entry is required for different phases of work, no block entries involving multiple phases of work. This actually gives pricing teams more valuable knowledge management (timekeeper phase/budget data) to be more precise with future pricing.

Leveraging LPM and time recording tools can really help here. Prompt release of time will improve budget monitoring and billing. Viewabill is a cloud-based application that allows both clients and matter managers to log in and see "real time" timekeeper and legal spend statistics. Viewabill is linked to our time and billing system so that you can see accurate data daily. So far we have approximately 20 clients using Viewabill managing over 800 matters and we have started to use the tool internally to monitor matters with a portfolio of fixed fees. Viewabill is also available on smartphones—matter management on the go.

Increasing efficiency means improving visibility and accountability. Using Viewabill, clients are able to view numerous billing metrics in real time and prior to final invoicing. At any time, members of the legal department are able to log into Viewabill and view accruals, billable hours, and even WIP time entries. Real-time access to pre-bill information ensures the legal department and law firm are continuously aligned on workflow and priorities. Leveraging a tool like Viewabill can assist with this oversight (See for more information).

The summary here does not have any legal status. It will be necessary to consult the legislation for details of the new provisions. Cost management will not apply automatically and it does not seem likely that it will be ordered, though it is possible that the Competition Commission (CC) could order it.

Cost Management

The cost management provisions in CPR 3.12, et seq, apply automatically to multitrack cases, with certain exceptions, unless otherwise ordered. They do not apply to judicial review, although the court can order cost management in any case. Under Rule 9.2, the CC may give directions on the process it will follow to enable it to make orders in relation to costs using its powers under the Schedule 2 para 32 Civil Aviation Act 2012.

It is hypothetically possible that the CC could order cost management.

CC Rules

The CC's power under paragraph 32 refers to costs "reasonably incurred," with no mention of proportionality. The overriding objective under the Rules is also different from that of the CPR; it refers to enabling the CC "to exercise its functions fairly, efficiently, and in accordance with the time limits prescribed by the Act," rather than the CPR's "enabling the court to deal with cases justly and at proportionate cost." However, the provision on circumstances in Rule 12.3 that must be considered, which to a degree reflects the court's discretion as to costs under the CPR, does include "the proportionality of the costs claimed."

Paragraph 83 of the CC's Guide to the Rules states that "any person seeking an award of costs in its favour should file a statement of costs with the CC at the same time as also disclosing it to any person who may become liable to pay those costs," to give them the opportunity to comment on the costs claimed to the CC. Each statement of costs should include detailed information about the costs (including categories such as solicitors' costs, Counsel fees, experts' costs, and any other disbursements) reasonably incurred by the party to the appeal in connection with the appeal.

The CC will normally expect the amounts for each category of costs to be broken down by reference to the number of hours claimed, hourly rate, position of the fee earner, and the nature of the work performed. This does not suggest that budgeting will be required at the commencement of, or during, an appeal, and would seem to be more in keeping with the pre-Jackson approach to claiming costs after the event.

It is also the case that, given the tight deadlines involved, the CC is not likely to be too concerned with the potential for costs to spiral out of control (and the focus in the Rules and Guide is on expedition rather than cost, as shown by the CC overriding objective). Paragraph 64 of the Guide states that "All appeals will be subject to active appeal management by the CC," and that the CC "does not require parties to the appeal to be legally represented at any appeal management conferences and hearings."

Both law firms and corporations are seeing the rise of the pricing and legal project manager roles. This suggests that cost budgeting will continue to be a hot issue in management conferences.

At Reed Smith, we realize that the selection of outside counsel involves a holistic evaluation of experience, quality, value, and cost-effectiveness. As such, we strive to find innovative ways to provide value and contain legal costs for our clients, while focusing on what matters to us the most—fostering client relationships and producing a high-quality legal product.

Our Client Value team, comprised of several dedicated and talented professionals with diverse legal project management experience, strategic pricing backgrounds, and strong credentials—including MBAs, JDs, CFO experience, PMP, and Six Sigma certifications—grew out of the firm's commitment to these principals. The Client Value team serves as a resource to the firm's legal teams and clients throughout the duration of each matter, and offers a number of value-add services aimed at increasing cost-effectiveness and efficiency, helping lawyers to adhere to these reforms and stay in compliance. Compliance is the key to success with the Jackson Reform. If you are a party to litigation, good project management and effective pricing will allow you to be as precise as possible with your assessment.

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