Legal costs drafting — the preparation of a formal bill of costs for assessment by the court — is one of the most specialised, technical, and high-value disciplines in UK legal practice. Done well, it recovers the maximum proportion of inter partes costs from the paying party. Done poorly, it leaves significant sums on the table and can result in adverse costs orders for defective or misleading bills.

This guide is aimed at litigation solicitors who need to understand the costs process, as well as those considering whether to draft in-house or instruct a specialist costs draftsman.

The Costs Landscape: An Overview

When Costs Are Recoverable

In civil litigation in England and Wales, the general rule under CPR 44.2 is that costs follow the event — the losing party pays the winning party’s costs. But this is a starting point, not a guarantee. Courts have broad discretion and will consider:

The conduct of all parties (CPR 44.2(5))
Whether a party succeeded on part only of its case (CPR 44.2(6)(b))
Any admissible offer to settle and whether it was beaten (CPR 36)
Any unreasonable behaviour in the proceedings

A successful claimant who rejected a Part 36 offer that exceeded the eventual judgment sum may face an adverse costs order for the period after the offer expired. Understanding the interaction between costs and Part 36 is essential at every stage of litigation strategy.

Fixed Recoverable Costs

From October 2023, the Fixed Recoverable Costs (FRC) regime was significantly expanded. Under the expanded regime, most civil cases with a value between £25,000 and £100,000 on the fast track and the new intermediate track will have their recoverable costs fixed at pre-set amounts, regardless of actual costs incurred.

The FRC tables (contained in CPR 45 and Practice Direction 45) set fixed costs for each stage of proceedings: issue, allocation, listing, trial. The amount recoverable depends on the track, the value band, and the stage reached. Firms must understand the FRC regime for cases in scope — budgeting time and charging clients proportionately is essential when the recovery ceiling is fixed.

Cases outside FRC scope — multi-track cases over £100,000, and certain specialist proceedings — remain subject to detailed assessment where every item is subject to scrutiny.

The Two Types of Assessment

Detailed assessment (formerly known as taxation) is the court-supervised process by which the amount of costs is determined when the parties cannot agree. It involves preparing a formal bill of costs, filing it with the court, and attending an assessment hearing.

Summary assessment is a faster process conducted by the trial judge at the end of a hearing, usually for shorter hearings and interlocutory applications. The judge assesses costs summarily, relying on a statement of costs in Form N260, usually at the conclusion of the hearing.

Understanding which process applies — and preparing accordingly — is the starting point for costs recovery.

Proportionality: The Central Test

The New Proportionality Rule

The Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO) and the Jackson reforms introduced a new proportionality test that applies to detailed assessments of costs incurred after 1 April 2013. Under CPR 44.3(2)(a), costs that were reasonably incurred but disproportionate to the value and complexity of the litigation can be reduced.

The critical point is that proportionality can override reasonableness. Costs that were entirely reasonable to incur — necessary, well-documented, properly charged — may still be reduced on assessment if the judge concludes they were disproportionate to the litigation.

The Lownds test (from the pre-Jackson era) no longer applies to post-April 2013 costs. The new test (articulated in West v Stockport NHS Foundation Trust [2019] EWCA Civ 1220) requires the court to assess whether the costs are proportionate having regard to:

The sums in issue
The value of any non-monetary relief
The complexity of the litigation
Any additional work generated by the paying party’s conduct
Any wider factors (public importance, etc.)

A costs draftsman who ignores proportionality when preparing the bill risks preparing a technically accurate bill that is significantly cut on assessment.

Costs Budgeting

In multi-track cases (cases worth over £10,000 that are not subject to FRC) the parties must exchange and agree — or have adjudicated — costs budgets in Form H (Precedent H) early in proceedings. The approved budget limits what can be recovered later on detailed assessment, except where there is good reason to depart from it.

Costs management hearings under CPR 3 are now routine in multi-track cases. Firms that do not take costs budgeting seriously — who file Precedent H late, in inadequate form, or who routinely exceed the approved budget without variation — will find their recovery capped.

Preparing the Bill of Costs

The Format Requirements

A bill of costs for detailed assessment must comply with Practice Direction 47. Since October 2019, electronically filed bills of costs (Form Precedent S or equivalent approved software format) are required in London and are increasingly used elsewhere. The electronic bill must be in a format that allows the parties and the court to review costs at a granular level — individual time entries, by task, by fee earner.

The bill must include:

A narrative section identifying the proceedings and the parties
Details of the receiving solicitor’s hourly rates for each fee earner
Time entries grouped by phase (as per the CCMCC phases: pre-action, issue/statements, CMC, disclosure, witness statements, experts, PTR/trial preparation, trial, ADR, negotiation)
Disbursements listed chronologically with supporting invoices
A summary of totals

The electronic bill links each time entry to the underlying email, document, or file note, allowing the paying party and the costs officer to verify entries against the file. This is a significant change from the narrative bill of previous years and places a premium on contemporaneous, accurate time recording.

Gathering the Material

The starting point for bill preparation is the matter file. The costs draftsman (or fee earner) must have access to:

Complete time recording printouts for the matter
All correspondence (email and paper)
All documents and drafts with metadata
Attendance notes and file notes
All disbursement invoices and receipts
Counsel’s fee notes
The costs budget (if applicable)

The quality of the bill depends entirely on the quality of the underlying records. A matter with incomplete time recording, poorly narrated entries, and missing disbursement invoices will produce a bill that is both difficult to prepare and vulnerable on assessment. A matter with contemporaneous, well-narrated time records, complete disbursement documentation, and clear correspondence files will produce a recoverable, defensible bill.

Hourly Rates

The recoverable hourly rate is determined by the rates set out in the Guideline Hourly Rates (GHR) published periodically by the Senior Courts Costs Office. The current rates (updated in 2021 for London and guidance given for other areas) are:

London 1 (Central London EC/WC/W1): £512 (Grade A solicitor with 8+ years’ experience) down to £197 (Grade D — trainee or equivalent)
London 2: lower rates for City fringes
National 1 (major provincial cities): Grade A £296, Grade D £133
National 2: Grade A £261, Grade D £118

These are guideline, not absolute, figures. Courts frequently award above-guideline rates in complex commercial, IP, or niche specialist cases. Below-guideline awards are common in straightforward cases where the client could have instructed cheaper solicitors.

Include a section in the bill setting out why the claimed rates are appropriate, referencing the complexity of the matter, the expertise required, and any specialist experience of fee earners.

Profit Costs — The Time Entries

Each time entry must include:

The date
The fee earner and their grade
A description of the work (the “narrative”)
The time taken (in units of 6 minutes)
The hourly rate applied

Narratives must describe the actual work done, not merely its category. “Preparation of letter” is inadequate. “Drafting letter to defendant’s solicitors responding to request for further information on quantum, including analysis of applicable case law on contributory negligence” is a recoverable narrative.

Entries that are vague, duplicative, or that cover work properly attributable to the paying party will be challenged. Entries relating to costs that cannot be recovered from the opponent (client relations, billing, file administration) should be identified and excluded or claimed only from the client.

Counsel and Expert Fees

Counsel’s fees are disbursements and must be supported by fee notes. Mark-ups on counsel’s fees are not recoverable. Where counsel’s fees are claimed above brief fee expectations, include a note explaining the complexity that justified the fee.

Expert fees are recoverable if the expert was reasonably instructed and the fee was reasonable. Courts apply a market rate test: would a reasonable solicitor in the position have instructed this expert at this fee? Single joint expert fees are generally recovered in full where jointly agreed; unilateral expert fees receive more scrutiny.

The Detailed Assessment Process

Service and Filing

After receiving a costs order following judgment or settlement, the receiving party has three months to file a notice of commencement of detailed assessment proceedings (Form N252) and the bill of costs with the CCMCC (County Court Money Claims Centre) or the relevant court. Points of dispute must be served by the paying party within 21 days of service of the bill.

Points of Dispute and Replies

Points of dispute identify the entries the paying party challenges and the grounds. They must be specific (CPR 47 PD 47.12): a global challenge to hourly rates or a failure to identify specific disputed items risks being struck out.

The receiving party then files replies to points of dispute. Replies must engage substantively with the points raised. A reply that simply states “the claimed rate/time is appropriate” without reasoning will not assist on assessment.

The Assessment Hearing

Detailed assessment hearings in the CCMCC are conducted by Costs Officers (for bills under approximately £75,000) or Costs Judges (Senior Costs Office) for larger bills. Parties present their arguments on disputed items, and the officer or judge makes findings.

Preparation matters. Know which items are worth fighting for and which should be conceded. Costs of the assessment itself are in the discretion of the court — a party who wins on balance but is unreasonably obdurate on minor points may face an adverse costs order for the assessment.

Costs Draftsmen and In-House Drafting

When to Instruct a Costs Draftsman

For complex multi-track litigation with significant costs, specialist costs draftsmen or costs barristers provide genuine value. They understand the current assessment climate, know which rates and items are routinely challenged in which courts, and can prepare a bill that maximises recovery while withstanding scrutiny.

For smaller fast-track matters, or where the FRC regime applies, in-house preparation or instructing costs solicitors on a fixed-fee basis may be more cost-effective.

The Association of Costs Lawyers

The Association of Costs Lawyers (ACL) regulates costs lawyers in England and Wales. Instructing an ACL-regulated costs lawyer provides professional indemnity protection and a quality standard for costs work. Look for Fellows of the ACL (FCostL) for the highest-level qualification.

How Obiter Supports Costs Drafting

Accurate costs drafting depends on complete, contemporaneous, well-narrated time records — the foundation of every recoverable bill. Obiter automatically generates time entries from fee earner activity, including emails, document drafts, and calls, ensuring that every recoverable action is captured with an appropriate narrative. When a matter reaches the costs drafting stage, the underlying records are complete and defensible from day one, reducing preparation time and increasing the bill’s resilience on assessment.

Summary

Legal costs drafting is a technical discipline that rewards preparation, accuracy, and a thorough understanding of the assessment process. The firms that recover the highest proportion of their inter partes costs are those whose underlying time records are complete, whose narratives are detailed, and whose bills are prepared by practitioners who understand how courts approach proportionality. Investment in costs management from the start of a matter pays dividends at the end.

Legal Costs Drafting: A Practical Guide for UK Solicitors