What is a Bill of Costs? Purpose, Contents and How It Works

A Bill of Costs is a formal document setting out the legal costs a party seeks to recover following court proceedings. It provides a detailed breakdown of the work undertaken by solicitors and other legal professionals, together with disbursements such as court fees, counsel’s fees and expert witness fees. Where a court has ordered one party to pay another party’s legal costs, a Bill of Costs is often required to establish exactly how much is being claimed.

However, the amount claimed in the bill is not necessarily the amount the other party must pay. The costs may be negotiated, challenged or assessed by the court.

In this guide, ARC Costs explains what a Bill of Costs is, what it should contain, when one is required and how it is used during detailed assessment proceedings.

What is the purpose of a Bill of Costs?

The main purpose of a Bill of Costs is to provide a clear, itemised account of the legal costs incurred during a case so that the amount recoverable can be determined. In civil litigation, the successful party will often obtain a costs order requiring the unsuccessful party to pay some or all of their costs.

The party entitled to recover costs is known as the receiving party, while the party liable to pay is the paying party. A costs order establishes the entitlement to recover costs, but it does not always specify the final amount payable.

For example, a solicitor may have incurred £120,000 in legal costs pursuing a claim. If the court orders the defendant to pay the claimant’s costs, the claimant may prepare a Bill of Costs seeking recovery of that expenditure. The defendant can then examine the bill and challenge any costs considered excessive, unreasonable or disproportionate. The Bill therefore serves as the starting point for determining the amount payable.

For further information, see our guide to detailed assessment proceedings.

What does a Bill of Costs include?

A Bill of Costs should provide sufficient information for the paying party and, if necessary, the court to understand and assess the costs claimed.

The precise format depends on the nature of the proceedings and the applicable rules, but the main elements generally include the following.

Solicitors’ fees and work undertaken

A substantial part of the Bill will usually relate to the work undertaken by solicitors and other fee earners.

This may include reviewing documents, advising the client, preparing statements, corresponding with other parties, dealing with disclosure, attending conferences and preparing for hearings.

The Bill should identify the relevant work, the time spent and the applicable hourly rates.

The level of detail is important because the paying party must be able to consider whether the work was reasonably undertaken and whether the time claimed is appropriate.

Fee earners and hourly rates

Different fee earners may work on the same case, including partners, senior solicitors, junior solicitors, trainee solicitors and paralegals.

Their hourly rates may vary according to experience, location and the nature of the work.

A Bill of Costs should identify the relevant fee earners and the rates claimed.

These rates can be challenged during assessment. The court may consider the Guideline Hourly Rates, alongside the complexity of the case and other relevant circumstances.

Counsel’s fees and disbursements

A Bill may also include expenses incurred during the proceedings, commonly referred to as disbursements. These can include counsel’s fees, court fees, medical reports, expert witness fees and other necessary expenditure. Disbursements must be properly recorded and may need to be supported by invoices or other documentation.

The fact that an expense was incurred does not automatically mean it is recoverable from the opposing party.

A narrative of the proceedings

A well-prepared Bill should explain the background and progression of the litigation. The narrative may address the nature of the dispute, procedural developments, complexity of the case, significant applications and reasons why particular work was necessary.

This is particularly important in complex litigation involving multiple experts, substantial disclosure or lengthy proceedings.

For more on the preparation of effective Bills, see our article What Makes a Good Bill of Costs?.

What is an electronic Bill of Costs?

An electronic Bill of Costs, often referred to as an electronic bill or Precedent S, is a spreadsheet-based format designed to make legal costs easier to examine and assess. Under Practice Direction 47, electronic bills are generally required for costs incurred after 6 April 2018 in relevant Part 7 multi track claims, subject to specified exceptions.

Unlike a traditional paper-style Bill, an electronic bill allows costs to be organised and analysed using information such as litigation phases, tasks, activities, fee earners and time recorded.

This makes it easier to identify where expenditure has arisen and compare the amounts claimed with any approved costs budget.

Electronic billing can be particularly useful where substantial costs have been incurred over several years.

ARC Costs explains the requirements in more detail in Precedent S and Preparing an Electronic Bill of Costs.

How does a Bill of Costs relate to costs budgeting?

Where a case has been subject to costs management, the Bill of Costs must be considered alongside the approved or agreed costs budget. A costs management order may record the court’s approval of estimated future expenditure across different stages of litigation.

During detailed assessment, the court must have regard to the last approved or agreed budget and will not depart from the budgeted costs without good reason, in accordance with CPR 3.18. However, an approved budget does not automatically establish that every item claimed in the Bill is recoverable.

The distinction between incurred and budgeted costs remains important, and individual items can still require examination.

In higher-value cases, specialist high-value Bill of Costs preparation can help ensure the Bill accurately reflects the litigation and addresses potential budgeting issues.

When is a Bill of Costs required?

A Bill of Costs is commonly prepared where court orders provide for costs to be assessed if the parties cannot agree on the amount payable. This frequently arises following the conclusion of civil proceedings, including personal injury, clinical negligence and commercial litigation.

However, not every costs order requires a detailed Bill. Some costs are summarily assessed by the court, meaning the amount payable is determined without a separate detailed assessment process. Other cases may be subject to fixed recoverable costs.

A Bill of Costs is principally required where costs are to be determined through detailed assessment.

What happens after a Bill of Costs is prepared?

Once the Bill has been prepared, the receiving party will ordinarily serve it on the paying party with a Notice of Commencement. This formally begins detailed assessment proceedings under CPR Part 47.

The paying party normally has 21 days from service of the Notice of Commencement to serve Points of Dispute. Points of Dispute set out the objections to the costs claimed in the bill. These may concern excessive hourly rates, unnecessary work, duplication, disproportionate expenditure or disputed disbursements.

The receiving party may then serve Points of Reply responding to those objections. Costs negotiations can take place throughout the process, and many disputes settle without requiring a court hearing.

If the paying party fails to serve Points of Dispute within the applicable deadline, the receiving party may be entitled to request a default costs certificate.

Our detailed assessment service covers the process from preparing and serving the Bill through to negotiations and assessment.

What happens if the Bill of Costs is disputed?

If the parties cannot agree on the amount payable, the outstanding issues may need to be determined by the court. The procedure depends partly on the value of the Bill.

Where costs claimed do not exceed £75,000, the matter will generally proceed through provisional assessment, subject to the applicable rules and any contrary court direction. Provisional assessment usually takes place on the papers without the parties attending court.

Where the Bill exceeds the relevant threshold, or the court otherwise directs, an attended detailed assessment hearing may be required. At the hearing, a costs judge or other authorised judicial officer considers the disputed costs and determines the amounts properly recoverable.

The court may reduce hourly rates, disallow unnecessary work or make adjustments to particular items. Following assessment, the relevant costs certificates record the outcome and the amount payable.

Can the paying party challenge everything in the Bill?

A paying party is entitled to challenge the amount claimed, but objections should be based on identifiable issues rather than a general assertion that the Bill is too high.

The court will consider the applicable basis of assessment, the nature of the proceedings, the work undertaken and relevant circumstances.

For example, substantial time spent reviewing medical evidence might be justified in a complex clinical negligence case but less readily justified in a straightforward dispute.

Equally, using a senior solicitor for routine administrative work may give rise to a challenge. The objective is not simply to reduce the Bill, but to establish the amount properly recoverable under the costs order.

How ARC Costs can help with Bills of Costs

ARC Costs prepares and negotiates Bills of Costs for law firms across England and Wales.

We assist receiving parties with preparing accurate, detailed Bills that reflect the work undertaken and are capable of withstanding scrutiny during negotiations and assessment.

We also act for paying parties, reviewing Bills of Costs, identifying potentially excessive claims and preparing Points of Dispute.

Our experienced costs lawyers and costs draftsmen can assist throughout the process, including costs budgeting, electronic billing, negotiations, provisional assessment and representation at a detailed assessment hearing.

Whether you need a Bill of Costs prepared or have received one that you wish to challenge, specialist costs advice can help establish the amount properly recoverable and resolve disputes efficiently.

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