Expect New Recommendations on Guideline Hourly Rates by the End of 2020

Minutes, recorded at the March 2020 meeting of the Civil Procedure Rule Committee (CPRC), have revealed that a Civil Justice Council (CJC) sub-committee has been founded to propose adjustments to solicitors’ guideline hourly rates (GHR), before 2021.[i]

With the backing of the Master of the Rolls (Sir Terence Etherton), the sub-committee will report directly to the Deputy Head of Civil Justice and Lead Judge on Costs in the Court of Appeal (Lord Justice Coulson).

Pressure has been mounting to bring about reform since Mrs. Justice O’Farrell branded present guidelines ‘unsatisfactory’, in the case of Ohpen Operations UK Ltd v Invesco Fund Managers Ltd [2019] EWHC 2504 (TCC):

‘It is unsatisfactory that the guidelines are based on rates fixed in 2010 and reviewed in 2014, as they are not helpful in determining reasonable rates in 2019. The guideline rates are significantly lower than the current hourly rates in many London City solicitors, as used by both parties in this case. Further, updated guidelines would be very welcome’ [paragraph 14].

Originally, GHR were ‘locally-derived’, i.e. based on information collated by practising district judges and solicitors, in their respective county courts.

Lord Woolf’s Access to Justice Report (1996), however, led to the inception of the Civil Procedure Rules, in 1999, which instructed judges at all levels to conduct summary assessment of costs at the conclusion of fast track trials and other 1-day hearings (unless there is ‘good reason’ to seek detailed assessment) – see CPR 44.6 and Practice Direction (PD) 44 para 9.2.

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To assist with this new procedural requirement, the Supreme Courts Costs Office (SCCO) published a Guide, in 2002, which laid out GHR on a national scale.[ii]

Under the more refined, current system, GHR are separated by experience (‘Bands’ A-D) and location (‘London’ and ‘National’ Grades)[iii] – see the table below:

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In December 2019, the CPRC costs sub-committee published a report, criticising the investigation that informed Lord Dyson MR’s decision to freeze 2010-established GHR indefinitely (there was no prospect of the evidence[iv]). The July 2014 analysis sought to rigorously establish ‘actual rates to a high degree of accuracy’, sooner than form ‘broad approximations of actual rates in the market’, as was recommended by Sir Rupert Jackson PC, in his Review of Civil Litigation Costs: Final Report (December 2009), after having heralded GHR as a ‘critical element’ in the civil justice system.

As such, it was foreseen that any forthcoming review will ensure ‘the need to produce broad approximations of actual rates, rather than anything more accurate than that’.

According to the CPRC sub-committee’s report, future GHR could be sourced:

  1. ‘Locally’, i.e. following discussions between solicitors and judges in a given circuit.
  2. Among regional costs judges with costs budgeting experience and with further input from law societies and CILEx.

Practitioner contributions would then be reviewed by the CJC, prior to submitting recommendations to Coulson LJ:

‘Such an approach could well ensure that sufficient data was gathered, thus overcoming a problem that hamstrung the costs committee in 2014’.

Earlier this month, Claire Green, Chair of the Association of Costs Lawyers (ACL), echoed calls for updated economic rates that accurately reflect costs incurred:

'... cash flow is particularly vital for many firms at the moment [in light of COVID-19]. A change in the GHR – not gratuitous, but still based on evidence – would be widely welcomed’.[v]

In fact, 60% of ACL members surveyed sense that there is an ‘urgent’ need for review.

Readers can expect to read a follow-up BC Disease News article in May, once plans to put GHR back on a ‘proper footing’ are envisioned in more detail during the CPRC’s April meeting.

 

[i] Neil Rose, ‘MR backs review of guideline hourly rates (17 April 2020 Litigation Futures) <https://www.litigationfutures.com/news/mr-backs-review-of-guideline-hourly-rates> accessed 17 April 2020.

John Hyde, ‘New recommendations coming on guideline hourly rates’ (17 April 2020 Law Gazette) <https://www.lawgazette.co.uk/law/new-recommendations-coming-on-guideline-hourly-rates/5103902.article> accessed 17 April 2020.

[ii] David Foskett, ‘FAQ: Guideline for Hourly Rates Survey (Courts and Tribunals Service) <https://www.judiciary.uk/related-offices-and-bodies/advisory-bodies/cjc/archive/costs-funding-and-third-party-funding/guideline-hourly-rates/ghrsurveyfaq/> accessed 20 April 2020.

[iii] ‘Solicitors' guideline hourly rates’ (19 April 2010 GOV.UK) <https://www.gov.uk/guidance/solicitors-guideline-hourly-rates> accessed 20 April 2020.

[iv] Neil Rose, ‘Dyson freezes guideline hourly rates indefinitely’ (17 April 2015 Litigation Futures) <https://www.litigationfutures.com/news/dyson-freezes-guideline-hourly-rates-indefinitely> accessed 20 April 2020.

[v] ‘ACL backs move to change way guideline hourly rates are set’ (17 April 2020 Association of Costs Lawyers) <https://www.associationofcostslawyers.co.uk/Press-Releases/acl-backs-move-to-change-way-guideline-hourly-rates-are-set/251359> accessed 22 April 2020.