APIL, ACL and The Law Society Weigh in on Suggested Guideline Hourly Rates for Solicitors

We laid out the response of the Forum of Complex Injuries Solicitors (FOCIS) to the Civil Justice Council (CJC) Working Group’s consultation on solicitors’ guideline hourly rates (GHR), in edition 325 of BC Disease News (here).

In summation, it was the Forum’s broadly understood position that by only taking into account the rates allowed, without first considering the distribution of rates claimed (on average 15% higher than proposed GHR), policy makers were not looking at the ‘full spread’ of information and could not produce broad approximations of actual rates in the market, as intended. On the contrary, that the methodology used has generated GHR that are ‘out of step’ with market inflation, leaving the ‘average successful litigant’ with a ‘cost shortfall for every hour worked’.

Several other legal bodies have also posted responses to the consultation, with equal measure of criticism, which we will cover sequentially.

The Association of Costs Lawyers (ACL), for instance, considered the failure to capture data already lodged with the courts in costs budgets to be a ‘wasted opportunity’. The harvesting and processing of costs budgeted information (potentially from thousands of cases) was branded an ‘obvious solution’, not only because it was ‘not too onerous of a task’, but also because it would provide the basis of a ‘more wide-ranging evidence-based review without requiring significant extra resources’, which would give a ‘more accurate approximation of the actual rates in the wider market which are being charged to litigants’.[i]

Elsewhere, the Association of Personal Injury Lawyers (APIL) commented that recovered rates were an inaccurate yardstick for calculating new GHR, as they would have been assessed in line with previous guidance that is now ‘10-years out of date’. Despite the fact that the Association was ‘encouraged’ by the CJC’s acceptance of the services producer price inflation (SPPI) index for legal services as a reference point for annually updating GHR, it was ‘simultaneously disappointed’ by the omission of any ‘firm commitment’ to do this to assure that the level of cost inflation experienced by the sector is appreciated. In the specific context of personal injury law, it was argued that claimants often pay much lower hourly rates than for other types of work at the same firm, i.e. hourly rates charged for injury work are ‘artificially deflated’. It went on to say that there is a ‘tendency’ to minimise the costs shortfall that clients face because their damages must meet their long-term personal injury-related losses and necessities.

Meanwhile, the Birmingham Law Society (BLS) has questioned whether GHR are now ‘otiose’, to such a degree that it is time to ditch the guideline hourly rates (GHR) entirely in favour of a market solution, as the only way of mirroring what lawyers are charging.[ii] It lashed out at defendants’ insurers, their legal advisers and costs draftsmen for reducing the amount of recoverable costs for successful claimants in personal injury litigation, before going on to label GHR as a ‘costs constraint’, as opposed to an indicator of real ‘commercial rates’.

One of the only outspoken supporters (i.e. featured on legal news outlets, such as the Law Society Gazette, or Litigation/Legal Futures) of the CJC’s consultation so far is the Law Society of England and Wales. Expressing ‘broad support’ of the recommended GHR and its underpinning methodology, the independent professional body warned that any resulting changes should be seen only as an interim measure to be ‘constantly kept under review’, rather than as a ‘conclusive exercise’. It appealed for firm commitment to review rates every 3-years, whilst also submitting that a more ‘comprehensive review’ (of other factors) in the future could further ‘assist solicitors in justifying their rates and enhance the integrity of the profession’.

Whether or not the Council proceeds with GHR reform in its current state should become clearer in the months that follow.

 

[i] Neil Rose, ‘Proposed guideline hourly rates too low, lawyers argue’ (6 April 2021 Litigation Futures) <https://www.litigationfutures.com/news/proposed-guideline-hourly-rates-too-low-lawyers-argue> accessed 16 April 2021.

[ii] Solicitors ask: Is it time to ditch the guideline hourly rates altogether?’ (9 April 2021 Litigation Futures) <https://www.litigationfutures.com/news/solicitors-ask-is-it-time-to-ditch-the-guideline-hourly-rates-altogether> accessed 16 April 2021.