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Howard Dean

Howard Dean

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Guideline Hourly Rate review: An inflationary missed opportunity?

Client Alerts11/01/2021

The CJC working party on Guideline Hourly Rates (“GHR”) have prepared a draft report which is open for public consultation between 8 January and 31 March 2021.

Background

Since the introduction of the CPR, Judges at all levels were required to assess costs summarily at the end of a trial on the fast track or at the conclusion of any other hearing which has lasted not more than one day. This requirement led to an immediate request from Judges for some guidance as to how to go about summary assessment and the hourly rates to apply.

This led to the formulation and publication of a comprehensive guide in 2002, the rates being based upon local rates derived from local Law Society expense of time surveys. The rates were increased for inflation up to the last published guide in 2010.

The guideline figures are not intended to replace figures used by those with accurate local knowledge. They are intended to provide a starting point for those faced with summary assessment who do not have that local knowledge.

The report

The Committee have reported that a set of rates on actual data remains impossible as it was when last looked at by Lord Justice Dyson in July 2014. However despite this they have gone on to propose revised rates and emphasis that these are no more than guideline rates and a starting point. Furthermore the overriding need to review the end figure for proportionality remains, regardless of the rates applied.

What are the new rates?

A comparison of the 2010 and proposed 2021 GHR is set out in the table below:

 

2010

2021 (including % rise)

Location

Grade A

Grade B

Grade C

Grade D

Grade A

Grade B

Grade C

Grade D

London 1

£409

£296

£226

£138

£512

(25.2%)

£348

(17.6%)

£270

(19.5%)

£186

(34.8%)

London 2

£317

£242

£196

£126

£373

(17.8%)

£289

(19.5%)

£244

(25%)

£139

(10.4%)

London 3

        £248

       £200

£165

£121

£282

(13.7%)

£232

(15.8%)

£185

(11.9%)

£129

(7%)

National 1

£217

£192

£161

£118

£261

(20.2%)

£218

(13.5%)

£178

(10.7%)

£126

(6.8%)

National 2

£201

£177

£146

£111

£255

(26.78%)

£218

(23.2%)

£177

(21.3%)

£126

(13.5%)

Subject to the outcome of the consultation, it is recommended that these rates apply from 1 January 2021.

The data relied upon

The proposed hourly rates were recommend following a review of data for the period 1st April 2019 to 27th November 2020 covering:

  1. Judicial decision: the hourly rates allowed by Regional Costs Judges, SCCO Costs Judges and authorised court officers in detailed assessments;
  2. Settlement data: the hourly rates claimed and allowed upon assessment , or claimed and agreed between the parties provided by solicitors;

(Less than 1% of cases proceed to detailed assessment, and those that settle do so on a lump sum basis so that the applicable hourly rate is never reduced to a figure. The fact that on average we secure a reduction of almost 30% across our portfolio of cases demonstrates that the hourly rates claimed are often inflated so as to build in a negotiation cushion from which to work)

Consultation

Before finalising the report the CJC has issued a consultation seeking comments on the following:

  1. The methodology used by the working group
  2. The recommended changes to areas London 1 and London 2.
  3. The recommended GHRs set out in paragraph 4.18 of the report.
  4. Whether the rate of £186 for London 1 Grade D is too high; if so, at what rate it should be set and why?
  5. The recommended changes to the geographical areas in section 5 of the report and the recommendation to have two national bands?
  6. Whether the working group should recommend that the Civil Procedure Rule Committee be requested to consider amending the summary assessment form N260 and the information provided on the detailed assessment bill - the amendment would be to require the signatory to specify the location of the fee earners carrying out the work. (See paragraph 7.4 of the report.)
  7. The recommended revisions to the text of the Guide in Appendix J.
  8. Any other aspects.

Responses to the consultation should be sent no later than 31 March 2021 via the online form.

Preliminary comments

Prior to the review, Keoghs raised significant concerns with the working party as to the data being sought as we considered it risked producing fundamentally flawed recommendations as to hourly rates. Those concerns have not been addressed, largely as a result of the decision not to pursue more meaningful, and current, relevant data.

Furthermore the new GHR and Guide to Summary assessment risks “double counting” of the factors that affect the hourly rate allowed between the parties because the data informing the proposed GHR comes from the hourly rates on multi track cases that have proceeded to provisional and detailed assessment. The hourly rates claimed and allowed in these cases take into account the following:

  • amount or value of the claim which could run to many £millions;
  • importance of the matter to the claimant which could be life changing;
  • particular complexity of the matter which could be significant in complex injury claims;
  • skill, effort, specialised knowledge and responsibility involved in dealing with what may be a high value, life changing, complex injury claim;

The proposed GHR already thus “bake in” an amount for these factors.

Paragraph 3.23 of the draft report asks Judges who assess costs to have due regard to the proposed revised paragraph 29 of the Guide to the Summary Assessment which states:

“29. In substantial and complex litigation an hourly rate in excess of the guideline figures may be appropriate for grade A, B and C fee earners where other factors, for example the value of the litigation, the level of the complexity, the urgency or importance of the matter, as well as any international element, would justify a significantly higher rate.”

It follows that duplication may arise where the Court allows a materially higher rate than the proposed guideline rate.

Court of Protection costs

An important side effect of this change will be a rise in Court of Protection cost claims now that they can adopt the GHRs as their starting point too. We could see an immediate 20-25% increase in this head of loss. The need for a forensic approach to the grade of work involved and the local market for the work will be critical.

Response to consultation

Keoghs will be preparing a response to the consultation following discussions with all its clients. Links to the draft report and consultation are below:

https://www.judiciary.uk/related-offices-and-bodies/advisory-bodies/cjc/

https://www.judiciary.uk/related-offices-and-bodies/advisory-bodies/cjc/working-parties/guideline-hourly-rates/

For further information or to discuss the topic above, please contact Howard Dean or Andrew Underwood