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Guideline Hourly Rates: Impact of recent case law

02 February 2021
Chris Stephenson looks at the latest case law on the issue of guideline hourly rates to consider their likely impact in the light of the Civil Justice Council's review.

The guideline hourly rates were last reviewed in 2010, remaining in place since then, despite a continual rumbling of discontent. Even a Civil Justice Council review in 2014 produced insufficient evidence at that time to enable the Master of the Rolls to set new rates. 

The mood towards reform started to change in the 2019 case of Ohpen Operations UK Ltd v Invesco Fund Managers Ltd [2019] EWHC 2504 (TCC) ("Ohpen") when Mrs Justice O'Farrell said:

"It is unsatisfactory that the guideline rates 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".

O'Farrell J's position was clear in Ohpen however, that the decision was non-binding, and Master Rowley in the SCCO decision of Shulman v Kolomoisky & Anor [2020] EWHC B29 (Costs) advocated care in reading too much into O' Farrell J's comments when he said:

"It seems to me that caution has to be applied to deriving too many pointers from the Ohpen decision given that Mrs Justice O’Farrell was conducting a summary assessment of costs. There are many ways in which judges carry out a summary assessment and I consider that I should be slow to draw any conclusions about the hourly rate she considered to be appropriate based upon the fact that she did not expressly alter the rates claimed". 

Ohpen was followed in the September 2020 decision in PLK & Ors (Court of Protection: Costs) EWHC B28 where Master Whalan stated:

“In 2020 the GHR cannot be applied reasonably or equitably without some form of monetary uplift that recognises the erosive effect of inflation and, no doubt, other commercial pressures since the last formal review in 2010”

On the other hand, however it must be remembered that PLK was a first instance non-binding decision that relates to solicitor/client bills where there were only submissions from the receiving party and no independent evidence. Indeed Senior Costs Judge Master Gordon-Saker, whilst speaking at the Association of Costs Lawyers annual conference in November was adamant that Master Whalan’s judgment was intended to apply only to Court of Protection matters, although he was resigned to receiving parties in other civil matters using PLK to advance an agenda that there should be at least a 20% uplift on the 2010 guideline rates. 

The latest decision addressing the issue of rates came in December in Cohen v Fine [2020] EWHC 3278 (Ch) Costs, which was an appeal on a summarily assessed costs claim. 

As well as addressing the proper approach to the summary assessment of costs, consideration was also given to the guideline hourly rates. The receiving party had originally sought to recover costs of £48,846 however the district judge had summarily assessed their costs at £27,000. 

The receiving party appealed and invited the appellate court to set aside the district judge's summary assessment. Judge Hodges QC, allowed the appeal, summarily assessing the costs at £35,703. 

When coming to that decision, he referred to his experience of sitting in the Business & Property Courts, both in the North-West and at the Rolls Building. He considered the present guideline hourly rates to be at a level considerably lower than those charged by solicitors. He further stated:

"In my judgment, pending the outcome of the present review, the Guideline Hourly Rates should be the subject of, at least, an increase that takes due account of inflation. Using the Bank of England Inflation Calculator, it seems to me that an increase in the (Band One) figures for Manchester and Liverpool broadly in the order of 35% would be justified as a starting point (appropriately rounded-up for ease of calculation)’.

Whilst both of these recent cases could be seen as an indication of the direction of travel on the question of guideline hourly rates, it should be remembered that a review of the rates by the Civil Justice Council was launched in early 2020 and the recently published report recommends only "modest" increases to the GHR, albeit that there is a consultation until the end of March on the proposals.

As Master Gordon-Saker acknowledged, we are likely to see in the meantime claims for increased GHR which will need to be carefully monitored on a case by case basis. DWF costs are able to assist with the review and negotiation of these matters.

Read more on the GHR review in Nicola Critchley's article this month CJC guideline hourly rate review: "modest" increases recommended | DWF

For further information please contact Chris Stephenson or Nicola Critchley.

Further Reading