Hourly Rates


It is becoming increasingly apparent that the new SCCO Guideline hourly rates are being considered by the courts to be not just a starting point but, in the majority of cases, the end point in costs assessments.

It was previously the case that the 2010 Guideline rates were intended only as a starting point, however they began to be used as a yardstick in all litigation and it became difficult to depart from those rates unless there was obvious justification for an enhancement.

In the two to three years prior to the new rates coming into force in October 2021, however, there were multiple examples of cases in which the court took the view that the 2010 rates were out of date, as a result of which higher rates were allowed. The cases of Harry Cohen v Marion Fine & Ors, and ABS Company Ltd v Pantaenius UK Ltd & Ors to name but two.

We are now hearing of cases in which the hourly rates, however complex the litigation, are being reduced to the new Guideline rates. In the case of Samsung Electronics Co Ltd v LG Display Co Ltd [2022] EWCA Civ 466, it was held that, if a party wants to recover hourly rates outside of the Guideline rates, a “clear and compelling justification must be provided.” That case has now been supported in the judgment by the Court of Appeal in Athena Capital Fund SICAV-FIS SCA & Ors v Secretariat of State for the Holy See (Costs) [2022] EWCA Civ 1061, in which it was stated that “a justification for the much higher rates was needed.”

The judgments in each case can be found here:

Samsung Electronics Co Ltd v LG Display Co Ltd [2022] EWCA Civ 466 

Athena Capital Fund SICAV-FIS SCA & Ors v Secretariat of State for the Holy See (Costs) [2022] EWCA Civ 1061

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Belsner v CAM Legal appeal

Unfortunately the important appeal in Belsner v CAM Legal has once again had to be postponed, this time due to one Counsel contracting Covid-19.

Whilst this case has a very low monetary value, the ramifications for numerous other cases are potentially very significant and the result is awaiting with anticipation by many in the world of legal costs.

The appeal will be heard on the first available date after 1 October (barring any further adjournment, of course).

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Six Factors

In the recent case of Richards & Anor v Speechly Bircham Llp & Anor (Consequential Matters) [2022] EWHC 1512 (Comm), HHJ Russen cited the case of Northrop Grumman v BAE Systems [2014] EWHC 3148 (TCC) in which Ramsey J set out, starting at paragraph 56, the six factors which have a bearing on the reasonableness of a refusal to mediate.  Those factors are:

  1. The nature of the dispute
  2. The merits of the case
  3. The extent to which other settlement methods were attempted
  4. The costs of ADR
  5. Prejudicial delay caused by ADR, and
  6. The prospects of successful ADR

In addition, he stated, at paragraph 73, that “any admissible offer to settle made by a party which is drawn to the court’s attention, and which is not an offer to which costs consequences under Part 36 apply” should also be taken into account.

In the prior case of Garritt-Critchley v Ronnan [2014] EWHC 1774 (Ch)[2015] 3 Costs LR 453, the Defendant was ordered to pay the Claimant’s costs on the indemnity basis for failing to engage in mediation.

In Gore v Naheed [2017] EWCA Civ 369 the lower court’s decision to disallow indemnity costs on the basis that it was not unreasonable for the Claimant to decline to engage in mediation was upheld by the Court of Appeal.

In Richards referred to above, in considering the six factors referred to in Northrop, HHJ Russen held that the Defendants’ failure to engage in constructive mediation was not sufficient to justify an Order against them for costs on the indemnity basis, and instead awarded costs on the standard basis up to and including trial.

Each case will clearly be taken on its individual merits, but the factors outlined above should always be considered when deciding whether or not to engage in mediation.

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The Civil Justice Council Final Report on Guideline Hourly Rates

Following the Interim Report coming out in January this year and the consultation which followed, the Final Report can be found here:

https://www.judiciary.uk/announcements/civil-justice-council-publishes-final-report-on-guideline-hourly-rates/

In essence, it recommends that the following Guideline Hourly Rates be adopted:

Guideline hourly rates

Grade Fee earner London 1 London 2 London 3 National 1 National 2
A Solicitors and legal executives with over 8 years’ experience £512 £373 £282 £261 £255
B Solicitors and legal executives with over 4 years’ experience £348 £289 £232 £218 £218
C Other solicitors or legal executives and fee earners of equivalent experience £270 £244 £185 £178 £177
D Trainee solicitors, paralegals and other fee earners £186 £139 £129 £126 £126

London

Band Area Postcodes
London 1 Very heavy commercial and corporate work by centrally based London firms Not restricted to any London postcode
London 2 City & Central London – other work EC1-EC4, W1, WC1, WC2 &amp: SW1
London 3 Outer London All other London Boroughs, plus Dartford & Gravesend

National 1:

  1. The counties of Bedfordshire, Berkshire, Buckinghamshire, Dorset, Essex, Hampshire (& Isle of Wight), Kent, Middlesex, Oxfordshire, East Sussex, West Sussex, Suffolk, Surrey and Wiltshire.
  2. Birkenhead, Birmingham Inner, Bristol, Cambridge City, Cardiff Inner, Leeds Inner (within 2km of City Art Gallery), Liverpool, Manchester Central, Newcastle City Centre (within 2m of St Nicholas Cathedral), Norwich City and Nottingham City.

National 2:

All places not included in London 1-3 and National 1

Categories of fee earners are as follows:

  1. Solicitors with over eight years post qualification experience including at least eight years’  litigation experience and Fellows of CILEX with 8 years’ post-qualification
  2. Solicitors and Fellows of CILEX with over four years’ post qualification experience including at least four years litigation experience.
  3. Other solicitors and Fellows of CILEX and fee earners of equivalent
  4. Trainee solicitors, trainee legal executives, paralegals and other fee

Qualified Costs Lawyers will be eligible for payment as grades B or C depending on the complexity of the work done.

Employed barristers’ rates should be allowed at the grade which best reflects the length of their litigation experience.

“Legal executive” means a Fellow of the Chartered Institute of Legal Executives. Those who are not Fellows of the Institute are not entitled to call themselves legal executives and in principle are therefore not entitled to the same hourly rate as a legal executive.

Clerks without the equivalent experience of legal executives will be treated as being in the bottom grade of fee earner i.e. trainee solicitors, paralegals and fee earners of equivalent experience. Whether or not a fee earner has equivalent experience is ultimately a matter for the discretion of the court.

BarnsChapel will retain our current hourly rate of £150 until the end of 2021, and in respect of matters funded by way of a CFA, to reduce our charges pro rata in accordance with the percentage reductions our clients achieve upon settlement or assessment.

For more information, visit our contact page or call us on 01244 256865.

Why not find out more about how we can help? Call us on 01244 256865 or send a message via our contact page.

Costs Recovery Cases where Fixed Costs May Apply

We have a number of clients who have recently fallen foul of what I consider to be slightly underhand behaviour of paying parties in cases which settle prior to allocation. I therefore write this post as a warning to anyone who seeks recovery of costs outside of the fixed costs regime provided for in CPR 45 for low value personal injury claims.

CPR 45.29 provides that fixed costs apply in portal claims for as long as they are not allocated to the multi-track. But that leaves a difficulty in cases where the claim is suitable for allocation to the multi-track but has not actually been allocated at the time of settlement.

CPR 36.20 states:

  • (1) This rule applies where -
  • (a) a claim no longer continues under the RTA or EL/PL Protocol pursuant to rule 45.29A(1); or
  • (b) the claim is one to which the Pre-Action Protocol for Resolution of Package Travel Claims applies.
  • (2) Where a Part 36 offer is accepted within the relevant period, the claimant is entitled to the fixed costs in Table 6B, Table 6C or Table 6D in Section IIIA of Part 45 for the stage applicable at the date on which notice of acceptance was served on the offeror.

Therefore, unless there is an is express provision otherwise in any settlement offer (be it Part 36 or otherwise), the fixed costs regime continues to apply until the court has allocated the claim to the multi-track, even if, when agreeing directions, the parties have agreed that the claim should be allocated to that track.

On at least two occasions recently, however, my clients have experienced circumstances where they have sought my advice as to the wording of offers and have attempted to include a clause expressly disapplying the fixed costs regime due both to the settlement value of the claim and the fact that the parties had agreed it was suitable for allocation to the multi-track. In so doing, the paying party responded that they would not deal with costs at the time of offer and acceptance but that it should be left to the parties’ costs lawyers/costs draftsmen. They will have stated this knowing full well that, if there was no express agreement in an accepted offer to exclude fixed costs, the fixed costs regime would be applied by the court if the matter were to proceed assessment.

Please be clear: to be able to exclude the claim from fixed costs, there must be an express provision that the claim be excluded from the fixed costs regime provided for in CPR 45 and that standard-based costs are payable and will be subject to assessment if not agreed. Do not allow the paying party to persuade you to leave it to the costs lawyers/costs draftsmen as they will know that, without that express provision being included at the time the offer is accepted, the receiving party will only recover costs provided for in CPR 45. You must therefore insist that such a clause is included unless you are content to be limited to fixed costs.

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SGI Legal LLP v Mrs Marta Karatysz

The appeal in the matter of SGI Legal LLP v Mrs Marta Karatysz overturned District Judge Bellamy's earlier decision and ruled that the Claimant was entitled to charge its client £455.50 as deductions from damages by way of its success fee and the ATE premium.

The judgment in this case, which is likely to have wider implications in view of the fact that there are a number of similar cases pending, can be read by following this link to the bailii.org website.

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Swann v Slater & Gordon

District Judge Rouine sitting at the High Court in Birmingham in the case of Swann v Slater & Gordon, in distinguishing his ruling from that in the Belsner v CAM Legal Services judgment, ruled that the provision of a percentage cap which a solicitor can deduct from a client’s damages amounts to informed consent.  He also ruled that there could be no fiduciary duty during the process of negotiating a retainer.

District Judge Rouine stated:  “Being told that there is a cap, and what that cap might be, is more than sufficient information…for the purposes of obtaining informed consent from a client for deductions to be made from their award of damages.”  He went on to say that “The realistic and pragmatic approach…is for the client to be made aware of their potential maximum exposure to a deduction from damages.”

This is some more positive news for personal injury and clinical negligence solicitors.

 

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