What Next for Hourly Rates?

2010 saw the last update of the SCCO Guideline rates (GHR), although they were reviewed in 2014 but it was considered that there was insufficient evidence for the need for change. The GHR were originally only intended to be used in summary assessment of costs in straightforward personal injury claims, but as time has gone on they have, it seems, become the starting point for those undertaking assessments in all kinds of matters. In addition, paying parties have increasingly sought to rely on them, whatever the circumstances, complexities, or type of claim.

Receiving parties have, for some time, thought that this cannot be right. For a start, the GHR are now over 10 years out of date. Of course, there is also the fact that many claims cannot be considered to be straightforward and therefore should not fall within the Guideline rates, in any event.

The courts now appear to have reached the conclusion that something needs to change. There have been numerous cases in the last 12 months which have sought to address the situation. The main ones are as follows:

Ohpen Operations UK Ltd v Invesco Fund Managers Ltd [2019] EWHC 2504 (TCC) – Mrs Justice O’Farrell commented at paragraphs 14 and 15 that:

  • 14. “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.”

And

  • 15. “…the technical nature of the dispute justifies the engagement of solicitors with the appropriate skill and expertise to ensure proper and efficient conduct of the litigation. Solicitors providing such skill and expertise are entitled to charge the market hourly rate for their area of practice.”

Regina (Fuseon Limited) v Shinners [2020] EWHC B18 (Costs) – At paragraph 30, Master Gordon-Saker said:

  • “The guideline rates are of course just that. They are fairly blunt instruments designed to assist judges in the summary assessment of costs. The passage of time since 2010 means that they tend now to be used as a starting position rather than as carved in stone.”

PLK & Ors (Court of Protection: Costs) [2020] EWHC B28 (Costs) – Master Whalen said:

  • “…it must be acknowledged that the GHR cannot be applied fairly as an index of reasonable remuneration unless these rates are subject to some form of periodic, upwards review… It seems clear to me that the failure to review the GHR since 2010 constitutes an omission which is not simply regrettable but seriously problematic where the GHR form the ‘going rates’ applied on assessment. I do not merely express some empathy for Deputies engaged in COP work, I recognise also the force in the submission that the failure to review the GHR since 2010 threatens the viability of work that is fundamental to the operation of the COP and the court system generally.”

And at paragraph 35:

  • “I am satisfied that 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… Accordingly my finding and, in turn, my direction to Costs Officers conducting COP assessments is that they should exercise some broad, pragmatic flexibility when applying the 2010 GHR to the hourly rates claimed. If the hourly rates claimed fall within approximately 120% of the 2010 GHR, then they should be regarded as being prima facie reasonable.”

And finally, the most recent case where guidance has been given in respect of hourly rates:

Cohen v Fine & Ors [2020] EWHC 3278 (Ch) – HHJ Hodge QC awarded an uplift of 35% on the GHR, referring to Mrs Justice O’Farrell’s ruling in Ohpen and stating:

  • “In my experience of sitting in the Business & Property Courts, both in the North-West and in the Rolls Building, the present Guideline Hourly Rates are considerably below the rates actually being charged by the solicitors who practise in those courts. Likewise, the Table of Counsel’s Fees bears no relationship to the fees which the courts see being charged for counsel appearing in the Business & Property Courts. 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).”

We are currently awaiting the results of a review of the GHR by the Civil Justice Council which may well take into account the rulings outlined above. What may also be taken into account, however, is the fact that many of us are now working from home and may continue to do so, which might result in reduced overheads for solicitors who no longer have a requirement for expensive offices in prime locations. The result of the review is expected any day and will no doubt be of interest to paying parties and receiving parties alike.

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