Introduction

Guideline hourly rates are used in many areas in practice and were introduced in the 1990’s. They have since become the main guideline which Judges use when making their summary assessment of costs at the end of a case. They outline the hourly rates which should be recovered by all grades of fee earner in different regions of England and Wales. Current guideline hourly rates are based on rates fixed by the Senior Courts Costs office (SCCO) which were set in 2010.

2014 Review of Guideline Hourly Rates

Guideline hourly rates were reviewed in 2014 and it was confirmed that they would remain the same as the rates in 2010.  The Civil Justice Costs Committee made recommendations for determining reasonable rates in their report to the Master of the Rolls.  In this report, they suggested new rates for all grades of fee earner as well as an introduction of a Grade E for paralegals and non-legally qualified fee-earners. All the recommendations made in the report were rejected.

Lord Dyson, who was the Master of the Rolls, stated;

“I have given very careful consideration to the recommendations for new rates but regret that I cannot accept them.”

He did accept the following amendments and changes were made on 1 October 2014:

• Fellows of CILEX with eight years’ post qualification experience are now included within the Grade A category.
• Suitably qualified Costs Lawyers, depending on the complexity of the work are now eligible for Grade C or Grade B rates.

In 2015, Lord Dyson, made the decision to indefinitely freeze the guideline rates at their 2010 level as he did not believe there was a requirement to change them, and stated;

“There is no funding available from any source for undertaking the sort of in-depth survey which the Civil Justice Council’s costs committee and its expert advisers consider is required to produce an adequate evidence base. There is also considerable doubt that even if such funds were forthcoming there would be sufficient numbers of firms willing to participate and provide the level of detailed data required to enable the committee (and in turn myself) to produce accurate and reasonable GHRs.”

Various Claimants v MGN Ltd [2016] EWHC B29

In this 2016 case, the SCCO considered some principles in relation to hourly rates and allowed rates which were  above the guideline hourly rates. Grade A solicitors were allowed £400 per hour instead of the 2010 rate of £317 and Grade B were allowed £280 instead of the guideline rate of £242.

Ophen Operations UK V Invesco Fund Managers

In the recent case of Ohpen Operations UK Ltd v Invesco Fund Managers Ltd [2019] EWHC 2504 (TCC), a High Court Judge urged an update of guideline hourly rates as he believed it was unfair that the current guidelines are based on rates fixed in 2010. Current guideline rates recommend an hourly rate of £409 for Grade A solicitors in Central London and £296 for those that are a Grade B.

The costs assessment in this case was made following a judgment which upheld the Defendant’s application for the claim to be stayed. The parties agreed that the Defendant’s costs of the application should be paid by the Claimant

The Claimant in this case argued  that the Defendant’s solicitors’ hourly rates were unreasonably high, especially when compared against the hourly guideline rates. The hourly rates charged by the Defendant solicitors were significantly higher than the SCCO guideline rates with Grade C fee earners claiming approximately £436 per hour and Grade B claiming £655 per hour. The Judge in this case allowed the Defendant Solicitors to recover their costs at these higher rates, and the Defendant solicitors successfully recovered up to £46,000 in costs.

 It was, however, decided that some of the time spent in relation to the work done on the case was excessive and therefore, the costs were reduced by nearly £6,000.

O’Farrell J stated;

“The guideline rates are significantly lower than the current hourly rates in many London City solicitors, as used by both parties in this case,”

She also stated that although the hourly rates of the Defendant solicitors were ‘much higher’ than the guideline rates, the current rates are ‘not helpful’ in determining acceptable rates in 2019 as the guidelines are based on rates fixed in 2010, which she described as ‘unsatisfactory.’

The Judge explained that in this case, the rates were justified as the technical nature of the case required that the Solicitors had suitable expertise, and stated;

“The hourly rates charged cannot be considered in isolation when assessing the reasonableness of the costs incurred; it is but one factor that forms part of the skill, time and effort allocated to the application.”

The Future of Guideline Hourly Rates

It is clear from the Judgment in the Ophen case that an update to guideline hourly rates is required. The current rates are now almost 10 years old and are therefore outdated.

The rate for a Grade A solicitor in Manchester City Centre has been £217 since 2010. In line with inflation, the amount should have increased to £280 in 2019, however, the rates have not increased in line with the level of inflation and many Solicitors are calling for an urgent review of the guidelines.  The main challenge faced by Solicitors today is providing evidence to the current Master of the Rolls to convince them that a change is required.

In a recent case, proposals were made for a 20% increase in SCCO guideline hourly rates.

How Can we Assist?

The ARC Costs team are always happy to help with costs challenges and to advise on the appropriate hourly rates to charge in your retainer and Bill of Costs. For more information on legal costs, please find out more about our speciality areas of expertise and our services on our legal costs page.