What are the Solicitors Guideline Hourly Rates?

Solicitors’ guideline hourly rates have been established for all Solicitors in England and Wales, splitting into National 2 (Outer City), National 1 (City Centre) and London (City of London, Inner London and Outer London) and are set out in the Senior Courts Costs Office (SCCO) assessment guide. These rates are guideline figures which were last calculated in 2010, for the reasonable charge out rate per hour for work done on a case. They are used as a starting point for Costs Judges when making their summary assessment of costs in Fast Track Trials or application hearings. They should be considered by Solicitors, Costs Lawyers, and Costs Draftsmen when any issue as to costs arises starting with the retainer and costs budgeting however, no party is bound by the same and can claim above or below the guidelines in any retainer.

Are All Solicitors Granted the Same Rates?

The rates vary according to location and grade of Solicitor (Grades A, B, C & D). Those who work in London Band 1 and are a grade-A fee earner, have a guideline rate of £409 per hour. By way of contrast, Solicitors with the same amount of experience working in Coventry, a National 2 area, have a guideline of £201 per hour.

These guidelines were set by virtue of an hourly rate survey. All firms of Solicitors and law societies within a set location submitted their hourly rate and amount of experience information to the Government. The rates collected were then combined to provide an average, and this average is then labelled as the Solicitors Guideline Hourly Rates.

When Were the Most Recent Solicitors Guideline Hourly Last Reviewed?

The most recent hourly rate survey took place in 2010. Since this time, substantial financial issues have arisen, and inflation has fluctuated. In 2014, the Master of the Rolls, Hon Lord Dyson reviewed a report submitted by the Civil Justice Council’s Costs Committee which contained recommendations in regard to an update of the Guideline Hourly Rates.

The recommendations stated that the majority of the changes that were required to be made would be reductions in hourly rates, with only seven bands increased. The committee conducted a survey which used ‘1500 randomly selected individuals on billable hours and gross salaries’. Lord Dyson stated that they had ‘given very careful consideration to the recommendations for new rates, but regrets that he cannot accept them’. He supported this decision by expressing that the evidence that the committee proposed was not based upon a “sufficiently strong foundation”, possibly due to the small sample size of the hourly rate survey.

Solicitors Guideline Hourly Rates and Recent Economic Changes

Most recently, Brexit and the COVID-19 pandemic have provoked the onset of a possible economic crisis. Therefore, it could be argued that an updated hourly rates survey is necessary to create guidelines which accurately reflect the UK economy.

Throughout the past twenty years, inflation rates have fluctuated significantly, and in theory, this should allow a Solicitor’s hourly rate to be increased since the last increased rates were set in 2010 (inflation between 2010 and 2019 as recorded by the Bank of England calculate averaged 2.9% per annum, changing a rate of £201p/h to £260). On the other hand, it is possible that the inflation rate increase is balanced out by the decrease in overheads as modern technology allows people to work in a much more cost-efficient manner.

Databases such as Proclaim allow Solicitors firms to have a larger caseload as all client details are stored on the system, and they can also work in a paperless manner, saving money on office resources.

Recently, and especially during the recent Covid-19 pandemic, video call platforms have been utilized widely. Therefore, when ‘normal’ life resumes, video technology may take the place of office space and permanently reduce the need for large office overheads.

These factors may discourage the Government from making any changes to the 2010 Guideline Hourly Rates as they may believe the increase in inflation is compensated for by the decrease in overheads.

Are Solicitors Required to Follow the Guideline Rates?

Despite the guidelines, Solicitors often set their own hourly rates and Court assessments often allow enhanced rates. Nevertheless, these rates can be disputed by the paying party and the Court. Sometimes, in detailed assessment proceedings, the Court can question the hourly rate submitted by a party (if it has been challenged) and can compel them to decrease it.  Even if the guideline rates are applied, the Court may decide on detailed assessment that a senior file handler should not have had conduct of the matter, and that it was proportionate for a junior file handler to have dealt with the litigation.

How Much Flexibility does the Court Allow? 

In the case of Smith v Others (2007) EWHC, the Court took the view that the guideline rates should be claimed within the Bill of Costs as they ‘had to take on additional responsibility, skill and expertise’. This demonstrates how the Court are often flexible with their decisions regarding hourly rates as long as there is a sufficient explanation.

In the recent case of Ohpen Operations UK Ltd v Invesco Fund Managers Ltd [2019] EWHC 2504 (TCC), the successful Defendant Solicitors were awarded £46,000 in costs at the High Court. Following this, it emerged that new guideline hourly rate reviews are to occur this year as the Civil Procedure Rule Committee has acknowledged there is an overdue review required given the length of time it has been since the 2010 survey and 2014 review.  In the case of Ohpen, the costs claimed by the Defendant solicitors included Grade C fee earners claiming approximately £436 an hour and Grade B fee earners claiming £655 an hour.

The costs were reduced by almost £6,000, however, the Judge suggested that the Guideline hourly rates were significantly outdated.  As such the hourly rates were permitted at the significantly increased amounts claimed however, it should also be noted that the litigation related to bespoke work requiring a specialist in technology and investment fund disputes, and this will have also factored into the decision to allow enhanced rates.

The Judge in this case 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.”

Whether or not significant alterations will occur within the guideline hourly rates is unknown, although many hope that the committee will take an increase into great consideration.  Previous recommendations in 2014 suggested a new Grade E being introduced, and this may be a matter taken into account again when considering the increased use of technology and lower overheads in modern litigation.

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

How Can ARC Costs Assist?

At ARC Costs, we are able to provide you with expert costs advice throughout your case. Our highly experienced Costs Negotiators have been successful on detailed assessment in recovering up to £350p/h in complex litigation in National 1 areas, and upwards of £500p/h in London matters.  If you represent a paying party, ARC Costs are also able to produce Points of Dispute to challenge hourly rates as well as other items in the Bill of Costs. If the case reaches detailed assessment proceedings, we can ensure that you receive the best assistance and results through our advocacy services.

We can be contacted via LiveChat, below, or via email at info@arccosts.co.uk, and by telephone on 01204 397302. For more information on legal costs, please find out more about our speciality areas of expertise and our services on our legal costs page.

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