Solicitor’s Rates Deemed Excessive by the Court
Rushbrooke UK Ltd v 4 Designs Concept Ltd  EWHC 1416 (Ch)
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Rushbrooke UK Ltd v 4 Designs Concept Ltd  EWHC 1416 (Ch)
In a recent High Court case, HHJ Paul Matthews sat as the judge with regards to a dispute that arose from an application for an injunction to prevent the presentation of a winding-up petition. The application was ultimately struck out by the Judge and the Respondent was awarded costs.
At the costs hearing, the Respondent sought two separate costs orders. The first requested that the Applicant company and the company’s director jointly pay the Respondent’s costs. Secondly, the Respondent requested an order for the Applicant’s Solicitors to pay the wasted costs.
The Respondent filed two costs schedules, an action which the Applicant challenged on the basis that the updated costs schedules were filed too late. Judge Matthews agreed with the Applicant’s position on lateness however, it was stated that due to the short length of the schedules, the Applicant would have had sufficient time to digest the information.
Solicitor’s Rates Challenge
Furthermore, the Applicant raised objections to the Respondent’s claim for costs. The Applicant highlighted that a Grade A fee-earner, situated in Bristol, had been charging £350 per hour. This starkly contrasted with the guideline figure of £261 per hour for this National 1 area. Additionally, the Applicant identified that no work had been delegated to more junior fee earners. Instead, the Grade A fee earner had completed all of the work on the matter.
The Judge believed that both of these propositions had “some force”. It was highlighted that new guideline figures had been introduced in October 2021 by the Master of the Rolls, subsequent to a report from the Civil Justice Council. This report stated that the old figures, which were over ten years old, were outdated. Following the rates reform, the new figures were expected to be used, as they were now reflective of the current economic climate.
In complex or heavy commercial and corporate work, the Court allows a fee-earner to charge a higher rate. Nevertheless, in this case, the Judge stated that the work was not difficult enough to justify such an uplift.
When considering the Applicant’s second proposition, the Judge stated that “one of the important skills of a solicitor is to know how to delegate less important work to less expensive fee-earners.” In this matter, delegation had not occurred whatsoever. The Judge did not consider this to be reasonable. He stated that during their own previous litigation work, there was always an opportunity to delegate. Therefore, Solicitors could not attempt to argue that a more junior member of staff were unavailable.
Judge Matthews concluded the summary assessment of costs with a reduction of the recoverable costs from £8,988 to £7,920 (including VAT). Finally, Judge Matthews decided that one of the directors of the company, Mr Steventon-Smith was not jointly liable for the costs as he was not a party to the proceedings.
Solicitors Rates: Guideline Hourly Rates
The Solicitors’ guideline hourly rates provide a starting point for fee-earners when charging for their work.
The rates are divided by grade, and the grading of a fee-earner depends on their level of experience. For example, to charge a Grade A rate, a Solicitor or CILEX would have to have accrued over 8 years’ post qualification experience. Contrastingly, a Grade D is a trainee Solicitor, Paralegal, or other fee-earner.
These rates are also dependent on the location of the fee-earner. Due to the higher cost of living in the capital, centrally based London firms have higher guideline figures. After the three London bands, there are two national bands which cover city locations such as Manchester and Leeds, and outer bands for more rural areas. There is however, now very little difference between National 1 and National 2 rates.
As stated above, a fee-earner can enhance the hourly rate above the guideline figures if they can provide a sufficient explanation for the same (this may be exceptional competence or complexity). Unreasonable enhancement of hourly rates will not be entertained by the Court, particularly if it is to excessive levels which a lay client has not had opportunity to give informed consent to (and legal professionals should be aware, that excessive and persistent unreasonable claiming of excessively enhanced hourly rates has on occasion caught the eye of the Solicitors Regulation Authority). Therefore if a fee-earner fails to explain their higher fees to the Court, it is likely that their costs will be reduced during assessment, particularly on a standard basis assessment, and this can lead to hampered Bill recoveries.
How can ARC Costs Assist?
Our independent team of experienced Costs Lawyers and Costs Draftsmen provide a bespoke costs law service, and can act for either Paying or Receiving Parties. We aid clients (Solicitors, CILEX and Litigants in Person) throughout the detailed assessment procedure and regularly prepare Bills of Costs, Points of Dispute and Costs Budgets, providing appropriate advice on the retainer and reasonableness of Solicitor’s rates claimed. When preparing these documents, we take our time to ensure that adequate explanation is provided to justify proportionately and reasonableness of the fees claimed, thus allowing us to maximise your legal costs recovery.
If it is required, our regulated Costs Lawyers can act as reliable advocates for our clients in Court.
Due to our paperless working method, we can promise a swift turn-around on instructions. This allows matters to move efficiently and settle quickly.
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