Increase in Guideline Hourly Rates Report

In my last blog on Guideline Hourly Rates, I explained how Courts were looking at the hourly rates claimed in many cases and deciding that the 2010 Guideline Hourly Rates were in serious need of a revaluation.

Background

Mrs. Justice O’Farrell, in the case of Ohpen Operations UK Ltd v Invesco Fund Managers Ltd [2019] EWHC 2504 (TCC), stated that existing guidelines hourly rates were “unsatisfactory.”

In PLK & Ors last year, a Court of Protection case, Master Whalan said that if hourly rates claimed fell within around 120% of the 2010 guideline rates, they should be regarded as “prima facie reasonable”, albeit still subject to assessment.

In Cohen v Fine & Ors, Judge Hodge said that “the guideline hourly rates should be the subject of, at least, an increase that takes due account of inflation.”

Seeking evidence for draft report

With pressure mounting for reform on rates last established in 2010 and last reviewed in 2014, and with the courts applying their own upgrades to the 2010 rates, a working group led by Mr Justice Stewart began seeking evidence in August 2020.

On 8 January 2021, the Civil Justice Council published a draft report on recommended guideline hourly rates for solicitors, along with points for consultation.

The working group consulted eight Senior Courts Costs Office (SCCO) Judges, the SCCO Costs officers, and 26 Regional Costs Judges (RCJs) across England and Wales on the rates they allowed on provisional and detailed assessments. In addition, the working group also considered evidence from other members of the legal profession as to the hourly rates agreed between parties following commencement of assessment proceedings.

What the report tells us

Having reviewed the report, there is good news all round as it seems that all grades of solicitors are on-track for an increase in hourly rates, from 7% to nearly 35%, depending on grade and location. The working group recommended the following increases to the current Guideline Hourly Rates:

	Grade A	Mean % difference from current GHRs	Grade B	Mean % difference from current GHRs	Grade C	Mean % difference from current GHRs	Grade D	Mean % difference from current GHRs
London 1	£512	25.2%	£348	17.6%	£270	19.5%	£186	34.8%
London 2	£373	17.8%	£289	19.5%	£244	25%	£139	10.4%
London 3	£282	13.7%	£232	15.8%	£185	11.9%	£129	7%
National 1	£261	20.2%	£218	13.5%	£178	10.7%	£126	6.8%
National 2	£255	26.78%	£218	23.2%	£177	21.3%	£126	13.5%

The working group considered that there is no longer any justification for having three regional areas, and it therefore combined national groups 2 and 3. Further, it seems that the recommendations will blur the line between National Bands 1 and 2 with very minimal differences between the recommended rates.

Whilst the working group did not consider it appropriate to recommend merging National 1 and 2 into a single national band, this is a matter on which responses are particularly requested during the consultation period.

London Bands 1 and 2 have been redefined, with the former potentially being restricted to “very heavy commercial and corporate work by centrally based London firms” and the latter absorbing, for example, personal injury work which would no longer apply to the former.

Geographically, the working group also considered matters relevant to the existing geographical location. Given the pending HMCTS reform programme which is intended to change radically the way in which litigation is conducted during the COVID-19 emergency, it was not considered sensible or possible to make further changes of substance to the existing geographical areas.

However, the working group did find some anomalies which it felt it should correct. Moving forward, regional and county bands are due to be introduced in such a way that no areas are omitted. As it stands, under the present system, large parts of the country are not allocated to a band.

These were in large the main recommendation made by the working group. The report is subject to consultation which is open until 31 March 2021.