The Civil Justice Committee’s proposals for changes to the Solicitors Guideline Hourly Rates.

Last year was an interesting year with regards to the Solicitors guideline hourly rates. Here at Dynamic Costs we wrote an article commentating on the Court of Protection case of PLK & Ors (Court of Protection) Costs [2010] EWHC B28 in which Master Whelan was extremely critical of the 2010 GHR and their relevance or application in 2020 and advocated a 20% uplift on the GHR based on inflation and other macro-economic factors alone.

Similar views were taken in matter Cohen v Fine & Ors [2020] EWHC 3278 (Ch). What was interesting about this case is that this was a summarily assessment proceedings as opposed to a detailed assessment hearing. Often the view is that guideline hourly rates are intended for summary assessment proceedings and in detailed assessment proceedings, they are essentially ‘guidelines’ or starting points. However, despite this, Justice Hodge, who was also involved in the 2014 Civil Justice Committee GHR review, advocated for at least a 35% enhancement in the summary assessment to account for the inflationary increase. At paragraph 35, Judge Hodge made the following comments.

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.

In mid-2020, that review of hourly rates in civil cases was promised under the auspices of the Civil Justice Council. A Consultation paper has now been prepared by the Civil Justice Committee which proposes changes to the Solicitors guideline hourly rates. It should be noted that this document is not binding, but merely a consultation paper outlining proposals and reasoning for the proposed changes and revisions to the hourly rates and band of Solicitors.

Table 1 below provides a summary comparison between the 2020 GHR and the 2021 proposal by the CJC Committee.

Table 1: Comparing the Guideline Hourly Rates between the 2010 GHRs and the proposed January 2021 GHRs.

Bands	Grade A (2010)	Grade A (2021)	Grade B (2010)	Grade B (2021)	Grade C (2010)	Grade C (2021)	Grade D (2010)	Grade D (2021)
London 1	£490	£512	£355	£348	£271	£270	£165	£186
London 2	£380	£373	£290	£289	£235	£244	£151	£139
London 3	£275-£320	£282	£206-£275	£232	£198	£185	£145	£129
National 1	£260	£261	£230	£218	£193	£178	£142	£126
National 2	£246	£255	£212	£218	£177	£177	£133	£126

The table shows the range of GHR rates according to the 5 regional bands against each Solicitors. The column 2010 shows current existing GHR rates according to the CJC 2010 Guidelines, in comparison the 2021 Columns demonstrate the proposed revised rates according to the report released by the CJC in January 2021.

The methodology formulated by the CJC to arrive at the figures above leaves a lot to be desired. One would have thought, in light of the numerous recent Judicial comments which emphasized on the need for inflation to be taken into account, the need for an appreciation of the increase in general law firms soft and hard overheads and profits since 2010, then surely the CJC would consider these factors and obtain real empirical evidence economical and accounting data to assist in their consultation and consequently setting of new GHR.

Rather, disappointingly, the recommended rates are based on 2019-2020 data of what has been awarded at provisional and detailed assessments. The working group obtained data from experienced SSCO judges, regional costs judges and professionals and essentially calculated the mean (average) assessed hourly rates across all cases within a given grade/band area.

From an individual perspective, I see a lot of limitations with the methodology adopted by the CJC. The first being that pool of data which formed the basis of these recommendations is relatively small, in a sense that in practice, it is actually the minority of the cases (I would argue less than 5%) that proceed all the way to detailed assessment for a cost judge to rule on what the appropriate hourly rate should be for the Solicitor and firm in question.  Furthermore, in the majority of the cases where costs are agreed, the parties do not specify or record any hourly rate agreement given that costs are often agreed in global sums.

However, despite the foregoing, it is worth bearing in mind that this consultation paper is by no means set in stone, it is certainly however, a big step in the right direction. the CJC themselves seeks consultative responses on the following key questions: (i) The methodology used by the working group, (ii) the recommended changes to areas London 1 and London, (iii) The recommended changes to the geographical areas and the recommendation to have two national bands. it’s likely that upon further consultations, their proposed changes will be revised further.

In conclusion, I welcome the proposals as whole, whilst, I do not agree with the methodology adopted, I do however appreciate that the CJC is perhaps not equipped with the resources to contend and grapple with the economic factors that Solicitors are faced with when conducting litigation. I can also appreciate the difficulties faced in ascertaining the overheads and profits for each hourly rate set and how one can arrive at such conclusions given the current economic landscape and the impact Covid-19 has had on the industry as a whole and consequently perhaps the CJC or the Courts may not be the most suited institutions to grapple with these issues and essentially become market makers.

Despite the foregoing, I do welcome the changes to revise the hourly rates, I also welcome the fact that the working group has carefully sought evidence and representations from Judges, Judicial Officers and stakeholders in the field of costs litigation and am certain that in the near future we will see a logical position adopted and most likely the hourly rates will be revised, whether this will be largely based on this report remains to be seen.