Clarity on costs for consumers of legal services: the guideline hourly rates

7 September 2021

Whether the claimant or defendant, successful parties to civil litigation can be disappointed to hear that they are highly unlikely to recover all of their legal spend. The losing party is only required to pay what is considered reasonable and proportionate. A key feature in what is recovered is the reasonableness of the hourly rates charged by the successful litigant’s solicitors.
 

Judges assess legal costs and consider a number of factors in determining the reasonable rates for the loser to pay. The starting point on any assessment has become the Senior Courts Costs Office’s Guideline Hourly Rates (GHR) which set guideline amounts for solicitors of varying experience based on the location of their office. However, these were last updated in 2010 and, while reviewed in 2014, had become unhelpful in assisting Judges in determining reasonable rates as the rates charged by solicitors to successful claimants and defendants were often significantly higher than the GHR because the cost of running a law firm had increased during the intervening period.

Therefore and following widespread judicial concern regarding the continued relevance of the GHR, the Civil Justice Council (CJC) was tasked with conducting an evidence-based review of the basis and amount of the GHR and to make recommendations accordingly. This was an important development as litigants can be left significantly out of pocket by virtue of Judges (understandably) basing their decisions on out of date GHR which bore very little reality to the hourly rates being charged in the market.

The CJC released its much anticipated Interim Report for Consultation in January 2021, following a call for evidence. Whilst the CJC recommended that the GHR be increased, the evidence requested and considered by the CJC appeared fairly limited. Commentary during the Consultation indicated widespread disquiet that the recommendations were not based on sufficient or reliable data, despite easily accessible data being available (for example, the thousands of costs budgets reviewed by the judiciary).

The Final Report continued to recommend increased GHR and this has now been approved by the Master of the Rolls, Sir Geoffrey Vos, to be implemented from 1 October 2021. Any increase is good news for successful litigants. It also provides some clarity to those ordered to pay costs.

For firms centrally located in London (such as Kingsley Napley) carrying out heavy commercial or corporate litigation, the GHR for solicitors and qualified legal executives (Fellows of CILEX) with at least eight years’ post-qualification and litigation experience (known as Grade A fee earners) increases from £409 to £512. At the lower end of the scale for legally unqualified fee earners, such as Trainees and Paralegals, the GHR increases from £138 to £186. For those law firms centrally located in London carrying out other types of civil litigation, the GHR for Grade As increase from £317 to £373 and for Grade Ds, from £126 to £139.

The CJC stress that the GHR should remain a guide and starting point, with other factors such as a claim’s value, complexity, importance or urgency all continuing to be relevant. This is helpful as, in our experience, the GHR remain far less than what litigants are being charged in a variety of dispute areas. What is often ignored in the debate surrounding hourly rates is an apparent misplaced belief that litigants have no interest in hourly rates; they are picking up the tab for the shortfall on rates and, as consumers of legal services, expect to recover more of their legal spend.

Whether acting for a claimant or defendant, we offer a variety of fee arrangements to assist with the funding of civil litigation.

About the Authors

Dale Gibbons is Legal Counsel in our Costs & Litigation Management team. He advises on litigation funding and acts in costs management and costs assessment proceedings. Dale is also a qualified legal project practitioner.

Michael Tyler is a Partner in our Costs & Litigation Management team. He has conducted costs proceedings at first instance and on appeal in the High Court and Supreme Court Privy Council. Michael is also a qualified legal project practitioner.

 

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