Guideline hourly rates to be reviewed and updated

A long-awaited review into the solicitors’ guideline hourly rates is underway following mounting pressure from lawyers and judges, but increases are not guaranteed.

This development has emerged following publication of the minutes of a meeting of the Civil Procedure Rule Committee held last month.

The Master of the Rolls is responsible for reviews of the rates which form the baseline figures for the summary assessment of lawyers’ costs

The minutes of the meeting reveal that a sub-committee of the Civil Justice Council has been established, with the agreement of the Master of the Rolls, to review the guideline hourly rates.

The sub-committee will report directly to appeal court judge Lord Justice Coulson.

The minutes note the absence of “any material changes to the rates for quite some time”.

In reality, they have remained static since 2010 despite a review in 2014.

The new sub-committee will make its recommendations by the end of this year with a view to then updating the rates – but that does not necessarily mean a rate increase.

Sean Linley, costs consultant at specialist costs firm PIC, said: “The general consensus appears to be that the rates are outdated and should most likely go up.”

However, he warned that the review may not entirely go the way practitioners would want it to because the data at the last review suggests that some fee earner hourly rates could actually decrease.

He added: “At that time, a new lower Grade E was mooted and it remains to be seen whether this idea will now be raised again.”

In her September 2019 ruling in Ohpen Operations UK Ltd v Invesco Fund Managers Ltd [2019] EWHC 2504, Mrs Justice O’Farrell strongly criticised the guidelines rates saying updated guidelines would be “very welcome”.

She stated: “It is unsatisfactory that the guidelines are based on rates fixed in 2010 and reviewed in 2014, as they are not helpful in determining reasonable rates in 2019.

“The guideline rates are significantly lower than the current hourly rates in many London City solicitors, as used by both parties in this case.”

Linley said the review now will only be as good as the data set which it is based upon; and giving the judiciary a “broad and strong data set” is vital otherwise recommendations may not actually reflect the current marketplace.

He added: “It is clear that what is needed is broad evidence to allow the judiciary to reach an informed view as to both what a reasonable market rate looks like; and what reasonable overheads might be and it’s clear that only the solicitor’s profession can sort that out.”

Realistically, he said he would expect to see some increase for the most experienced fee earners (those typically classified as Grade A or B) with inflationary pressures alone.

“Previously, calls for a new Grade A* rate were resisted”, he commented, “and there’s no reason to suggest that this will change.

“At the other end of the spectrum – and the data set available to the judiciary will be key here – then it’s foreseeable that the Grade C and Grade D rates could potentially reduce; and some fee earners could see rates cut further if the previously proposed Grade E (based purely on paralegals) resurfaces.”

However, Linley pointed out: “The reality is that a large number of firms already apply rates exceeding the guidelines and there’s no reason to expect that this practice will abate just because guidelines are reviewed.

“I expect that regardless of the outcome of the review the old battle-lines as to what hourly rate is reasonable will continue; but we may see the force of such arguments reduce when we can no longer say that the guidelines haven’t shifted for 10 years.”