GHR review: no guaranteed increase

A long-awaited review into the Guideline Hourly Rates (GHR) is underway and by the end of this year recommendations to update them are expected to be made.

But lawyers cannot assume this means an increase.

The GHR are guideline figures set by the Senior Courts Costs Office for carrying out a summary assessment of court costs, listed by pay band and grade for different parts of the country. The Master of the Rolls is responsible for rate reviews. And though a guideline only, the GHR have remained the same since 2010 and, though outdated, they are still widely used and relied on.

The 2020 review was not announced in any shape or form, rather it was essentially discovered in a single paragraph as ‘any other business’ at the end of the minutes of a recent meeting of the Civil Procedure Rule Committee. It was a mere passing mention (unaccompanied by any public statement about it) – simply that the GHR are to be reviewed and “updated” (though it does note the absence of “any material changes to the rates for quite some time”).

The minutes state that a sub-committee of the Civil Justice Council has been established with the agreement of the Master of the Rolls to review the guidelines hourly rate, and the sub-committee is so report directly to Lord Justice Coulson.

Calls for a review and resultant increase in the GHR rate have been brewing within the profession for a long time, intensifying in recent months with the judiciary joining the debate. It was the subject of comments by O’Farrell J in Ohpen Operations UK Ltd v Invesco Fund Managers Ltd [2019] EWHC 2504 (TCC), who urged a review of the GHR. This is a costs ruling following a case centred around a dispute resolution clause in a contract dispute.

The claimant argued that the other side’s solicitors’ hourly rates were unreasonably high compared to the GHR. O’Farrell J acknowledged that that they were much higher than the GHR but said: “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.” She said updated guidelines would be very welcome.

Reflecting the presence of particular skills and expertise, she went on: “Solicitors providing such skill and expertise are entitled to charge the market hourly rate for their area of practice. The hourly rates charged cannot be considered in isolation when assessing the reasonableness of the costs incurred; it is but one factor that forms part of the skill, time and effort allocated to the application.

“It may be reasonable for a party to pay higher hourly rates to secure the necessary level of legal expertise, if that ensures appropriate direction in a case, including settlement strategy, with the effect of avoiding wasted costs and providing overall value.”

Last month, the senior costs judge ruled in a separate costs case following the submission of a prosecution costs claim to the legal aid agency following Crown Court proceedings (Fuseon Ltd, R [2020] EWHC B18). The GHR for a partner in central London is currently £317. The partner in this case was charging £350 per hour.

The Master commented: “The guideline rates are of course just that. They are fairly blunt instruments designed to assist judges in the summary assessment of costs. The passage of time since 2010 means that they tend now to be used as a starting position rather than as carved in stone.”

However, there needs to be factors present that justify elevating the matter above the GHR (there were in this case - the specialism of the solicitors instructed and the passage of time).

Don’t assume an increase

Recommendations are expected to be made by the end of this year but an increase is by no means guaranteed – even if 10 years have passed since there was any rise.

Don’t forget the last review in 2014 was somewhat of a damp squib. Commentators say that the data at that review suggests that some fee earner hourly rates could actually decrease; a new, lower grade was also suggested at that time; and that current data clearly demonstrates that the current guidelines are considerably lower than the reality of what is being charged.

Recommendations following the 2020 review will depend heavily on the evidence and data it considers, and law firms and individual solicitors need to engage with the review. One factor that could prove a sticking point is the significant increase in specialism within the profession in the past decade. How will that inform the review recommendations?

Firms would do well to be reminded of Lord Dyson’s comments at the time of the previous review. He said that there was “no funding available from any source for undertaking the sort of in-depth survey which the Civil Justice Council’s costs committee and its expert advisers consider is required to produce an adequate evidence base.

“There is also considerable doubt that even if such funds were forthcoming there would be sufficient numbers of firms willing to participate and provide the level of detailed data required to enable the committee (and in turn myself) to produce accurate and reasonable GHRs”. Firms absolutely must engage with the review if they want to see those accurate and reasonable GHRs.

For now, many firms are already charging hourly rates higher than the GHR to reflect factors such as specialism and particular expertise. This is permitted if justifiable on the evidence as the authorities illustrate.

The debate – and the review – is essentially about what is reasonable to recover from an opponent. Let’s see what the sub-committee considers to be reasonable in due time.


Posted on 11.05.20