GUIDELINE HOURLY RATES:

Transcription

1 Quality without compromise 79 Marlowes Hemel Hempstead Hertfordshire HP1 1LF England PO Box 764 Wellington 7654 Western Cape South Africa In association with van Wyk Fouchee Incorporated Cape Town South Africa GUIDELINE HOURLY RATES: THEIR USE AND MISUSE See Kerry s blog at: kerryunderwood.wordpress.com Underwoods Solicitors is a trading name of Law Abroad plc Registered in England: Number Registered Office: 79 Marlowes, Hemel Hempstead, Hertfordshire HP1 1LF PO Box 764, Wellington 7654, Western Cape, Republic of South Africa A list of directors is open to inspection at the registered office Freephone [email protected] Authorized and regulated by The Solicitors Regulation Authority under number

2 2 GUIDELINE HOURLY RATES: THEIR USE AND MISUSE There is more misunderstanding about Guideline Hourly Rates than any other aspect of costs. Quite simply they have no application at all in relation to anything other than summary assessment, and even in summary assessments they are guidelines and not tramlines, and are not supposed to replace the experience and knowledge of those familiar with the local area and field and the field of law generally (see (1) KMT, (2) Kay, (3) Mey, (4) MJY (Children proceedings by their Litigation Friend the Official Solicitor) v Kent County Council [2010] EWHC 2088 QB. Here I am not setting out the rates, but rather when they should be used, and more particularly when they should not be used. I am grateful to Judge Michael Cook for much of the following, which appears in Butterworths Personal Injury Litigation Service. The Senior Courts Cost Office (SCCO) Guide to the Summary Assessment of Costs contains guideline hourly rates for different levels of fee earner in different parts of the country. It is not the fault of the guide that the profession and the judiciary ignore its title and most of its content, and focus entirely on the tables of hourly rates. As the title and the content state, the guide is specifically limited to summary assessments of costs, and is intended to provide a simple collation of hourly rates applicable for routine costs to be assessed summarily at the end of a hearing which has lasted no more than a day. It has nothing to do with detailed assessments. Increasingly the guide is treated as if it prescribes hourly rates: it does not, it merely collates them. To regard these rates as a substitute for solicitors calculating their own rates is to put the cart before the horse the figures in the guide are no more than a simple collation of figures that individual

3 3 firms of solicitors have calculated. The original figures for each locality were arrived at through a framework of local co-ordinators based on civil trial centres set up by the Law Society to assist in the agreement of local rates. The co-ordinators were responsible for liaising with local law societies and district judges, and afterwards with the designated civil judge for each trial centre to ensure consistency across the group. The figures were then communicated to the SCCO for publication on its website and in the guide. In 2005 the guide ceased to give hourly rates approved for each court. It massaged the rates into three groups for the entire country plus London. As a result the rates are no longer approved by any member of the judiciary, do not refer to any particular court and to that extent have become a bureaucratic and not a judicial exercise. Advisory Committee on Civil Costs In 2008, the Ministry of Justice transferred the task of collating hourly rates to an Advisory Committee on Civil Costs under the chairmanship of Professor Stephen Nickell, who wrote to the Master of the Rolls on 9 December 2008 as follows: The Advisory Committee on Civil Costs recommends the attached Table of Guideline Hourly Rates to apply from 1st January, As you know these guideline rates are broad approximations to be used only as a starting point for judges carrying out summary assessment. These rates are interim in nature in the sense that there remain some unresolved issues which are made clear in the enclosed document entitled The Derivation of New Guideline Hourly Rates, from which you will understand that at least one member was pressing for an immediate reduction in rates. The unresolved issues include the extent of work done by solicitors outside the region in which they are located and the extent to which

4 4 referral fees can account for the gap between the hourly rates charged by claimants', as opposed to defendants', solicitors. We hope to have looked at these specific issues by Our new interim Guideline Hourly Rates are based on data collected in a survey of solicitors and other interested parties as well as both written and oral evidence provided by representatives of the main interest groups and others. The information collected refers to the calendar year 2007 and, as last year, we have used the rise in the Office of National Statistics Average Earnings Index (AEI) for Private Sector Service industries, excluding bonuses, seasonally adjusted, from 2006 Q3 to 2008 Q3 to uprate the 2007 numbers. I should emphasise that the Committee sees this as unfinished business and that when the outstanding issues have been resolved, we shall revisit the question. The committee was concerned that the figures were skewed because an increasing number of firms have offices both in London and the provinces and by the payment of referral fees. The Master of the Rolls accepted the recommendation of the Advisory Committee that the guideline hourly rates for Summary Assessment should be increased in line with inflation by 1.7% with effect from 1 April The rates for London 3, Bands A and B are presented as ranges which are said to go some way towards reflecting the wide range of work types transacted in these areas. USING THE GUIDE The following extracts from the SCCO Guide to the Summary Assessment of Costs are important to its application: The guide is specifically limited to summary assessments of costs and is intended to provide a simple collation of hourly rates incorporating a 50% profit mark-up

5 5 appropriate for routine costs to be assessed summarily at the end of a hearing which has lasted no more than a day. It has nothing to do with detailed assessments. The rates, in the words of the guide, are broad approximations only. They are not prescribed by the SCCO. They are not a scale. They may be amended locally at any time by the Designated Civil Judge. They are not carved in stone. The guideline figures have been grouped according to locality by way of general guidance only. Although many firms may be comparable with others in the same locality, some of them will not be. For example, a firm located in the City of London which specialises in fast track personal injury claims may not be comparable with other firms in that locality and vice versa. In any particular case the hourly rate it is reasonable to allow should be determined by reference to the rates charged by comparable firms. For this purpose the costs estimate supplied by the paying party may be of assistance. The rate to allow should not be determined by reference to locality or postcode alone. An hourly rate in excess of the guideline figures may be appropriate for Band A fee earners in substantial and complex litigation where other factors, including the value of the litigation, the level of complexity, the urgency or importance of the matter as well as any international element, would justify a significantly higher rate to reflect higher average costs. The guideline rates for solicitors provided here are broad approximations only. In any particular area the Designated Civil Judge may supply more exact guidelines for rates in

6 6 that area. Also, the costs estimate provided by the paying party may give further guidance if the solicitors for both parties are based in the same locality. In (1) Brown-Quinn (2) Webster Dixon LLP and Others v (1) Equity Syndicate Management Ltd (2) Motorplus Ltd [2012] EWCA Civ 1633 the Court of Appeal said that the Guideline Rates for Summary Assessment were of no use or relevance in relation to the hourly rates to be paid by before-the event insurers to non-panel solicitors.