1 November 2013Print This Post

Don’t ignore it

Foskett J: purely local approach is outdated

Posted by Mr Justice Foskett, chairman, Civil Justice Council costs committee

I am grateful to Litigation Futures for the opportunity to say something about the current work of the Civil Justice Council’s costs committee, which I chair.

Our current task is to recommend to the Master of the Rolls by April 2014 what the guideline hourly rates (GHRs) should be. GHRs influence, but do not govern, what solicitors and other legal fee-earners are paid by the losing side for their civil litigation work?

It is a controversial issue and as costs expert Kerry Underwood has said, “there is more misunderstanding about guideline hourly rates than any other aspect of costs”.

The GHR have been frozen since 2010. Successive Masters of the Rolls felt an uplift based purely on an inflation-linked index was insufficiently evidence based. Furthermore, the underlying evidence for the 2010 rates was itself outdated.

Clients need reassurance that there is a proper contemporary basis for any standard rates charged. Such rates also offer a yardstick by which to judge an uplift for specialist and complex work.

It follows that our recommendations have to be evidence based. We need help from as many firms of solicitors as possible to assemble a comprehensive contemporary evidence-base for those recommendations.

We have some evidence already in the form of surveys conducted by the Law Society and others. Our own survey, launched online today, is, however, a vital part in building up an accurate picture. It is designed to supplement existing data by asking a range of questions, including questions on numbers and average earnings of fee-earners at all levels, the costs of overheads, types of work undertaken, hours billed and sums recovered.

The objective is to create as accurate a picture as possible of salaries and hours charged (and amounts recovered) for all fee-earners, from trainees to senior partners nationwide.

GHRs used to be based on locally undertaken investigations into rates charged and paid locally, reflecting the costs of running a practice and factoring in a reasonable profit margin. A purely local approach is outdated in the current market-place and we are attempting a wider view.

We recognise that some of the data we seek will be sensitive. However, the answers will be treated in the strictest confidence, held securely and used only for the purposes of the survey. No data identifying firms or individuals will be published and respondents will not be revealed to committee members (other than to me or the vice-chairman if necessary), its economic advisers or anyone else without express consent.

The committee has no agenda or pre-determined mindset. It is independent and, I emphasise, judicially chaired. Its members have substantial costs expertise and experience and the practitioner members have extensive litigation experience from differing perspectives. There is a common objective to do the best job we can and to approach the evidence with an open mind.

Our first meeting was held in April, shortly after what some labelled as ‘J-day’. We have considered whether we should try to factor in to our analysis any effect that the Jackson reforms may have. Current evidence suggests their impact is yet to be felt and the overwhelming majority of the committee took the view that there will not be a sufficiently reliable evidence base about this for the present exercise.

That may change when we review things next year, given our remit to keep GHRs under review.

Whilst we cannot engage in speculation, some of the survey questions (for example, on referral fees) may give an early indication of what is happening. The final survey question is a general one inviting respondents to make additional comments which they feel are relevant and will assist us. My invitation to respondents is to make liberal use of that question in this context.

The survey will remain available for completion until 29 November. Our expert advisers will examine the data initially and the committee will consider that analysis in mid-December. We will then decide whether to call for written submissions and oral evidence sessions and, if so, in what form. They would be in February.

In a busy world it is always tempting to ignore a survey or questionnaire. However, we have tried very hard to keep the survey short and clear, with questions that can be answered by reference to a firm’s most recent annual report and accounts together with its costs management system.

My message to all firms engaged in litigation is that this is a real opportunity to contribute to an exercise designed to provide a reliable evidence base upon which to make our recommendations. Criticising the outcome will be somewhat hollow if the critic has not completed the survey.

My final plea, therefore, to all litigation solicitors is this: don’t ignore it.

The survey can be found here.

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