25% uplift is usual for outdated guideline rates, says judge

Pelling: Rates were appropriate

The conventional approach in relation to the guideline hourly rates (GHR) is to uplift them by about 25% to reflect the effects of inflation since they were set in 2010, a High Court judge has said.

He refused without more evidence to reduce the impact of inflation by commercial pressures on solicitors to keep their fees lower.

The ruling of His Honour Judge Mark Pelling QC, sitting as a High Court judge, was handed down last October but has only just been published.

Since then, a Civil Justice Council working group has issued interim recommendations, currently out for consultation, that the GHR should be increased variously by between 7% and 35%.

The case concerned the costs of repairing a yacht under an insurance policy. The claimant was awarded €244,000 (£214,000) and sought costs of £213,000. As the claim was run through the shorter trial scheme, the judge had to assess the costs summarily.

Neither the solicitors nor the rates they claimed were specified in the ruling, but the defendants complained that the rates exceeded the GHR.

HHJ Pelling described this as “to an extent an artificial submission” in that the claimant’s solicitors were previously at a City firm and had set up their practice just outside the Square Mile, in the N1 postcode. This had “a profound effect” on the rates that could be charged.

He went on to describe the GHR as “significantly out of date”, although the defendants said it was wrong simply to look at inflation, because solicitors’ rates have suffered commercial pressure, particularly in respect of work carried out for big institutional clients such as insurers.

The judge said: “That is a difficult submission for me to act on without real evidence upon which to arrive at a judgment. The conventional approach in relation to guideline rates is to uplift them by about 25% in order to reflect the effects of inflation on the figures previously arrived at.”

In any event, he went on, “it has always been the case that specialist solicitors in specialist areas of activity should recover an uplifted fee to reflect that specialism”.

That was the situation here, HHJ Pelling said, meaning the rates were “appropriate in all the circumstances”.

He explained: “The difference between where in fact they now practise and where they previously practised is an artificial distinction which has only very limited impact on the fees which can properly be charged, although I recognise that there will be a marginal difference driven by things like rent and rates, but all of that said, this is specialist work by specialist solicitors and I am satisfied that it is appropriate that they should charge such a rate.

“I note that, in any event, the rate charged by the solicitor acting for the defendant at £290 an hour as an associate is not unadjacent to the rates which have been charged in this case.”

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