CJC group recommends “modest” increases in guideline hourly rates

Stewart: Working group chair

There should be “modest” increases in the guideline hourly rates (GHRs) – ranging from 7% to 35% – with the highest band for heavyweight commercial work rather than any work carried out by a City law firm, the Civil Justice Council working group has proposed.

Its consultation – which closes on 31 March – recommends an annual inflation increase thereafter but forecast that a more fundamental review of how the GHR were calculated would be needed in the coming years.

The final report will go to the Master of the Rolls, Sir Geoffrey Vos, in the summer.

The GHRs have not been changed since 2010. Following a report by a group headed by Lord Justice Foskett, in 2015 the then Master of the Rolls, Lord Dyson, froze the rates indefinitely after deciding there was no prospect of the evidence required to change them being produced.

The working group, head by Mr Justice Stewart, was tasked last year with making recommendations and in a consultation published today said it sought to follow “the traditional basis of the GHRs”.

Aside from central London, it said the data it received was “sufficient (though a few were borderline sufficient)” to proceed, but it was not making more radical recommendations given the likelihood that a deeper review would soon be required.

The court modernisation programme and Covid-19 were likely “fundamentally to affect the way in which the legal profession provides its services” and a further review by a working group “should be considered once the need is considered by the CJC to have arisen”.

The group said: “This may well be within, say, three years, though it is difficult to predict… That would be the appropriate occasion to examine the methodology, how effective this working group’s work has been, and any appropriate, evidence-based amendments to geographical areas.”

Inflation since 2010 was 13% using the service producer price index (SPPI) for all services, 17% on the SPPI for professional services, 34% on the SPPI for legal services, and 24% using the consumer price index – but the working group noted that the 2010 figures were “more historic than evidence-based” and thus “seriously open to challenge” as a baseline figure.

It proposed changing the London 1 and London 2 rates to reflect the work done, rather than whether or not firms were in the City, given the “vast range of work of varying complexity and size” carried out by City law firms.

Thus London 1 would primarily be for very heavy commercial and corporate work and London 2 for all other work.

The group struggled to obtain much data from lawyers at big commercial firms; most of that evidence was based on judicial summary assessment rates. It also recognised that there were anomalies in the present boundaries for London 2 and London 3.

“A future review should carefully consider evidence on geographical location, particularly within London…

“Meanwhile, costs judges will no doubt continue to take into account the nature, complexity and location of the work when assessing complex high-value work carried out by firms which are based in areas of central London but are located in London 3.”

The group recommended merging National 2 and 3 into a single band, as the rates were the same and would continue to be under its proposals, although it might be that a single national rate could be achieved in the future review.

It also placed those parts of the country not currently allocated to a band into one.

The proposed changes to the GHR can be seen in the table below (the number in brackets is the percentage increase).

The report said: “The working group is of the opinion that these recommended GHRs will give to the inexperienced judge a better steer, by providing a simplified scheme to assist such judges without them being a substitute for the proper exercise for judicial discretion.”

Though, “in an ideal world”, the GHRs would be reviewed and updated on a very regular basis, this was currently “impracticable”.

“If the GHRs produced in this report are accepted as being soundly based, then in the short term they could be updated annually in line with an appropriate SPPI index.”

The working group noted that the Foskett review saw evidence that some firms were charging for work at their Central London office rates that was carried out in regional or outsourced offices. Foskett said: “This will, of course, always be a matter for close scrutiny at that costs assessment stage.”

However, some members of the present working group were not convinced that this happened; the report said the Civil Procedure Rule Committee should consider “a small but significant amendment to the summary assessment form N260 and to the information provided on the detailed assessment bill” which would require the signatory to specify the location of the fee-earners carrying out the work.

A new draft Guide to the summary assessment of costs, published with the consultation, also removes all reference to rates for counsel.

The group said the rates for counsel in the White Book were “hopelessly out of date”. Its terms of reference did not include evidence gathering on such rates, which would in any case be a very difficult task.

“The working group was unanimously of the view that these rates were unhelpful and should be deleted from the guide.”

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