The guideline hourly rates (GHR) are to be frozen at their 2010 levels indefinitely after the Master of the Rolls decided there was no prospect of the evidence required to change them being produced.
Lord Dyson said he would instead continue pressing the government to extend the use of fixed fees.
Last July, after a year-long study by the Civil Justice Council’s costs committee, he concluded that there was a “fundamental” shortcoming in the evidence available to amend the rates.
He said he would seek “urgent discussions” with the Law Society and the government to see what steps could be taken to obtain more.
In a note published today, Lord Dyson said: “These discussions… have not made any material change to the position I was placed in last July – there is 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.”
Lord Dyson observed that the GHRs are becoming “less and less relevant” for several reasons, including “advances in technology and business practices and models”, “the ever-increasing sub-specialisation of the law which is seeing the market increasingly dictate rates in some fields (particularly commercial law)”, the judiciary’s use of proportionality as a driving principle in assessing costs, and the greater application of costs budgeting.
He added: “Not least, I hope, of such factors, is a trend towards the greater use of fixed costs in litigation. I have long advocated their wider application, and will continue to press this point to ministers and others in the hope that this important element of the Jackson reforms is implemented.”
However, the MR recognised that the GHRs are still widely used in summary and detailed assessments, as well as budgeting, and as a measure for smaller law firms “to base practice charges on and to demonstrate to clients a national benchmark”.
He concluded: “I am not therefore suggesting that the existing GHRs no longer apply. The existing rates will therefore remain in force for the foreseeable future, and will remain a component in the assessment of costs, along with the application by the judiciary of proportionality and costs management.”
Sue Nash, chair of the Association of Costs Lawyers and a member of the costs committee, said: “It is difficult to see what other decision the Master of the Rolls could have taken in the circumstances – at least we have a decision and an end (for now) to further speculation. What will be interesting to see now is whether this will give added impetus to the increasingly wide variety of alternative fee and billing arrangements being entered between solicitors and their clients.”
Adrian Jaggard, managing director of defendant costs firm Jaggards and also a member of the costs committee, said: “It will be disappointing for paying parties that there will be no detailed survey, as many suspect it would lead to a reduction in guideline hourly rates. However, they will be pleased also that there is no imminent prospect of an increase.”