Guideline rates of little use in City-type litigation, says judge

Rowley: Limit to the impact the size of the case can have on the hourly rate

The guideline hourly rates (GHR) are “barely even a starting point” in high-value litigation conducted by City law firms, a costs judge has ruled in allowing a grade A rate of £750.

Master Rowley also chided the claimant in Shulman v Kolomoisky & Anor [2020] EWHC B29 (Costs) for the “opportunistic” argument that the fact a leading US law firm was based in Canary Wharf meant it should receive less than the GHR for the City of London.

He was ruling on the hourly rates to be allowed for work carried out by Skadden Arps Slate Meagher & Flom for the second defendant. The decision from April has only just been published.

The claimant had offered to pay rates between those set for the City of London and outer London, starting at £400 for a partner.

“In my view, the claimant’s starting point is entirely opportunistic,” Master Rowley said. “Whilst Canary Wharf may be located in a postcode outwith those allowed by the guideline rates for the City (EC1 to EC4), the presence of firms such as Skadden and Clifford Chance as well as many multinational financial institutions inevitably leads to the conclusion that rates equivalent to those to be found in the City are much more appropriate.”

He found that, aside from its value, the claim was otherwise not “at all out of the mainstream that might be expected to be dealt with by City solicitors” and did not raise any novel issues.

“There is a limit to the impact that the size of the case can have on the hourly rate. Once it is clearly a significant sum that is involved, there is a finite limit to the rate a solicitor can charge for shouldering the burden of that value, and generally therefore the importance, of the case. It is not as if the hourly rate is proportional to the size of the claim, for example.”

The highest-charging partner handling the case at Skadden, David Kavanagh QC, had an hourly rate of £1,043 (the firm billed in dollars and the rate fluctuated depending on the exchange rate at the time), with a legal assistant at £257 an hour the lowest.

Master Rowley said the case was a good example of why the GHR – although originally only for use on summary assessment – were often relied upon by advocates and the court.

“Despite the points of dispute challenging the rates wholesale, there is no evidence whatsoever from the second defendant or Skadden as to how the level of the hourly rates charged to the second defendant have been determined.”

He went on: “However, one of the many issues that has arisen with the use of the guideline rates over time is the fact that there is a single figure for a particular level of lawyer in a particular locality.

“That figure takes no account of the size of the firm, the nature of the work undertaken et cetera in the particular case. It is described as a broad approximation and it is really the roughest of rough guides as to what might be allowed.

“The potential range of litigation in the City can be seen in this case and it explains why the guideline rates are barely even a starting point in a case such as this.”

Master Rowley considered the so-called seven pillars of wisdom in CPR 44.4(3) to conclude that the nature of the case did not justify the hourly rates which Skadden had claimed.

“Whilst it cannot be said that no client would pay the rates claimed in this case – since the second defendant has already paid these fees – I do not consider that they can be justified between the parties.

“If the case involved truly novel or ground-breaking litigation, it might be possible to justify the figures claimed, or at least something close to them. But that is not the situation here and, in my view, competent representation… could easily be obtained from any number of similar firms to Skadden at considerably lower figures.”

He allowed rates of £750 for grade A, £400 for grade C and £200 for grade D fee-earners.

Mr Justice Stewart is currently heading a Civil Justice Council working group looking to update the GHR, which were last revised in 2010.

    Readers Comments

  • David Crawford says:

    Dear Sir,

    As with Manchester United football club and the Glaser family, one need only ask the question, “What are these Americans doing over here, if not to make a fast buck?”. There were no such firms when I was admitted in 1975. Do we really need them? Are there not home grown firms capable of doing this work?

    Yours faithfully,

    David Crawford

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