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Increase guideline hourly rates by 35% pending CJC review, judge says

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Hodge: GHR considerably below what lawyers are charging now

The guideline hourly rates (GHR) should be increased to take account of inflation while they are being reviewed, meaning an increase of 35%, the High Court ruled this week.

His Honour Judge Hodge QC, sitting as a High Court judge in Manchester, said his experience of sitting in the Business & Property Courts, both in the North-West and in the Rolls Building, was that the present GHR were “considerably below” the rates actually being charged by solicitors.

The table of counsel’s fees also bore “no relationship” to the fees which the courts see being charged for counsel appearing in the Business & Property Courts.

HHJ Hodge sat on the Foskett committee that last reviewed the GHR in 2014 – the then Master of the Rolls ultimately decided against any increase, citing a lack of evidence – and there is currently a Civil Justice Council committee headed by Mr Justice Stewart [2] that is set to issue an interim report shortly, before a final report to the Master of the Rolls next summer.

Pending the outcome of that review, HHJ Hodge said his view was that the GHR “should be the subject of, at least, an increase that takes due account of inflation”.

Using the Bank of England inflation calculator, “it seems to me that an increase in the (band one) figures for Manchester and Liverpool broadly in the order of 35% would be justified as a starting point (appropriately rounded-up for ease of calculation)”.

This meant £295 for grade A, against a present rate of £217, £260 (£192) for grade B, £220 (£161) for grade C, and £160 (£118) for grade D.

The decision comes in the wake of the Senior Court Costs Office decision in September that costs officers should allow rates of 20% above the GHR in Court of Protection cases.

HHJ Hodge was ruling on the appeal of Cohen v Fine & Ors [2020] EWHC 3278 (Ch) [3]. This concerned the costs of the claimant professional executor after he had to bring part 8 proceedings to force the sale of the estate’s main asset, a property, which was the subject of dispute between the three beneficiaries, the deceased’s children.

District Judge Matharu ordered the sale but, conducting a summary assessment, said she was “appalled” by the £48,000 (including VAT) in costs sought by the executor, awarding £27,000 instead.

Though she cited some of the items claimed as examples of what she considered unreasonable claims, she said she was “considering matters in the round” and did not go through the N260 statement of costs in detail.

HHJ Hodge ruled that she “erred” as a result. “While summary assessment can be ‘broad brush’, a judge still has to consider the individual elements of the bill item by item,” he said, citing binding authority.

“What is meant by ‘broad brush’, in the present context, is that, unlike the detailed assessment procedure under CPR 47, there is no need for any formal notice of commencement of the assessment, or any detailed bill of costs, or any points of dispute, or any points of reply. But the court must nevertheless address individually each separate objection that may be taken to particular items in the N260.”

Rather than directing a detailed assessment, HHJ Hodge decided to undertake a summary assessment himself so he would know who had ultimately been successful in the appeal. Otherwis,e he could not deal “justly” with the costs of the appeal.

The judge embarked on a two-hour, line-by-line assessment of the 13-page N260 and finished with a figure of £35,703. He then spent a further 30 minutes summarily assessing the costs of the appeal at £8,298, against a claim for £9,972.

The judge adopted the inflation-increased GHR, subject to the indemnity principle, but rejected the argument that the case justified rates higher than the GHR.

HHJ Hodge expressed sympathy with the district judge, who had had just five minutes at the end of an hour-long telephone hearing to deal with the costs.

In future, he advised, the court should establish from the paying party how many, and which, individual elements of the statement of costs were subject to challenge. If there was insufficient time available to consider them, the court should ask the parties to consent to a broad brush, and global, approach.

If they did not, the court could either order that the assessment be determined on paper after an exchange of “short, sequential written submissions”, re-list the matter for a summary assessment, or direct a detailed assessment.

Speaking last month at the Association of Costs Lawyers’ virtual annual conference, the Senior Costs Judge, Andrew Gordon-Saker, said the current review might be only the prelude to a “more fundamental” look at how the changing working practices of the legal profession should be reflected,

The judge, who is vice-chair of the Civil Justice Council working group headed by Mr Justice Stewart, said the group was not looking to base its recommendations on an ‘expense of time’ calculation like Mr Justice Foskett did in the last review, because “there is no reason to think solicitors will be more forthcoming than they were in 2014”.

Master Gordon-Saker defended the working group’s approach instead to look at what the courts award. What solicitors claimed was not a “reliable” measure, he said, while he saw nothing wrong with this being a circular approach – the argument that what will be recommended are the current rates “plus a bit”.

“The key is the sort of rates that are generally allowed by the court,” he said – not what solicitors charged, or what it cost them do the work or the market rate.

The judge said the rates would remain based on geography rather than practice area and the working party would not be reviewing the banding.

“We’re conscious of the fact that working practices have changed in the last year… and in due course somebody will have to carry out a rather more fundamental review of how legal profession is working, perhaps in two or three years’ time, to arrive at possibly different rates based on possibly different geographical areas…

“But we thought that if we started looking at geographical areas now and there’s a more fundamental review in two or three years… then we’d probably be wasting our time now.”