The Civil Justice Council (CJC) has been tasked with reviewing the guideline hourly rates (GHR), it has emerged, with costs specialists urging it to revert to the old system of setting them locally.
According to the newly published minutes of March’s Civil Procedure Rule Committee meeting, a sub-committee of the CJC is to conduct the review, with the agreement of the Master of the Rolls, Sir Terence Etherton.
They said: “Given that there have not been any material changes to the rates for quite some time, the aim is that this new sub-committee will make recommendations by the end of the year, so that the rates can be updated.”
It will report directly to Lord Justice Coulson, the deputy head of civil justice and the lead judge on costs in the Court of Appeal.
The GHR have not been changed since 2010 despite solicitors’ rising costs, and the issue of updating them became live because last year after Mrs Justice O’Farrell said in Ohpen last year that the current levels were “not helpful” when deciding what reasonable rates should be in 2019.
A survey of members of the Association of Costs Lawyers (ACL) in the wake of the decision found that 60% of Costs Lawyers said a review was urgent, agreeing that the current GHR were doing more harm than good.
In 2015, the then Master of the Rolls, Lord Dyson, froze the guideline rates at their 2010 levels indefinitely after deciding there was no prospect of the evidence required to change them being produced.
According to the ACL, last December, the rule committee’s costs sub-committee recommended a different approach to collecting the evidence this time.
Its recently released report said that, though the aim of the GHR was to provide “broad approximations of actual rates in the market”, the investigation by the CJC that informed Lord Dyson’s decision focused too much on establishing the actual rates to a high degree of accuracy.
This was a more rigorous examination than Lord Justice Jackson recommended in his final report on costs in 2010.
The sub-committee’s report said: “It is hoped any review that ought now to take place ensures that it bears more firmly in mind the need to produce broad approximations of actual rates, rather than anything more accurate than that.
“Consideration might equally be given to revert to an approach closer to that which was originally taken to devising the guidelines. Originally, pre-Woolf, the guidelines were set locally. They were arrived at following discussions between the judiciary and local solicitors, and then set by the judiciary in the area.
“A similar approach could be taken now, with the rates being set for Circuits and for London. The guidelines could be based on recommendations by regional costs judges based on, for instance, their experience of costs budgets, with input from local law societies and CILEx.”
The sub-committee said the CJC could then review the results before submitting recommendations. “Such an approach could well ensure that sufficient data was gathered, thus overcoming a problem that hamstrung the costs committee in 2014.”
The report concluded by noting how Lord Justice Jackson accepted that the GHR were a “critical element” in the civil justice system. It said: “It is beyond time, as O’Farrell J highlighted, for that critical element to be put back on a proper footing.”
ACL chair Claire Green said: “It is pleasing that the Master of the Rolls and the sub-committee have recognised the urgency of reviewing the GHR. Especially given the current Covid-19 crisis, it is more important than ever that lawyers are paid a proper, economic rate for their work that reflects the costs they have to carry.
“It goes without saying that this is a very difficult time with many competing priorities, but cash flow is particularly vital for many firms at the moment. A change in the GHR – not gratuitous, but still based on evidence – would be widely welcomed.”