The review of the guideline hourly rates (GHR) has been widely criticised for only considering the costs judges have allowed, rather than what lawyers have claimed.
The likes of the Association of Personal Injury Lawyers (APIL), Association of Costs Lawyers (ACL) and Forum of Complex Injury Specialists (FOCIS) have told the Civil Justice Council (CJC) working group that the revised figures it put forward were too low.
The ACL said the failure to capture data from costs budgets filed in court risked making the review “a wasted opportunity”.
In January, the working group recommended “modest” increases in the GHR, which were last updated in 2010, and cited the difficulty in obtaining substantial evidence from the profession.
The ACL said basing the proposed figures on the small number of cases which have reached detailed assessment meant the GHR would reflect what judges awarded on assessment rather than informing courts of the “broad costs of litigation” – which was their original intention.
An obvious solution was to use data already lodged with the court in costs budgets: “This will be a more accurate approximation of the actual rates in the wider market which are being charged to litigants.
“The harvesting and processing of this data would not be too onerous of a task. The courts already review thousands of budgets and the data which could be procured would provide the basis of a more wide-ranging evidence-based review without requiring significant extra resources.”
Otherwise the work done by the CJC could be “a wasted opportunity”, the association warned, especially given the key role the GHR could play in “achieving the desired balance between a controlled legal spend and ensuring appropriate remuneration and access to justice”.
APIL’s response pointed out that the recovered rates based on the GHR were also “10 years out of date”.
It went on to highlight the particular position of personal injury, where the amount claimants paid were “often much lower than hourly rates which would usually be charged to the same individual for other types of work at the same firm”.
APIL said: “This makes it evident that the hourly rates charged for injury claims are artificially deflated by the historic GHR rather than inflated when contrasted to other practice areas.”
There was also “a tendency” to minimise the costs shortfall clients faced because clients needed their damages to meet their long-term injury-related losses and necessities.
The association said the working group should also have relied more on the services producer price inflation (SPPI) index for legal services – which the CJC said recorded a 34% increase in inflation since 2010.
“It is not clear to us why the CJC would not use the SPPI (legal services) index when it is clearly representative of the level of cost inflation being experienced by the legal services sector.”
Even the smaller increase in the consumer prices index would result in higher GHR than those proposed, APIL said.
“It is encouraging that the CJC accepts that the appropriate SPPI index (legal services, we would suggest) could be used when annually updating GHR. It is simultaneously disappointing that there is no firm commitment to do this, the CJC describing it as ‘currently impracticable’, a premise which we do not accept.”
FOCIS persuaded the working group to release the information it gathered on claimed costs for the cases where it analysed the assessed costs.
Chair Julian Chamberlayne explained that this showed the proposed GHR were 15% lower than average claimed rates, as well as both the consumer prices index and SPPI.
“That strongly suggests that judicial moderation influenced by the legacy of GHR 2010 is out of step with market inflation,” he said.
“Consequently, the methodology for the currently proposed rates materially understates the average market rate and so does not, in our opinion, meet the core aim of the GHR.
“If it remains, then the average successful litigant, who reasonably chooses to instruct a solicitor who charges the average market rate, will be left with a cost shortfall for every hour worked.
“However, it is easily fixed: using the same data set the average claimed rates provide a more reliable proxy for market rates that is in line with the closest matching inflationary measure, SPPI Legal.”
In its response, the Association of Consumer Support Organisations said increasing the GHR and thus reducing the costs shortfall clients have to make up would help reduce barriers to access to justice.
It also questioned the lower increases proposed for the junior fee-earner grades, saying this could discourage firms from allocating work to them.
Closing the disparity was “likely to aid the personal development of individual solicitors, provide greater consumer choice of representative and increase competition in the market”, it said.
The ACL’s response welcomed the confirmation in the working group’s draft Guide to the Summary Assessment of Costs that qualified costs lawyers would be eligible for payments as grades B or C depending on the complexity of the work.
It said: “Despite this position being ratified in 2014 by the Master of the Rolls, it is the experience of our members that we are routinely, automatically delegated to a grade D for bill drafting and written advocacy. ACL would respectfully urge the wider judiciary to note this current position.”
But costs law and the work of costs lawyers were growing ever more complex, the response went on – work that was previously the preserve of costs counsel.
“Many of our peers achieve the status of partner in top 100 law firms, clearly demonstrating exceptional competence. On this basis ACL struggles to comprehend the arbitrary cut-off point that qualified costs lawyers can only ever recover a grade B rate, regardless of the complexity of the work.
“ACL is firmly of the belief that an appropriate rate should be recoverable for appropriate work, that being a grade A rate for the most complex work.”
The response also questioned reducing the rest of the country to just two bands when London has three.