News had now filtered through the profession that the Master of the Rolls, Lord Dyson has refused to accept the vast majority of the Civil Justice Council’s recommendations on Guideline Hourly Rates in Summary Assessments within Civil Litigation. The rates, as they have stood since the last recommendations on such in 2009 and the increase in 2010, remain. Dyson MR described the position as “deeply unsatisfactory”. Commentators have described the present position as shambolic, predictable and disappointing. We are now left with a profession in which there has been no increase in guideline rates for almost 5 years, which, against the economic background within those years and the resounding changes and challenges in the legal profession could not be described as anything other.
The evidence upon which the recommendations were submitted was, in Dyson MR’s view, “not a sufficiently strong foundation”. The CJC’s recommendations would have resulted in 18 reductions (from 10% to 36%) and only 7 increases (5% to 18%), A single set of rates was proposed for outside London and a new Grade E for paralegals.
The recommendations that were accepted however were: no Grade A*; no separate guidelines for specific types of litigation; no separate rates for detailed assessment, but there should be greater flexibility in detailed assessments and the inclusion of Fellows of cIlex within Grade A (8 years PQE required) and that Costs Lawyers be eligible for Grade C/B rates, depending on the complexity of the work. The above changes will be introduced on 1st October 2014.
In terms of the rates themselves, more fact based evidence is clearly required from a much broader range of sources. Whether the gathering of such will be properly commissioned (and receive an appropriate budget) or how long the process will take is uncertain. Clearly, though, this will not happen overnight.
Given that the guideline rates are often blindly relied on by most paying parties, irrespective of the facts, complexity, and conduct of the case in question, the position and further delay will only serve to exert more pressure on a profession already feeling the pinch. Hourly rates charged by solicitors, when recovered (not taking into account the expansion of fixed/staged costs brought about by the Jackson reforms) cover a whole plethora of costs, including: tax liabilities (including that measured against a firm’s WIP); debt repayments; PII cover; mortgage payments; managing agents fees; insurance; security; f/e salaries; IT costs (including maintenance and software licences); support staff salaries; admin overheads; childcare vouchers; cleaners; training; conflict/compliance/financial risk checks; marketing and any other non- recoverable client costs [a non-exhaustive list I thank Legal Orange for].
However, a very , very important point was highlighted by Lord Dyson within his response to the recommendations:
“It is important to emphasise that the GHRs are guideline rates. The original intention was to provide the judiciary and others with a simplified scheme of rates to be used in undertaking summary assessment of costs. As Lord Phillips MR explained in 2004:
“The Guide is intended to be of help and assistance to judges, but it is not intended as a substitute for the proper exercise of their discretion having heard argument on the issues to be decided.”
Links to the CJC recommendations and the response from Lord Dyson MR can be found below: