Reform likely for guideline hourly rates

Costs lawyers have called for the guideline hourly rates (GHR) to revert to the old system of being set locally

It emerged last week that a sub-committee of the Civil Justice Council (CJC) has been established to review the rates, with the agreement of the Master of the Rolls. The sub-committee will report directly to Lord Justice Coulson, deputy head of civil justice, and will ‘make recommendations by the end of the year, so that the rates can be updated,’ according to the recently published minutes of March’s Civil Procedure Rule Committee meeting.

The GHR, which help judges assess costs, have not changed since 2010 despite costs rising. The issue came to the fore last year after Mrs Justice O’Farrell said the current levels were ‘not helpful’ when deciding what reasonable rates should be in 2019, in Ohpen Operations UK Ltd v Invesco Fund Managers Ltd [2019] EWHC 2504 (TCC). In the wake of that judgment, the Association of Costs Lawyers (ACL) surveyed its members―60% said a review was urgent, agreeing that the current GHR were doing more harm than good.

ACL chair Claire Green says: ‘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.'

Last December, the rule committee’s costs sub-committee recommended a different approach to collecting the evidence, noting that Lord Justice Jackson recommended a less rigorous examination of market rates, in his final report on costs in 2010. It suggested producing ‘broad approximations’ or reverting to the previous system of letting judges set rates locally after discussions with local solicitors.