Guideline Hourly Rates: publication of final report and a practical update

This content was written by BLM prior to its merger with Clyde & Co.

Last Friday the Civil Justice Council (CJC) produced its final report on Guideline Hourly Rates (GHRs) following a review which started in 2020. A copy of the report can be found here. 

The final report considered the consultation responses from interested parties (mainly receiving and paying parties) with input from both sides of the litigation landscape largely: (a) criticising the methodology adopted by the CJC (with receiving parties saying the proposed rates weren’t generous enough and paying parties saying the rates were too generous), (b) suggesting the data collected was unreliable and unrepresentative and (c) noting that additional relevant data sources, such as the Annual Survey of Hours and Earnings (ASHE), were seemingly ignored.

Unsurprisingly, the CJC’s final report rejects these criticisms and recommends that the new GHRs proposed should be implemented. This is perhaps an example of adopting this mantra from Curb Your Enthusiasm (amongst others):  “A good compromise is when both parties are dissatisfied”. Equally, it might smack of the Shakespearean “plague o’ both your houses”.

What happens now?

The final report is now with the Master of the Rolls, Sir Geoffery Vos who must decide the way forward. If he is satisfied that GHRs last set on 2010 rates do need updating - which isn’t guaranteed given that the Foskett review of GHRs in 2014 failed to convince the-then MR, Lord Dyson, that a revision was justified - we could expect implementation of the proposed rates (below) as early as October 2021.

Whilst the report does not anticipate retrospective introduction of these updated GHRs, the fact that costs assessed after implementation will include all costs in the bill means that the practical effect is that the changes will have retrospective effect, as is explained at 10.2 of the final report: “The new rates (if approved) should be used on summary assessments which are carried out after the date of approval … the working group sees no justification for any phased introduction of the rates.”

Since the interim CJC report in January 2021, we have seen receiving parties adopt the proposed rates or claim ever-increasing rates in excess of the guidelines and relying on the CJC report as evidence to justify the figures claimed. We have had considerable success in pushing back against the worst excess of the hourly rates claimed but we are now starting to see a shift with some, but crucially not all, District Judges allowing increased rates. 

What can you do? 

On a practical level there are limited steps you can take to prevent claimants seeking higher hourly rates. When BLM are instructed we adopt various cost containment strategies as part of our case handling model but we cannot prevent claimant’s solicitors claiming increased hourly rates in appropriate cases.

We can and do challenge the rates claimed at detailed assessment. In costs-managed cases the impact of increased hourly rates will be somewhat limited as the budget has been set and will not be modified unless there is a significant development or good reason. It goes without saying that an increase in the hourly rates claimed should not be a good reason to depart from the approved costs budget but we are starting to see an upward shift in new claims with hourly rates in several high value Injury budgets being claimed at >£550 an hour.
  
In terms of long tail disease claims, specifically NIHL and mesothelioma, the issue is more complex. NIHL claims are not generally subject to costs management (unless allocated to the multi-track) and in respect of the latter costs budgeting does not apply and there is a developed body of case law that permits rates in excess of the GHR in appropriate cases.

Nevertheless, there are several steps that should be taken which can ameliorate some of the worst excess of the hourly rates claimed. These points are applicable to all claims.

1. Investigate the rates claimed and satisfy yourself the claimant’s solicitors are entitled to the rates sought. Many claimant CFAs limit their recoverable rates to the GHR or a fixed rate and any hourly rates claimed in excess of these rate are a breach of the indemnity principle and can amount to misconduct;
2. Keep claims in relevant portals wherever possible, do not let them exit and challenge cases which are incorrectly excluded / taken out of the claims portals. By way of one specific example, given the potential for uplifted hourly rates, we are seeing a significant increase in single defendant disease cases being incorrectly excluded from the Claims Portal. As part of effective case handling, objections to abuse of the claims portals should be included in the letter of response and defence and reliance should be placed on the BLM appeal of Hawkyard v KFC which dealt with this issue. 
3. In budgeted cases, resist attempts to revise hourly rates following an application for a significant development. R.3.15A permits the court to revise budgets to account for significant developments (such as a loss of capacity or an unanticipated claim for provisional damage) but we are seeing an increase in spurious applications with the real purpose being to uplift the budgeted figures to account for the new rates claimed.
4. Look closely at costs schedules in non-budgeted cases and cross-reference any schedule filed in the substantive proceedings and highlight any inconsistencies in the rates claimed.
5. Be smart, pick what to fight, don’t fall into traps and use data analysis. We continue to record and develop our data following detailed assessments and this informs our advice and decision-making going forward. A data-driven approach  to isolating the correct cases to fight to assessment is critical, as is understanding which to avoid. Some claimants solicitors are actively pursuing mesothelioma / catastrophic Injury claims with the express intention of setting a new high watermark for recoverable hourly rates and caution should be adopted before such cases are pursued to assessment given the significant potential negative consequences.

If my team or I can assist with any queries relating to GHRs or detailed assessment of costs generally please do not hesitate to contact me.