Guideline Hourly Rates to Increase from 1 October 2021

Background to the changes

Guideline hourly rates (GHRs) for solicitor charges have been static for the past 11 years and were long overdue for review- the last increase was in 2010.In January 2021, the GHR working group of the Civil Justice Group (CJC) published its Interim Report which called for “modest” increases in GHRs, ranging from 7% to 35%. A consultation period then ran until 31 March 2021 when feedback was sought on 7 specific matters listed in the Interim Report. 103 responses were received from solicitors, insurers, the NHS, representative bodies of receiving and paying parties, judges, the Law Society, local Law Societies, the civil sub-committee of the council, costs lawyers, local authority legal services and a substantial limited company.

The responses were predictably partisan – the Final Reports states;
‘It would not be unfair to summarise the responses from receiving and paying parties by saying that the former argued that the proposed GHRs were insufficient and that more specialisations should be recognised as warranting separate and higher GHRs; the latter that they were based on totally flawed methodology and that no increase was warranted or, indeed, that the present GHRs were too high.’

The Final Report published earlier this month responded to the feedback in some detail and acknowledged the argument from many paying parties that the review should have been conducted in the wider context of how civil litigation is changing, including court modernisation and more home working. It acknowledged the criticism of the methodology adopted by the CJC and that the data was too narrow and unreliable but “concluded that, though capable of some valid criticism, it [the interim report] is the best available in all the circumstances and is a sufficiently sound basis on which to make recommendations.”

The recommendations were then put before the Master of the Rolls, Sir Geoffrey Vos, for his approval.

He has accepted the recommendations and asked that they be implemented from 1 October 2021.

The key changes from 1 October 2021:

1. There is to be an increase in recoverable rates as set out below:

Grade Fee Earner London 1 London 2 London 3 National 1 National 2
A Solicitors and legal executives with over 8 years’ experience £512 £373 £282 £261 £255
B Solicitors and legal executives with over 4 years’ experience £348 £289 £232 £218 £218
C Other solicitors or legal executives and fee earners of equivalent experience £270 £244 £185 £178 £177
D Trainee solicitors, paralegals and other fee earners £186 £139 £129 £126 £126

2. London 1 rates are to be defined by the nature of work done rather than geographical location. London 1 rates will be for very heavy commercial and corporate work, and London 2 will be for all other work carried out by firms geographically located in either the City of London or the area at present covered by London 2.

3. The express inclusion as a grade A fee earner of Fellows of CILEX with 8 years’ post qualification experience and the replacement of the words ‘legal executives’ with ‘Fellows of CILEX’ in the grade B and C categories of fee earners.

4. National Band 3 is to be abolished and merged into National Band 2.

5. A further review of the GHRs will take place in the next 2 years.

Commentary
The increased GHRs will be welcomed by receiving parties. Even though the rates do not come into effect until October, they are persuasive now. It was reported this week that in Axnoller Events Ltd v Brake & Anor (Summary Costs Assessment) , HHJ Paul Matthews was prepared to take the new GHRs into account in his assessment, even though they were not in force yet. Practitioners should be reviewing and updating retainers where necessary to reflect the increased rates to avoid falling foul of the indemnity principle.

However, the CJC made clear in its final report that the new GHRs are not prescriptive and may be reviewed upwards and downwards depending upon the nature of the case. In Axnoller, save for the trainee solicitor and the costs draughtsman rates, all the rates charged by Stewarts Law were more than £100 an hour higher than the new GHRs. HHJ Matthews accepted the retainer of London solicitors was reasonable (even though the action was proceeding in Bristol) and that parts of the claim were legally complex but stated that the work involved in the case did not justify anything in excess of the new GHRs.

Paying parties will doubtless be disappointed by the higher rates, especially legacy insurers faced with long tail noise induced hearing loss claims which are of limited value in terms of damages, and which are not subject to the fixed recoverable costs regime. The increased GHRs provide even more incentive to ensure that single defendant hearing loss claims are correctly brought in the claims portal and if not, an objection should be raised in the Letter of Response.

If you have any queries relating to the increased GHRs or in respect of costs claims generally, please contact our Corporate Claims team.

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