Guideline rates review risks being wasted opportunity, ACL warns

The failure to capture data from costs budgets filed in court risks making the review of the guideline hourly rates (GHR) a wasted opportunity, the ACL has warned.

It also called for the right for Costs Lawyers to seek grade A rates for the most complex work they handle.

Responding to the Civil Justice Council (CJC) working party’s consultation on changes to the GHR, the ACL said it was concerned about the approach of basing the proposed figures on the small number of cases which have reached detailed assessment.

This risked the GHR merely reflecting what judges awarded on assessment rather than informing courts of the “broad costs of litigation” – which was their original intention.

The ACL said 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”.

With Lord Justice Jackson’s idea of fixed costs for all cases worth up to £100,000 and ultimately £250,000 still on the table, the ACL said using differing guideline rates for so-called intermediate claims, as well as some multi-track claims, “could address many of the problems identified by Sir Rupert without the inherent disadvantages that a fixed costs regime brings to actions of such value and complexity”.

The ACL welcomed the confirmation in the 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. The ACL would respectfully urge the wider judiciary to note this current position.

“However, it is evident that the nature of costs law and the work of our members is growing ever more complex. It is our experience than many of our members provide highly specialist and technical advice before, during and after litigation. Much of this work would have traditionally been 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, the 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.

“The 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 principles which are applied to other regulated legal professionals when determining recoverable rates should be applied to Costs Lawyers.”

The response, drafted by a group led by Council member Adam Grant, questioned the idea of changing the approach in London to reflect the work done, rather than whether or not firms were in the City, saying it feared the move was “necessitated by the imperfect methodology”. It would be better, the ACL said, for the factors outlined in CPR 44.4(3) to govern the appropriate band.

Reducing the rest of the country to just two bands when London has three was disappointing, the association went on.

“The ACL naturally appreciates the pre-eminent position London has within the legal market. It would agree that London itself has a diverse legal market that warrants appropriate triple banding for guideline rates.

“This does not take away, however, the need for the guideline rates and bands to account for the diversity in the legal markets of, say, Shrewsbury and Sheffield, or Hereford and Hull. Under the current proposals, there seems to be none.”

The bigger issue was how working practices would change post-Covid and whether litigators would continue to work from home. “Such a development would, the ACL feels, lead to the location of where work was done to be less relevant over the skill, complexity and the value of the lawyer required to undertake the work.”

This needed to be borne in mind too in relation to the proposal that the location of the fee-earners carrying out work should be identified within the summary assessment form N260.

“Will it, for instance, be a requirement to state if fee-earners are working from home or from an office within the N260?

“This may well have knock-on effects in respect of overhead rates and disputes over rates to be permitted for individual fee-earners who are ‘based’ at home or in office locations. Such a rule change could have significant effects on public policy which have not yet been identified.”

The N260 should also make explicit reference to Costs Lawyers, the ACL added.

The proposal to remove rates for counsel from the guide which noted that “counsel and judges, as well as solicitors who negotiate most of counsel’s fees, generally have more experience of the rates for counsel” is of interest.

The ACL said: “The methodology of the CJC’s report has been to accept the primary role of the court in setting recoverable hourly rates for solicitors. This concession seems to suggest that the market, dictated by negotiation, should dictate the recoverable rates for counsel. The ACL would query whether this discrepancy is logical in light of the report’s wider conclusions.”

The working party indicated that a more fundamental review would be needed in future, given the changes in working practices. The ACL agreed this needed to happen in the “not too distant” future.

“The marketplace has been subject to continual and significant changes over the past decade. These changes have been due to internal, organic factors and substantial external impacts, the latter including the introduction of fixed costs, budgeting and more recently a more ‘home working’ base for legal firms.

“These developments raise fundamental questions about how best hourly rates can evolve to meet these changes.”

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Costs News
Published date
31 Mar 2021

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