It really is in the profession’s interests to make sure the new guideline hourly rates reflect commercial reality.
Earlier this month, the Civil Justice Council issued a call for evidence over guideline hourly rates.
The rates are intended to be a benchmark for costs judges when assessing the level of costs to award to the receiving party. But although they are not ‘fixed’ rates as such, they are influential – and likely to become even more so once they have been freshly reviewed.
Commercial litigator David Greene is involved in the CJC committee that has been asked to look at the rates. At a joint Litigation Funding/Law Society event focusing on commercial litigation this month, Greene urged solicitors to engage with the call for evidence. He pointed out that the genesis of the rates was the concept of local solicitors and local judges ‘setting’ local rates; and noted that they do tend to form the starting point for costs.
As Greene commented, what should really happen is that costs judges should allow rates that reflect the market rate. But in practice, the costs judges are effectively setting a rate around which the market then aggregates.
The CJC committee is looking at making changes to the geographical bands of the rates, as well as introducing different rates for different types of litigation – such as commercial, personal injury and clinical negligence. Speaking at an Association of Costs Lawyers conference earlier this month, Judge Hodge, the circuit judge member of the CJC committee conducting the review, said it would be looking at issues including whether it is still appropriate to define ‘City’ practices by whether they have ‘EC’ postcodes – which excludes many established City firms such as Clifford Chance and Lawrence Graham.
Hodge put out a plea for lawyers to provide evidence on the new rates, which have been frozen since 2010. No data supplied will be published in a way that identifies the rates of individual firms.
If any firms remain unconvinced about whether it is worth the trouble to supply information to the committee, here is some food for thought. Every now and then at a costs-related event, a lawyer or expert will raise the spectre of fixed recoverable costs being extended well beyond the current limited areas of lower-value personal injury, potentially across all civil litigation. That might be fixed recoverable hourly rates, or fixed fees for set stages of litigation. If that were to happen, surely the guideline rates would be the most obvious starting point for calculating any new fixed costs.
It really is in the profession’s interests to make sure the new guideline rates reflect commercial reality. A link to the committee’s survey for firms can be found here.
A report of the joint Litigation Funding/Law Society event on commercial litigation will be published in the December edition of Litigation Funding magazine.
Rachel Rothwell is a former Gazette news editor