Master of the rolls Lord Dyson today opted for an indefinite freeze in the current guideline hourly rates for litigation costs.
In a statement, Dyson (pictured) said the rates, which have been frozen since 2010, will ‘remain in force for the foreseeable future, and will remain a component in the assessment of costs’.
Dyson had previously described an evidence-based revision of the rates as ‘urgent’ when he declined to accept the proposals of a Civil Justice Council Committee established to review the rates in July 2014. At that stage he declared the committee’s evidential base to be insufficiently safe.
The £80,000-plus that experts told the Gazette a full research survey would have cost was not available to the committee and remains unavailable. Dyson asked for discussion with the Law Society and the Ministry of Justice.
In today’s statement, Dyson noted the discussions had taken place, and that he had received a detailed written response from the Law Society.
‘These discussions and this correspondence have not made any material change to the position I was placed in last July – there is no funding available from any source for undertaking the sort of in-depth survey which the Civil Justice Council’s Costs Committee and its expert advisers consider is required to produce an adequate evidence base,’ Dyson said.
He also noted: ‘There is… considerable doubt that even if such funds were forthcoming there would be sufficient numbers of firms willing to participate.’ In 2014 an online CJC survey generated just 148 responses.
Guideline rates were less relevant, Dyson noted, with advances in technology and business practices, and greater use of fixed costs in litigation. But he admitted: ‘Less relevance is not the same as no relevance.’
With regard to fixed costs, Dyson said: ‘I have long advocated their wider application, and will continue to press this point to ministers and others in the hope that this important element of the Jackson reforms is implemented.’
Despite the reduced ‘relevance’ of the rates, they remain the accepted default figures for costs calculations, partly because they save firms the time and effort involved in calculating a figure for specific jobs. Relying on rates that are widely accepted by the other side and by the judiciary also provides some certainty.
Dyson added: ‘They remain an integral part of the process of judges making summary assessments of costs in proceedings. They also form a part, even if only a starting reference point, in the preparation of detailed assessments. They also provide a yardstick for comparison purposes in costs budgeting. I know that for some smaller practices GHR also offer a rate to base practice charges on, and to demonstrate to clients a national benchmark.’
Sue Nash, chair of the Association of Costs Lawyers, said: ‘While any decision which gives certainty is to be welcomed, it is unfortunate that the GHR committee was unable to fulfil its brief.’ This was, Nash added, ‘a golden opportunity for the legal profession to help shape the debate about the value of legal services’.
The outcome was ‘inevitable’, she said, ‘given the limited responses to the consultation coupled with the lack of resources afforded to the committee’.
Richard Burcher, chairman of niche costs and pricing law firm Burcher Jennings, told the Gazette that Dyson had reached ‘the sensible conclusion in the absence of reliable market data, particularly in view of the fact that the result of the CJC’s report would have been an overall net reduction’.
But he warned that the decision to reject an inflation adjustment as an interim measure meant the ‘indefensible pricing degradation that has occurred since the GHRs were last reviewed’ still stood.
‘The elephant in the room,’ Burcher added, ‘remains unaddressed. That is the extensive and troubling anecdotal evidence of judges’ treatment of costs which can at times be characterised by lack of knowledge, indifference, arbitrariness, capriciousness and a profound dissonance with the realities of running a law firm in 2015.’
The CJC’s July 2014 recommendations would have caused rates to fall by an average 5%. But the committee struggled to obtain a credible evidential base for its recommendations, with one online survey of solicitors generating just 148 responses.