Guideline hourly rates: help or hindrance?

Guideline hourly rates (‘GHR’) are so often misunderstood: paying parties frequently aver that they ought to be strictly adhered to, irrespective of the nature, value etc. of the litigation concerned and be it summary or detailed / provisional assessment, while receiving parties (and even respected academics) often argue that they have no relevance to anything but the summary assessment of costs in the fast track (and possibly even only in respect of interlocutory skirmishes). Such arguments / views are plainly wrong in my view.

My view is, and always has been, that the GHR are a most useful tool or yardstick by which one might measure the reasonableness of hourly rates and that such a tool is, and should be, used at all manner of assessments. They bring a degree of certainty to what would otherwise be an entirely uncertain situation; without them it would be exceedingly difficult for both receiving and paying parties alike (not to mention the Court) to assess claims for costs with any meaningful accuracy so as to endeavour to avoid costly and drawn out assessment proceedings (or at least to try to ensure that they are the successful party in such proceedings). The GHR are not carved in stone and they are neither a shield nor a sword (or perhaps they are both); they are the product of research which provide litigants and judges alike with a starting point and, hopefully, a route to an end point. Further information as to the derivation of the (2009) GHR may be found here.

The most common (and annoying) argument I receive from receiving parties is that the GHR are simply and completely irrelevant to the detailed / provisional assessment of their costs. Really? Irrelevant? Notwithstanding that the bill of costs in respect of which that argument is made states “Matter conducted by a Grade A fee-earner at a rate of £217.00 per hour“?! So it is fine for a receiving party to adopt the GHR, when it suits, for the purpose of that nomenclature and precise rate, but for it to wholly denounce the GHR, when it doesn’t suit, should a paying party dare to say something like “Reduce to guideline Grade C rate of £161.00 in this run-of-the-mill claim“.

I accept that the above paragraph is as much an exercise in semantics as it is an argument as to the relevance of GHR to detailed / provisional assessments. However, a much stronger argument, to counter that of irrelevance, might be based on the notional fast-track personal injury claim which concluded at trial but without there being sufficient time to conduct a summary assessment of the successful party’s costs at the end. Can it possibly be right that in such a claim the GHR would have been relevant had there been another 15 minutes or so of court time available but the GHR are then rendered irrelevant simply because there was no time and because the costs are to be subjected to detailed / provisional assessment instead? No, of course that cannot be right; it is absurd.

The relevance of the GHR to detailed / provisional assessment proceedings was recently considered in detail by HHJ Richardson QC (sitting with assessors – District Judge, and Regional Costs Judge at Scarborough County Court, Neaves and Mr John Woosnam) in the matter of G (by her mother and litigation friend M) -v- Kingston upon Hull City Council (Kingston upon Hull County Court 18/09/13 – available via Lawtel). It is interesting to note that this appeal was from a decision of another Regional Costs Judge, District Judge Besford, and that the parties were represented by notable costs specialists Nicholas Bacon QC for the claimant/appellant receiving party and Paul Joseph for the defendant/respondent paying party.

The facts of the underlying litigation are horrific to even think about and so, without disrespect or insensitivity, let’s focus on the issues relevant to this article. As the learned Judge put it, at paragraph 3:

This costs appeal allows this court to set out the principles to be applied by District Judges (usually acting as Costs Judges) when determining a detailed assessment of costs as opposed to a summary assessment by a trial judge. One critical issue has been addressed – is there a material difference between the two?

Of more relevance to this article, paragraphs 20 and 21 state:

20. A detailed assessment is not a scientific process, neither is it a process which will produce a necessarily right or wrong answer. A multiplicity of different methods for establishing the appropriate hourly rates has flourished. At the heart of this appeal is the question of relevance of the guideline rates. The range of possibilities varies from following those rates slavishly; to ignoring them altogether. There are clearly many shades in between those two extremes. Whilst they are described as “guidelines” for “summary” rather than detailed assessment, it is nevertheless commonplace on both summary and detailed assessments for courts to be referred to the guidelines. This is often on the basis that they should be uplifted (on the receiving party’s submission); disregarded entirely (receiving party); or followed (a common submission from a paying party in response to a Bill claiming higher rates than those in the Guidelines). However it is put, it is a matter for the court’s discretion. The seven factors in CPR 44.5(3) will be relevant; but the weight afforded to each factor is a matter for the wide discretion of the costs judge.

21. As we shall come to explain the guidelines are an extremely useful tool for detailed assessments, but they are not to assume an enhanced status beyond a useful starting place or cross-reference point. We emphasize at once that a detailed assessment requires the exercise of judgment as we hereafter set out.

The appeal as to hourly rates (the actual rates involved matter not) arose from District Judge Besford’s approach of identifying the grade of the fee-earner concerned, considering what grade of fee-earner might notionally have dealt with such a claim, taking into account the various facts of the underlying claim and thereafter arriving at an hourly rate derived from those considerations and the GHR. Specifically, it was this part of the Judge’s views at first instance which caused the claimant concern (or rather, caused her solicitors concern as they do a lot of business at the Kingston upon Hull County Court where, as aforementioned, District Judge Besford sits as Regional Costs Judge and which likely explains the perceived need to bring in a QC):

…as a body we now look to implement unchanged the rates that are set out in the Supreme Court guidelines. So for all intents and purposes those are the rates that we look to irrespective of whether it is summary, interlocutory, fast-track, anything. That is the rate we feel is appropriate. I take the view that for the run-of-the-mill cases, whether they are High Court, multi track or whatever, fast-track or anything, that is the rate that I will ordinarily allow. If I have a partner doing a small track claim and they obtain an order for costs, although on the guideline rates the partner will get the partner rate of £200, I’m not going to give it to them because that is not partners work. They will get work at the lowest expertise that is necessary for that particular work, so for a small claim they will get a Grade D and not a lot else. The converse is absolutely true. If a Grade D-and by that I mean a person who comes within the fixed description, and we do use those descriptions very robustly-is doing what I consider to be partner work, then they will get Grade D rates, but I will then consider an enhancement by reference to a percentage uplift. I think that is the way it ought to be approached and nobody has appealed me and nobody has criticised me yet. I have floated this idea at various conferences and all the rest of it and everybody knows it. I’m happy for you to appeal. That is the way I approach these. I look at what is the grade of the person, not how brilliant they are or however much expertise, and then I look to see what sort of work this is. Is the work that they have undertaken within the sort of grade I would expect that person to do? If it is, that’s the rate you get. If it is not and if they’re punching above their weight, then I will allow a percentage uplift. So that’s how I’m approaching it. All the bit about Miss Coulson being absolutely wonderful possibly does not have that much weight in my view. What is more important is: what is she grade-wise? What is this case? Is this case the sort of work I would expect her grade to do?

It was argued on behalf of the claimant that the District Judge’s approach was plainly wrong. First it was argued that the Judge was wrong to apply the GHR as they are guidelines intended for summary assessment. Further, having drawn himself into being bound by the GHR he was constrained to pigeon-hole the fee-earner by grade and thus failed to have regard to the alleged experience of the relatively recently qualified fee-earner. In short, it was argued that the hourly rates ought to have been assessed having regard to the provisions of CPR 44.5(3) (the “seven pillars” – now the “eight pillars” given the advent of costs budgets and, since April 2013, enshrined in CPR 44.4(3) of course) and thus the pre-qualification experience of the fee-earner should have been taken into account.

The defendant, naturally, agreed that CPR 44.5(3) was the correct starting point for the assessment of costs and thus hourly rates. However, it was argued on behalf of the defendant that it was wrong to say that the GHR have no application upon detailed assessment; as a matter of law or practice there should not be any material difference in the approach to be taken to either summary or detailed assessment. Counsel for the defendant drew support for that proposition from the SCCO Guide that the general approach to summary and detailed assessment should be the same and argued that were it not, obvious and serious injustice would arise. It was further argued, not unlike my own observation above, that if there were a distinction between the approach to summary and detailed assessments it might lead to litigants trying to avoid summary assessment by persuading the court to put off the assessment of costs to a detailed assessment, which would lead to a waste of court resources and be contrary to the overriding objective.

Of course, the parties’ respective arguments were more detailed and refined than is set out above; there is no substitute for reading any judgment in full.

HHJ Richardson QC ultimately dismissed the claimant’s appeal but not before finding error in the approach of District Judge Besford. In short, while it was held that the District Judge had placed too much emphasis on the GHR and not enough emphasis on CPR 44.5(3) (and the purported experience of the fee-earner concerned in particular), the hourly rate he allowed was actually slightly higher than that arrived at by the Circuit Judge and his assessors. In the result, there being no cross-appeal by the defendant, the hourly rate was left undisturbed.

So what is the correct approach to hourly rates and do the GHR have any place in the assessment? At paragraph 39:

We disagree with Mr Bacon, however, when he submits that the guidelines have no relevance whatsoever on detailed assessments. Having carefully considered the authorities referred to we take the view that it is not wrong in principle at all, and is entirely appropriate, for the guidelines to be referred to during a detailed assessment and/or for them to be used as a starting point or crosscheck. It seems to us that, to the extent that the authorities cited make any criticism in respect of the use of the guidelines, such criticism is aimed at slavishly following or adhering to them without a considered reference to the CPR 44.5(3) factors. Indeed it is difficult to see how hourly rates can be properly assessed in a vacuum without at least some starting, or reference, point. If Mr Bacon’s contention is right it is difficult to see why there is a requirement for the status of the fee earner to be included on the Bill. There must be some starting point for the consideration of the appropriate hourly rate and we are satisfied that the authorities do not criticise reference per se being made to the guideline rates subject to the provisos mentioned above. However whilst the District Judge in this case did in fact allow a rate in excess of what he found to be Miss Coulson’s grade, this was only on the “robustly applied” grade and, in our view, he fell into error in specifically excluding expertise from his consideration. Expertise is synonymous with skill, which is one of the factors to be taken into account in 44.5(3)(e). In our view he was plainly wrong to exclude that factor from his assessment of the hourly rate.

With almost a sense of amusement it seems to me, HHJ Richardson QC went on to say (paragraph 41):

It did not escape our attention that during the hearIng of this appeal Mr Bacon himself fell into reference to the guidelines in his submissions to us as to the appropriate hourly rate that he contended should be applied. Mr Bacon indeed acknowledged this, and commented on the difficulty of discussing hourly rates without making any such reference.


Finally, paragraph 45:

A detailed assessment demands the exercise of judgment in accordance with the broad discretion within CPR Part 44.5. It is different to a summary assessment where some guidance is needed to assist judges who are required to speedily determine costs. The guidance is designed for that process, but, as we have said, it is a valuable cross-reference point when undertaking a detailed assessment which, by its very definition, has much greater need of the exercise of judgment upon a factual matrix which may be rather less than conventional. When using the guidelines in a detailed assessment in the way we suggest, they are not to be seen as a hermetically sealed commodity or series of compartments. We emphasize the guidelines are a useful cross-reference tool, but are not hegemonic.

Indeed. And lest it be forgotten, departure from the starting point / cross-reference tools that are the GHR can also be downwards. If, as the receiving party, you consider your case to warrant higher than average (or dare I say, guideline) hourly rates, which may become more common given the growing rumours that the next revision of GHR may be a downward revision (the Civil Justice Council costs committee is due to report by the end of March 2014, having been granted further time by the Master of the Rolls), remember that the burden on detailed assessment (ordinarily) lies with you; short of a Jones -v- Secretary of State for Wales [1997] 1 WLR 1008 expense of time survey, at least give the paying party, and thus the Costs Judge, some reason to agree with you (even if that is because the fee-earner is “absolutely wonderful” and/or has expensively coloured hair) and not, in every bill of costs, simply say something as utterly bland as “Due to the nature of this case, a rate of £180 is claimed” – you know who you are…