Do you consider your hourly rate when preparing your retainer? Or do you rely on a template document?
It is worth considering at the outset of any claim the potential value of the matter and complexity of the claim in order to set the hourly rate accordingly. Failure to do so could result in you being limited to hourly rates that, on an assessment of costs, could have recovered an enhancement. In light of the indemnity principle, enhancement is not an option if your retainer restricts you to lower rates.
With the introduction of fixed costs on the horizon, it is essential that Solicitors correctly assess a reasonable hourly rate at the outset to ensure maximum recovery.
Consideration of CPR 44.4 “Factors to be taken into account in deciding the amount of costs” can assist:
Specifically, CPR 44.4 (3) states that the court will also have regard to –
(a) the conduct of all the parties, including in particular –
(i) conduct before, as well as during, the proceedings; and
(ii) the efforts made, if any, before and during the proceedings in order to try to resolve the dispute;
(b) the amount or value of any money or property involved;
(c) the importance of the matter to all the parties;
(d) the particular complexity of the matter or the difficulty or novelty of the questions raised;
(e) the skill, effort, specialised knowledge and responsibility involved;
(f) the time spent on the case;
(g) the place where and the circumstances in which work or any part of it was done; and
(h) the receiving party’s last approved or agreed budget.
I have recently prepared Bills of Costs for two different firms of Solicitors where the work undertaken justified recovery of an hourly rate considerably in excess of what the retainer limited the fee earners too. On both occasions the retainers stated guideline Band Two hourly rates. Obviously, hindsight is a beautiful thing, but any firm of Solicitors accepting instructions on potentially high value clinical negligence matters or catastrophic personal injury claims may benefit from taking a moment to consider, at the outset, what hourly rate is appropriate for the potential work involved, with particular reference to CPR 44.4.
On both occasions, the matters warranted conduct by a Grade A fee earner. However, one matter had been allocated to a highly competent Grade D fee earner, and the other to a Graduate of CILEx (claiming Grade B rates). With success fees no longer recoverable post LAPSO, it is essential that consideration to hourly rates is given prior to preparing the retainer.
A paying party will no doubt challenge hourly rates claimed that are in excess of the SCCO guidelines, and seek to limit them accordingly. However, it is common knowledge in the costs world that these guideline hourly rates are applicable to summary assessment only, and are to be treated as guidelines and not tramlines.
As Master of the Rolls Lord Dyson said in April 2015, guideline hourly rates “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…”
The key point is that they are a starting reference point in a detailed assessment. If a receiving party can successfully persuade a judge, with reference to the 8 pillars of CPR 44.4, that their claim warranted in excess of the SCCO guideline rates, then they are likely to recover an hourly rate that is in excess of these guidelines.
In the case of Higgs v Camden and Islington Health Authority [2003] EWHC 15 (QB), the Honorable Mr Justice Fulford found on Appeal that “the guideline figures are not supposed to replace the experience and knowledge of those familiar with the local area and the field generally” and that “it is expressly recognised in the Guide that costs and fees exceeding the guidelines may well be justified in an appropriate case as an exercise of discretion”.
In the more recent case of (1) KMT, (2) Kay, (3) Mey, (4) MJY (Children proceedings by their Litigation Friend the Official Solicitor) v Kent County Council [2012] EWHC 2088 QB, the Honorable Mr Justice Eady found on Appeal that the Costs Judge was well within his remit to award rates in excess of Central London rates after consideration of the factors listed in the former CPR 44.5 (3).
Therefore, it is essential that Solicitors give specific consideration at the outset of any claim to both the identity of the fee earner who is going to undertake the work and the appropriate hourly rate to be claimed within the retainer to ensure that they have the opportunity to maximise their costs at the conclusion should the matter be successful.
Any questions? Please contact Joanne Chase at joanne.chase@clarionsolicitors.com or call on 0113 336 3327.
One thought