There have been ongoing discussions between some of our clients and the SCCO in relation to the uplift in hourly rates under this recent case. This is on the basis of firms seeking the increased rates backdated to 2018, but frustratingly, regularly been restricted to the 2010 rates.
The Court have continued to ask for sight of client care letters to ensure the indemnity principle has not been breached. Many firms have been appealing this decision on the basis that there can be no breach of the indemnity principle in the absence of hourly rates in the client care letter with the added argument that the Protected Party cannot consent to the hourly rates, so the document simply does not exist in many cases.
We have received lengthy advice from the Court on this issue.
The Court firstly refer back to the position of Helene Maxwell; who wrote to Professional Deputies on 1 October 2020 to clarify that Costs Judge Whalan’s judgment would not permit rates to be claimed at more than had been agreed between Solicitor and Client.
The Court further added that some practitioners have characterised this as Ms Maxwell seeking to limit the effect of Costs Judge Whalan’s judgment and asserting that she has contradicted Costs Judge Whalan’s express application of his direction in PLK to costs claimed for general management years going back to 2018. However, what Costs Judge Whalan held in PLK regarding what is reasonable, is not incompatible with what Ms Maxwell wrote about what is recoverable. These two terms are not interchangeable and should not be treated as such, but this basic misunderstanding has caused great difficulty to practitioners since PLK.
The Court also advise that the limits referred to first by Ms Maxwell and latterly by Senior Costs Judge Gordon-Saker, in the Practice Note of October 2020, are to do with the retainer between the Solicitor and their client, and not to do with the historic issues around the 2010 GHR, as addressed by Costs Judge Whalan in PLK.
The main point arising from the advice is that on basic contractual principles, a firm cannot increase its hourly rates retrospectively, and if its terms of business are couched in vague terms as to what those hourly rates are, the default position is that costs will be allowed on a quantum merit basis at the ‘reasonable’ rate. As the previous Practice Note of October 2020 indicates, and as the Costs Officers have been instructed to apply, the 2010 GHR without the PLK uplift apply.
Costs Officers are taking the harsh approach that in the absence of evidence by way of a client care letter, terms of business or other agreement which pre-dates the judgment to indicate that the Deputy can recover higher rates, 2010 rates will apply. It would be almost impossible to produce such paperwork in most cases, because no one could have predicted what the hourly rates approved in PLK would be before the judgment was shared. It is therefore incredibly unlikely that COP teams will recover any time which pre-dates PLK at the higher rates.
Going forward, we urge all professional deputies to update their retainer paperwork from the 30th of September 2020 to reflect the PLK & Others hourly rates, otherwise the Costs Officers may argue that you are not entitled to the rates, even for time incurred after the decision, as you will have no client specific proof that the indemnity principle is not in breach.
Brian Ferry is an Associate in the Costs and Litigation Funding Department at Clarion Solicitors. You can contact him at Brian.Ferry@clarionsolicitors.com and 07741 663809 or the Clarion Costs Team on 0113 246 0622