Tag: Hourly Rates

Complexity pays – securing hourly rates in excess of guideline rates

angelanakoLeave a comment

Introduction

The case of Micula & Ors v Romania [2024] EWHC 3566 (SCCO) involved the enforcement of an arbitral award issued by the International Centre for Settlement of Investment Disputes (ICSID). The issue of hourly rates charged by legal professionals was a central point of discussion in the judgment, focusing on the importance of the complexity of the matter in determining the appropriate hourly rate to award.

Background of the case

Micula & Ors v Romania involved the enforcement of an arbitral award issued by the ICSID. The Claimants were investors who were eligible for a tax incentives scheme, and the Defendant, Romania, had repealed the scheme. To compensate for the damage sustained from the repeal of the scheme, the Micula brothers requested the establishment of an arbitral tribunal under the ICSID convention and, in 2013, an arbitral award of EUR 178 million was awarded to the Claimants in compensation for the repeal. The Claimants subsequently took steps to enforce the arbitral award.

The decision regarding the hourly rates and legal costs

The issue of costs recovery in respect of the enforcement proceedings was heard before Costs Judge Leonard in the Senior Courts Costs Office (SCCO). The hourly rates charged by the Claimant’s legal team were considered and discussed in relation to the complexity of the case and the expertise required.

The Costs Judge considered CPR 44.4 (3) to highlight the ‘factors to be taken into account in deciding the amount of costs’, and he suggested that the application of hourly rates should be grounded on the circumstances of the claim. He noted that the work was undertaken between 2014 and 2017 when guideline rates had not increased since 2010, claiming that during this time they were of less value as a starting point in any context, much less a detailed assessment, indicating that the hourly rates claimed were to be analysed based on other factors alongside the guideline rates.

Moreover, Costs Judge Leonard then referred to Choudhury J in Powerrapid and emphasised that the Master of the Rolls had made clear that guideline rates were no more than a guidance and a starting point for judges undertaking summary assessment, and a possible helpful starting point on detailed assessment.

It was made clear by the Judge that facts such as international elements, value, and importance may justify significantly higher rates. The Costs Judge also explained that Choudhury J himself accepted that whether guideline hourly rates were helpful as a starting point was a matter for the Costs Judge, having regard to the relevant circumstances. However, it was also mentioned that increased hourly rates claimed later in the bill were excessive beyond what could be awarded, making clear that the rates must remain reasonable and proportionate.

Ultimately, the Costs Judge allowed an hourly rate at a maximum of £700 per hour for Grade A, £500 per hour for Grade B, £380 per hour for Grade C and £200 per hour for Grade D. In reaching this decision, the Costs Judge concluded that it was a “complex case with substantial international elements” meaning that the case was “top end” for commercial litigation and required the skill, effort and responsibility undertaken by the receiving party’s solicitors to also be top end of the scale.

Conclusion

The Micula & Ors v Romania case underlines the significance of considering the circumstances of a case when determining the appropriate hourly rates. It provides insight into the approach adopted when assessing hourly rates and it sets out the key components that are taken into account by the Costs Judge at detailed assessment.

 

Angela Nako is a Paralegal in the Costs and Litigation Funding Department at Clarion Solicitors.  You can contact the team at civilandcommercialcosts@clarionsolicitors.com

Uplifted Guideline Hourly Rates from 1 January 2025

ujjainimistryLeave a comment

The Guideline Hourly Rates have increased with effect from 1 January 2025.

In December 2023, the Master of the Rolls accepted the recommendations of the Civil Justice Council Costs Review, which was published in May 2023. One of the recommendations was to annually review and increase the Guideline Hourly Rates in accordance with the Services Producer Price Index (SPPI).

The Guideline Hourly Rates are now as follows (the brackets reflecting the rates effective from 1 January 2024 to 31 December 2024):

Grade Fee Earner London 1 London 2 London 3 National 1 National 2
A Solicitors and legal executives with over 8 years’ experience £566

(£546)

 £413

(£398)

 £312

(£301)

 £288

(£278)

 £282

(£255)
B Solicitors and legal executives with over 4 years’ experience £385

(£371)

 £319

(£308)

 £256

(£247)

 £242

(£233)

 £242

(£233)
C Other solicitors or legal executives and fee earners of equivalent experience £299

(£288)

 £269

(£260)

 £204

(£197)

 £197

(£190)

 £196

(£189)
D Trainee solicitors, paralegals and other fee earners £205

(£198)

 £153

(£148)

 £143

(£138)

 £139

(£134)

 £139

(£134)

 

 

There has been an average of a 5%  increase to Grade A rates and 4% increase to Grade B, Grade C and Grade D rates.

Ujjaini Mistry is a Paralegal in the Civil and Commercial Costs Team at Clarion Solicitors. You can contact the team at civilandcommercialcosts@clarionsolicitors.com

Uplifted Guideline Hourly Rates from 1 January 2024

Ellena Hunter1 Comment

It has today been published that the Master of the Rolls has accepted the recommendations of the Civil Justice Council Costs Review, which was published in May 2023.

The 2021 Guideline Hourly Rates will be uplifted as of 1 January 2024 in accordance with the Services Producer Price Index (SPPI). The Guideline Hourly Rates will then be uplifted annually in accordance with the SPPI.

The rates from 1 January 2024 will be as follows (the brackets reflecting the present rates):

GradeFee earnerLondon 1London 2London 3National 1National 2
ASolicitors and legal executives with over 8 years’ experience  £546 (£512)£398 (£373)£301 (£282)£278 (£261)£272 (£255)
BSolicitors and legal executives with over 4 years’ experience  £371 (£348)£308 (£289)£247 (£232)£233 (£218)£233 (£218)
COther solicitors or legal executives and fee earners of equivalent experience  £288 (£270)£260 (£244)£197 (£185)£190
(£178)		£189
(£177)
DTrainee solicitors, paralegals and other fee earners  £198
(£186)		£148 (£139)£138 (£129)£134 (£126)£134
(£126)

The Master of the Rolls has also stated that he will establish a further working group to examine the methodology underpinning Guideline Hourly Rates.

Further, the Master of the Rolls has also asked the Civil Procedure Rules Committee to take forward the suggestions in the May 2023 Costs Review with regard to costs budgeting and pilot the same.

Ellena Hunter is an Associate in the Civil and Commercial Costs Team at Clarion Solicitors. You can contact the team at civilandcommercialcosts@clarionsolicitors.com

Guideline Hourly Rates are the starting point not the finishing point

Robert PattersonLeave a comment

Arguments concerning solicitors hourly rates have always been a central issue in the assessment of costs, regardless of whether there is a detailed assessment or a summary assessment. Those arguments can be particularly important in cases where the rates claimed exceed the guideline hourly rates. Indeed, those who represent paying parties will deploy numerous arguments to achieve reductions, but one argument that is becoming increasingly common is the suggestion that an hourly rate in excess of guidelines should not be awarded unless a ‘clear and compelling justification’ has been given.

This particular line of argument derives from the case of Samsung Electronics Co Ltd & Ors v LG Display Co Ltd & Anor [2022] EWCA Civ 466. In that case the court was faced with a summary assessment involving hourly rates ranging from £801.40 to £1,131.75 for a Grade A and £443.27 to £704 per hour for a Grade C. The justification provided for those rates was that it is almost always the case the rates will exceed guidelines in competition litigation. Rates in excess of guidelines were not allowed and Males, LJ that:

“[…] If a rate in excess of the guideline rate is to be charged to the paying party, a clear and compelling justification must be provided. It is not enough to say that the case is a commercial case, or a competition case, or that it has an international element, unless there is something about these factors in the case in question which justifies exceeding the guideline rate.”

Males LJ made a similar finding in Athena Capital Fund SICAV-FIS SCA & Ors v Secretariat of State for the Holy See [2022] EWCA Civ 1061 when faced with rates well in excess of the guidelines.

Although the above decisions are frequently relied on, the point made by Males LJ may not be applicable in all cases. This is because in both Samsung and Athena, the court was dealing with a summary assessment rather than a detailed assessment and the two types of assessment are conceptually different. That difference was recently explained Master Rowley in Various Claimants v News Group Newspapers Ltd [2023] EWHC 827 (SCCO):

“70. I also accept the argument that the GHR may be a useful starting point in a detailed assessment as well as in a summary assessment. I do not, however, consider that the guidance given by Males LJ regarding the need for a “clear and compelling justification” for exceeding the GHR extends with any great force to this particular situation.

71. The GHR are provided predominantly to assist judges who do not specialise in costs cases to deal with a summary assessment of costs when faced with the successful party’s summary assessment schedule and competing arguments from the advocates.

72. The relevance to the GHR being a starting point in detailed assessments is no more than a reflection of the scarcity of any other starting point. Expense of time calculations or other potential starting points, as is demonstrated here, are invariably absent. But a starting point by its very name does not suggest it is the finishing point and that is particularly so where the court has the opportunity for the parties to address it in detail in respect of the CPR 44.4 factors.”

The Master went on to allow hourly rates in excess of guidelines. Accordingly, the decision in Samsung does not represent an additional test for receiving parties to overcome and detailed submissions in respect of the eight pillars of wisdom in CPR rule 44.4 are likely to be more effective in securing hourly rates in excess of guidelines.

Robert Patterson is a Senior Associate in Clarion’s Costs and Litigation Funding Team, and can be contacted at robert.patterson@clarionsolicitors.com.

Hourly rates: is a detailed assessment more beneficial to a receiving party than summary assessment?

Ellena HunterLeave a comment

In Harlow District Council v Powerrapid Limited [2023]EWHC 586 (KB), the Council (‘Appellant’) made a Compulsory Purchase Order (‘CPO’) in respect of land owned in Harlow by Powerrapid (‘Respondent’). The Respondent successfully resisted the CPO and was awarded their costs.

District Judge Leonard determined the categories of costs that fell within the scope of the costs order and made a preliminary assessment as to the applicable hourly rates, including an uplift on the guideline hourly rates of between 8% and 41%. The Appellant appealed District Judge Leonard’s judgments in relation to the scope of the costs order and the hourly rates awarded.

There are two interesting features of this judgement: firstly, the Court’s position on a party appealing a costs Judge’s determination of hourly rates and, secondly, the relationship between the guideline hourly rates and detailed assessment.

Appealing a costs Judge’s determination of hourly rates

In determining the appeal regarding the hourly rates, the Mr Justice Choudhury considered the judgment of Mealing McLeod v Common Professional Examination Board [2002] 2 Costs LR 223and noted that “Permission to appeal should not be granted simply to allow yet another trawl through the bill, in the absence of some sensible and significant complaint”. Mr Justice Choudhury stated that:

“…the role of the Appellate Court in this context is a limited one, that it should be slow to interfere with the exercise of judgment by a specialist costs judge, and that it should only do so where the conclusions of the judge below exceed the generous ambit within which reasonable disagreement is possible”

In response to the Respondent’s submissions that the Judge did not preside over the substantive matter giving rise to the costs application, Mr Justice Choudhury commented:

“In my view, it would be to usurp the role of the costs judge if the appellate court were to consider that it was in an equivalent position to the costs judge and/or had some greater right to interfere with a judgment merely because the judge below (like the appellate court) had not heard the substantive matter.”

The relationship between the Guideline Hourly Rates and detailed assessment

Upon considering the hourly rates awarded by District Judge Leonard and the applicability of the Guideline Hourly Rates (‘GHRs’) on detailed assessment, Mr Justice Choudhury stated that:

“The Master of the Rolls’ emphasis on the Guide being “no more than a guide and a starting point for judges carrying out summary assessment” is important to bear in mind. I note that the Judge in the present case was not conducting a summary assessment, for which the Guide is principally intended… ”

Mr Justice Choudhury further commented that the GHRs are not as central to a detailed assessment as they are to a summary assessment and highlighted the reference in the Guide to the Summary Assessment of Costs 2021 (‘Guide’) that GHRs are intended to provide a starting point in a summary assessment, and that they may also be a helpful starting point on detailed assessment. He added that whether or not the GHRs are a helpful starting point is a matter to be considered by the costs Judge having regard to all the circumstances of the case.

In dismissing the challenge to the hourly rates awarded, Mr Justice Choudhury stated:

“It was open to the Judge to conclude, as he did, that the GHRs were not particularly useful in this case”

Mr Justice Choudhury in dismissing the appeal stated that “there was no error of principle or law on the part of the Judge and no judgment that exceeded the generous ambit afforded to him. Accordingly, there is nothing that would entitle this Court to interfere with his conclusions.”

Is it more beneficial for a Receiving Party to seek detailed assessment of their costs rather than summary assessment?

Mr Justice Choudhury’s judgment on the relationship between the GHRs and the detailed assessment proceedings reiterates the passage in the Guide that GHRs may be a useful starting point for detailed assessment proceedings, but a Judge can utilise their discretion and find that the GHRs are not useful in light of the circumstances of the case.

The contrast of this judgment to that of Samsung Electronics Co Ltd and others v LG Display Co Ltd and another (Costs) [2022] EWCA Civ 466, in which it was held that there must be ‘a clear and compelling justification’ to obtain hourly rates in excess of GHRs at summary assessment, clearly demonstrates that obtaining an uplift on the GHRs at summary assessment is a higher threshold to pass than at detailed assessment. Whilst the wording of the Guide requires that GHRs be a starting point on summary assessment, and leaves it open to the Judge to determine whether they are in fact helpful on detailed assessment, the case law has certainly widened the relationship between the two assessment processes. It would be preferable for a receiving party to have their costs assessed by way of detailed assessment than summary assessment.

You can find out more about our services here or you can contact the Costs and Litigation Funding team at CivilCosts@clarionsolicitors.com.

Departure from Guideline Rates not justified (even on the indemnity basis)

Joanne ChaseLeave a comment

In Eurohome UK Mortgages 2007 1 Plc & Ors -v- Deutsche Bank AG, London Branch & Anor [2022] EWHC 2408 (Ch) the court ordered the Third Claimant (‘C3‘) to pay the Defendants’ costs on the indemnity basis. The judge summarily assessed the costs.

The costs related to an application by the Defendants to strike out the claim. The basis of the application was that, in part, that C3 had no standing in the proceedings. C3 did not engage with the application, serve evidence, or attend the hearing. Accordingly, the court ordered that C3 pay the Defendants’ costs on the indemnity basis.

The Defendants claimed costs of £72,287 for the application. The Defendants’ solicitor claimed an hourly rate of £710 per hour as against a guideline rate of £512. Considering the rates Mr Justice Miles held that:-

These are guidelines and are not fixed but they are an important starting point. I do not think this is a case of such complexity to justify a departure from the guideline rates.

Para 49

Following the increase to the guideline hourly rates in 1 October 2021, courts have been much less willing to allow uplifted rates. Solicitors should be prepared to factor this into their advice to their clients.

Should you have any questions, you can contact the team at civilandcommercialcosts@clarionsolicitors.com.

Uplifted Guideline Hourly Rates in Commercial Litigation

Anna LockyerLeave a comment

Nothing above London 1 guideline hourly rates should be charged to the paying party in the absence of “clear and compelling justification” was the message from LJ Males in his judgment on an issue concerning costs of appeal in Samsung Electronics Co. Ltd v LG Display Co. Ltd Anor (Costs) [2022].

The receiving party, whose solicitors billed in US Dollars, claimed costs equivalent to charges between £801 and £1,131 for Grade A work and between £443 and £704 for Grade C work. A comparison was made to London 1 guideline rates at £512 and £270 for A and C respectively, and the fact the White Book guides applicability of these rates to “very heavy commercial and corporate work by centrally based London firms”.

Consideration was given to the fact that hourly rates higher than guideline figures may be appropriate for substantial and complex litigation, and that value, urgency, the importance of the matter or an international element may all have a bearing on whether an uplift is justified. LJ Males also reflected on how:

“it is important to have in mind that the guideline rates for London 1 already assume that the litigation in question qualifies as “very heavy commercial work“.”

The receiving party was criticised for attempting to justify the higher rates on the basis this was almost always the case in competition litigation.

“It is not enough to say that the case is a commercial case, or a competition case, or that it has an international element, unless there is something about these factors in the case in question which justifies exceeding the guideline rate.”

“There is nothing in the present appeal to justify doing so. This was a one-day appeal, where the only issue was the appropriate forum for the trial, the documentation was not heavy, and the amount claimed (£900,000) was modest by the standards of commercial cases.”

The delegation of work to juniors and a single junior barrister was however noted as appropriate, but the schedule claiming costs of £72,818 was still reduced to £55,000.

Planning a full and detailed justification, explaining why an uplifted hourly rate is reasonable in a particular matter, is the key to good recovery.

You can find out more about our services here or you can contact the Costs and Litigation Funding team at CivilCosts@clarionsolicitors.com

Ensure consistency between your Costs Budget and Bill of Costs

Andrew McAulay1 Comment

Consistency and a true connection between Costs Management and Detailed Assessment is essential for the successful recovery of costs on Detailed Assessment.

If a costs budget is prepared incorrectly, which creates a disconnection between the costs budget and bill of costs, then you can expect a costs law obstacle course and a heavy migraine on detailed assessment.

The case of MXX -v- United Lincolnshire NHS Trust [2018] is a great example, which is summarised below:

Background, Retainer and Hourly Rates

The Claimant instructed her Solicitors in 2012 and the matter was funded by way of a Conditional Fee agreement with the rate for the conducting lawyer (Grade A) agreed at £335 per hour.

In August 2013 the rate for the conducting lawyer increased to £460 per hour (this was an error). In January 2015 the hourly rate was reduced to £350 (effective from May 2014). It was increased to £360 in 2015 and £365 in 2016.

The substantive proceedings related to a high value injury claim, with quantification being resolved in November 2016. The claim was subject to a Costs Management Order dated 2 March 2015.

Detailed Assessment Proceedings were commenced in March 2017 and the bill of costs totalled circa. £1.3 million.

Background to the Costs Management Order

At the CCMC, the District Judge dealt with estimated costs and correctly stated that the incurred costs were for detailed assessment. The hourly rate included in the costs budget for the conducting lawyer was £465 per hour.

In respect of the estimated costs, the Judge indicated a composite rate of £280 per hour, which the parties then used to agree the estimated costs for each phase.

Discrepancies between Budget and Bill

Following the commencement of detailed assessment proceedings, the Defendant compared the costs budget (Costs Management Order) with the bill of costs and noted the following discrepancies:

  • Substantial differences in relation to hourly rates.The hourly rate included in the costs budget for the conducting fee earner was £465.00 per hour, but in the bill of costs hourly rates of £335.00 and £350.00 were claimed; and
  • The bill of costs included roughly 144 to 147 hours less time for incurred costs than the costs budget.

The Defendant had legitimate concerns and made an Application for an Order pursuant to CPR 44.11, arising out of what the Defendant described as a mis-certification of the Claimant’s costs budget in the substantive proceedings.

Decision

It is well worthwhile reading the Judgment and the very articulate submissions advanced by both parties. This will help you to fully understand the decision, which was as follows:

  1. The Master did not find that the errors regarding the rates for the conducting fee earner (in respect of estimated costs) or the significant time discrepancies in relation to the time included in the costs budget and the bill of costs amounted to improper conduct.
  1. However, the Master did find that there was improper conduct in relation to the inflated rate/s claimed within the budget (as incurred costs).The Master had previously dealt with a case with some similar issues (Tucker v Griffiths & Hampshire Hospitals NHS Trust 2017) and decided to apply the same sanction in this case as he did in that case, which was to disallow the items claimed in the bill of costs which related to the Costs Management Order.The Defendant had submitted that the Claimant’s bill of costs should be reduced by 75% due to the errors, but the Master said:“Whilst those behind the Defendant in both cases may have considered the sanction in Tucker to be insufficient, it seemed to me to be the only appropriate sanction. There is nothing wrong with the Bill in terms of the indemnity principle. The problem lies with the budget. I consider it to be entirely appropriate to impose a sanction in respect of the work which caused the problem.That work is the non-phase time spent creating and maintaining the budget. It would be wrong in my view retrospectively to disallow some of the budget itself”.

    The decision in this case (and in the case of Tucker) are both cases which were before Master Rowley at the Senior Courts Costs Office. Another Court/Judge could reach a different conclusion and I certainly expect to see this issue again before the Courts for the following reasons:

Lawyers do not time record consistently within their respective departments and firms, which means that discrepancies between budgets and bills will continue to regularly occur and a different Judge/Master may well adopt a more stringent approach;

Costs Budgets are regularly being prepared by non-specialists and prepared very “late in the day”, which leads to errors; and

There is a misconception that the costs budget is a more flexible document than a bill of costs i.e. the statement of truth to a bill of costs carries more weight than a statement of truth to a bill of costs.It is very important that all lawyers (and law firms) approach Costs Management consistently and understand the importance it has on detailed assessment. If that is done, then it leads to a consistent bill of costs, less obstacles on detailed assessment and no migraine – but maybe a headache!

This blog was prepared by Andrew McAulay who is a Partner at Clarion and the Head of the Costs and Litigation Funding Team. Andrew can be contacted at mcaulay@clarionsolicitors.com or on 0113 336 3334

NB There are some other interesting points and views in the Judgment which I will cover in a further blog.