Costs News

12 December 2019
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Costs Lawyers call for urgent review of guideline hourly rates

Costs Lawyers say there is an urgent need to review the guideline hourly rates, an ACL survey has found.

The poll also showed continuing signs of improvement in solicitors sticking to their budgets and greater comfort with the electronic bill of costs.

A total of 72 Costs Lawyers responded to the poll, carried out at last month’s Manchester conference.

The guideline hourly rates have not been changed since 2010; in a recent High Court ruling, Mrs Justice O’Farrell said the current levels were “not helpful” when deciding what reasonable rates should be in 2019.

In 2015, the then-Master of the Rolls, Lord Dyson, froze the guideline rates at their 2010 levels indefinitely after deciding there was no prospect of the evidence required to change them being produced.

Some 60% of Costs Lawyers said a review was urgent, agreeing that they are doing more harm than good. A further 26% said it would be “helpful”.

Speaking at the Manchester conference, SCCO Master Jennifer James said the ruling of O’Farrell J has “created a mood and perhaps an impetus for change that might not have been there before”.

The survey found that 24% of Costs Lawyers said the solicitors they dealt with now stick to their budgets, compared to 10% this time last year. However, 21% said solicitors always went over what was budgeted and a further 45% said they sometimes went over.

Some 27% also reported more applications to revise budgets – another figure on the rise – while 19% said they had still never seen one.

The survey showed that Costs Lawyers were becoming more comfortable with the electronic bill of costs – 63% said they were getting used to it, compared to 41% in 2018 – while 27% still think it is making things worse (down from 36%).

But the number saying solicitors are getting the hang of the electronic bill stayed very low at 4%. More than half (56%) agreed with the statement that “like it or not, this is the future and we must embrace it”.

Some 74% of Costs Lawyers said the electronic bill has increased the costs of assessment, which is unsurprising as users get to grips with it, and few saw much enthusiasm for it at judicial level – just 5% thought judges were keen to use the new bill.

The recent guidance provided by the Court of Appeal on the proportionality test in the conjoined cases of West and Demouilpied does not appear to have helped a great deal, with 52% saying that judges seemed none the wiser and 11% confessing to being more confused than ever. One in six (17%), however, felt the ruling had cleared the issue up definitively.

Other findings included a majority (54%) believing that the mooted increase in fixed costs for cases worth up to £100,000 would be bad news for access to justice – as lawyers would be discouraged from taking them on – 59% saw opportunities for acting for solicitors’ ex-clients to challenge their bills and 69% reporting that they had never seen a damages-based agreement being used.

There has been a push in recent years to use mediation to resolve costs disputes, and 29% of costs lawyers said they were seeing greater interest in going down this path.

The survey showed too that the Costs Lawyer profession itself is in a largely positive state: 43% reported that their practice/department had grown over the previous year, 29% said it had stayed the same and 21% said it had shrunk. This meant that 29% of firms took on more staff.

ACL chair Claire Green (pictured) said: “A review of the guideline hourly rates is vital for the solicitors’ profession. They remain the starting point in most cases – and the end point in many – but fail to take into account the considerable increase in overheads that firms have had to swallow since 2010.

“Solicitors and Costs Lawyers must do their bit, however. Lord Dyson was stymied by a lack of evidence and the rates can only be changed if the judiciary can see how firms’ costs have risen over the past decade.

“It is also pleasing to see the steady upward curve in solicitors accepting the importance of budgeting – although nearly seven years on from its introduction, compliance really should be far higher – and of Costs Lawyers becoming more comfortable with the electronic bill.

“As the survey shows, many of our members’ businesses are in robust health but, to ensure they remain that way, they need to embrace the opportunities that the electronic bill of costs offers those who forge ahead with it – there is no turning back the move from paper to computer.”

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