Guideline Hourly Rates confirmed

The Master of the Rolls has considered a ‘Conclusions Report’ from the Advisory Committee on Civil Costs, and has accepted the recommendation that the interim Guideline Hourly Rates (GHR) should be accepted as the final hourly rates. The interim hourly rates came into effect on 1 April 2010, having been set pending the Committee’s further investigations of some unresolved issues.

The Committee will continue to keep the GHR under review, and anyone in a position to provide information to the Committee is invited to send it as soon as possible and in any event by the end of December.

The Report from the Advisory Committee on Civil Costs (see link) makes for very interesting reading and their views can be contrasted with those I expressed in previous posts concerning the discrepancy between claimant and defendant hourly rates and the ongoing referral fee debate.

The Committee, if I have understood properly, attribute the higher hourly rates charged by claimants’ solicitors compared to defendants’ solicitors, in personal injury claims, as being "entirely accounted for by extra marketing costs/referral fees" that claimants’ solicitors have to incur.  It is then accepted that the work of claims management companies generates claims that otherwise would not find their way into the system.  I have previously questioned whether this view is accurate. 

It may be possible that CMCs help generate some additional claims for relatively trivial injuries that otherwise would not have been brought.  However, whether this is a "good thing" for society, given the cost of these extra claims must be met ultimately by the public, is doubtful.  There was no shortage of claims before the existence of CMCs and when solicitors were banned from advertising and there is no reason to suppose that those with serious injuries would not continue to bring claims in the abscence of advertising on daytime television.

Referral fees add an additional unnecessary cost into the system that does no more than divert a relatively fixed number of claims from the solicitors the claims might otherwise have made their way to, to those solicitors prepared to pay the highest referral fees.

The Report refers to a report by Moulton Hall Ltd into referral fees that found: “On average the number of PI cases conducted per annum by firms paying referral fees was one hundred times that of those which are not paying. There is very little work available in the PI market unless it is paid for”. 

The Advisory Committee on Civil Costs appears to have confused this conclusion with the idea that referral fees create one hundred times more claims than would otherwise exist.

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