Supreme Court guideline hourly rates


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The Practice Directions to the Supreme Court Rules 2009 have been updated with new guideline hourly rate figures for the provisional assessment of costs.  Funnily enough, they are identical to those for summary assessment in other courts.

For those who keep pretending that the Guideline Hourly Rates are only relevant for low value fast-track claims, and should play no part in detailed assessment, think again.  These rates also operate as the starting point figures for assessment in matters heard in the Supreme Court.

What grade fee earner for drafting a bill of costs?


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What grade of fee earner can be justified for a law costs draftsman drafting a bill of costs?

Cook on Costs 2010, page 438, says this issue was discussed at a Costs Practitioners’ Group meeting at the SCCO “whose view was that while Grade D fee earners might be able to draw straightforward bills of under £10,000, all other bills ought to be drafted by a Grade C fee earner, since costs are a technical matter, and matters such as the operation of the indemnity principle need more experience than a Grade D fee earner is likely to possess.”

This suggests that the Costs Practitioners’ Group was of the view that it is acceptable for smaller bills to be drafted by fee earners who do not understand the indemnity principle.  It also suggests that student members of the ALCD who have had up to five years qualifying employment (and would therefore be the equivalent of a Grade D fee earner) might not understand the indemnity principle.  If true, something would have gone seriously wrong with the ALCD training and the previous five years work.

I’m still waiting to see a bill of costs that comes with a disclaimer that the person who drafted it does not understand the indemnity principle and no reliance should therefore be placed on the signature to the bill.  (Though no doubt routinely true even with very large bills.)

Cook on Costs does not identify which Costs Practitioners’ Group meeting is being referred to so the Legal Costs Blog did its own fearless investigative journalism.

The meeting referred to appears to be that of 8 March 2007.  The minutes can be viewed here.  Michael Cook is not listed as one of those present.

The minutes read:

“Mr Hocking [from the Association of Law Costs Draftsmen] outlined the current position. For run-of-the-mill cases in the provinces, bill drafting was normally allowed at grade “D” fee earner level, whereas advocacy was generally allowed at grade “C”. In larger and/or more complex matters, grade “C” might be achieved for bill drafting and grade “B” for advocacy which would be appropriate for Fellows of the Association of Law Costs Draftsmen, some of whom are also qualified solicitors or FILEX. The meeting agreed with this.”

There is absolutely no mention of a £10,000 limit.

Interestingly, the Supreme Court costs practice direction states:

” For a larger bill [over £10,000] the amount allowed for time reasonably spent in drafting the bill is calculated as a multiple of the relevant hourly rate for a Grade D fee earner (unless a claim for a higher grade is justified).”

Following on from my last post, and in anticipation of this post, one reader raised the question as to what rate is appropriate for the fee earner who “punches above his/her weight”. “Suppose the unqualified and therefore Grade C fee earner is actually highly skilled and routinely handles Grade A work. What rate should be paid then?”

A very good question. Almost the kind of question I would expect a member of the judiciary reading this Blog to anonymously post.

The full answer to that is a bit too long for this post. In relation to substantive litigation or advocacy at detailed assessment hearings I can see strong arguments for allowing a fee earner to recover higher hourly rates than their qualifications/experience strictly justifies, depending on their skill and the nature of the case being dealt with. However, when it comes to drafting routine bills of costs I just don’t buy the idea that this is ever anything other than Grade D work. 

Its very kind of Cook on Costs to try to pretend that anything other than the most complex bill of costs (and I mean complex rather than simply ones with a large amount of work claimed) justify anything other than a Grade D fee earner, but it is simply not true.  If your law costs draftsman is charging you Grade C rates or above for anything other than unusual claims you are being ripped-off.

What grade of fee earner is a costs lawyer or costs draftsman?


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What grade of fee earner does a costs lawyer/law costs draftsman fall into?  This is a different issue as to what grade can they justify on assessment, which I will deal with on another day.

I recently commented on the subject of who qualifies as a Grade C fee earner.

By way of a quick reminder:

Grade A and B fee earners are defined as follows:

A – Solicitors with over eight years post qualification experience including at least eight years litigation experience.

B – Solicitors and legal executives with over four years post qualification experience including at least four years litigation experience.

A Grade C fee earner is defined as: “Other solicitors and legal executives and fee earners of equivalent experience”.

The Guide to Summary Assessment of Costs (page 1494 of the White Book 2010) states: “Whether or not a fee earner has equivalent experience is ultimately a matter for the discretion of the court.”

More specifically, the Guide states:

“Unqualified clerks who are fee earners of equivalent experience may be entitled to similar rates and in this regard it should be borne in mind that Fellows of the Institute of Legal Executives generally spend two years in a solicitor’s office before passing their Part 1 general examinations, spend a further two years before passing the Part 2 specialist examinations and then complete a further two years in practice before being able to become Fellows. Fellows have therefore possess [sic] considerable practical experience and academic achievement. Clerks without the equivalent experience of legal executives will be treated as being in the bottom grade of fee earner ie. trainee solicitors and fee earners of equivalent experience [Grade D].”

I’ll proceed on the basis that the costs lawyer/law costs draftsman was initially unqualified. For costs lawyers/law costs draftsmen who have previously qualified as barristers, solicitors, FILEX, etc, or possibly even possess just a law degree, different considerations will no doubt apply.

The Association of Law Costs Draftsmen has four classes of membership (or at least did when I was writing this post):

Students are registered with the Association and are required to complete one module of the training course within the first year of membership to remain as a student member. To enrol as a student applicants are not required to be employed in costs law.

Associates have completed the full training course consisting of three separate modules, attended the compulsory seminars and passed the examination of the Association at Associate level in addition they must have completed five years qualifying employment.

Fellows are full members of the Association who have qualified as Associates, passed the examination at Fellowship level and must have completed seven years qualifying employment.

Costs Lawyers are Fellows who have completed the Costs Lawyer course of the Association.

Although there is no clear-cut answer to the question, Fellows are probably about the equivalent of a Grade C fee earner, Associates arguably so. Students are obviously Grade D.

Beyond that, to be treated as the equivalent of Grade A/B fee earner would depend on the number of years’ PQE experience that had been gained.

What about law costs draftsmen who are not members of the ALCD and have not completed the ALCD training?  I would suggest somewhere north of 8 years’ experience to be Grade C status.

Grade C fee earner?


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I have a bill of costs which utilises various hourly rates for the “Grade C”, “Grade A” and “Costs Draftsman”. However, the bill fails to comply with Costs Practice Direction 4.5:

“The background information included in the bill of costs should set out:

(2) a statement of the status of the solicitor or solicitor’s employee in respect of whom costs are claimed and (if those costs are calculated on the basis of hourly rates) the hourly rates claimed for each such person.”

Therefore, at an early stage (July 2009), I requested details of the names, qualifications and PQE of each fee earner. The claimant’s “law costs specialists” subsequently gave the names of the various fees earners and indicated which of them they classified as Grade A or Grade C. Oddly, there was a total failure to deal with the question of qualifications or PQE.

The matter drags on and Points of Dispute are served in September which repeat the request for details of the qualifications and PQE of the fee earners.

Replies are served months out of time in December.

These Replies give the date of qualification of two of the fee earners (the Grade As) and state in relation to the other three fee earners that they “do not have the qualifications however all have the relevant experience to claim a Grade C Grade.”

Grade A and B fee earners are defined as follows:

A – Solicitors with over eight years post qualification experience including at least eight years litigation experience.

B – Solicitors and legal executives with over four years post qualification experience including at least four years litigation experience.

A Grade C fee earner is defined as: “Other solicitors and legal executives and fee earners of equivalent experience”.

The Guide to Summary Assessment of Costs (page 1494 of the White Book 2010) states: “Whether or not a fee earner has equivalent experience is ultimately a matter for the discretion of the court.”

More specifically, the Guide states:

“Unqualified clerks who are fee earners of equivalent experience may be entitled to similar rates and in this regard it should be borne in mind that Fellows of the Institute of Legal Executives generally spend two years in a solicitor’s office before passing their Part 1 general examinations, spend a further two years before passing the Part 2 specialist examinations and then complete a further two years in practice before being able to become Fellows. Fellows have therefore possess [sic] considerable practical experience and academic achievement. Clerks without the equivalent experience of legal executives will be treated as being in the bottom grade of fee earner ie. trainee solicitors and fee earners of equivalent experience [Grade D].”

So, a FILEX has six year’s experience and academic achievement under their belt. Those without this should be treated as Grade D. There may be arguments as to whether seven or eight year’s experience is sufficient to amount to Grade C status without having passed the exams required of a FILEX.

I advised my instructing solicitors to raise a formal Part 18 Request to drag a proper answer out of the other side.

The response that has just been received is that the experience of the unqualified fee earners is: six years, five years and two years respectively.

The first two fairly obviously aren’t the equivalent of a FILEX.  Although the first has the equivalent experience, just, neither has undertaken the academic training.  But what about the third?

Two years. Unqualified.

On what parallel legal costs world does that equate to the equivalent of a qualified solicitor or FILEX?

At what stage does wishful thinking concerning the rates that might be allowed move into outright fraud?
 

Guideline Hourly Rates confirmed


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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.

Make my hourly rate a double


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When flying back from holiday the other day I was glancing at the on-board bar prices. (Despite living a multi-millionaire playboy lifestyle, I am too mean to pay for a flight that has a free bar.)

They were selling 5cl miniatures of Bombay Sapphire gin (standard 40% strength) for £4 a bottle. By my maths, that works out at £80 a litre. The same flight was selling duty free (which unfortunately you are not meant to consume on the flight) Bombay Sapphire (at 47% strength: the good stuff) for £24 for two one litre bottles: £12 a litre. That, by any standards, is a significant price differential.

In the field of legal costs there is a similar level of surprising price gap between the hourly rates that claimant representatives claim and the rates charged by defendant lawyers. Claimants argue that this difference is not evidence that they are overpaid – and therefore that the Guideline Hourly Rates are too high – but rather is due to a combination of the fact that defendant lawyers have guaranteed work volumes and that claimant lawyers have different acquisition costs due to advertising and/or referral fees.

I will leave others to decide whether this explains the following example. This is simply one in my current case load and is far from being anything like the most extreme example I have seen.

The case concerns a high profile, high damages sporting injury claim. The main fee earner (a Grade A) for the claimant is based in a Northern city (Band One). The rate claimed for 2007 is £285. A 100% success fee is claimed in addition. With VAT at 15%, the total claimed is £655.50 per hour. The main fee earner (also Grade A) for the defendant is based in Central London. The rate charged to the defendant insurers for 2007 was £160 (£184 with VAT). Both fee earners are specialists in this type of claim. So, a rate of £655.50 as against £184.

It is no doubt fair to say that comparing a CFA funded case with a non-CFA funded case is something of an artificial comparison. Nevertheless, the base hourly rate claimed by the claimant’s solicitor is 46% above the Guideline Hourly Rates for the area where the firm is based. The rate charged by the defendant solicitor is 45% below the Guideline Hourly Rates for the area where the defendant firm is based. Despite the claimant’s solicitors being based in an area where the Guideline Hourly Rates are lower, they are claiming a rate that is 78% higher than the defendant’s.

Of course, maybe claimant lawyers are just “worth” more.

Feel free to submit more extreme examples than this one. 
 

Hourly rates out of control?


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Ropewalk Chambers has an excellent article on their website by Andrew Hogan on how the current approach to hourly rates has led to a lack of proportionality and transparency in legal costs.  This article was first presented to the Association of Law Costs Draftsmen at this year’s annual conference and has also appeared in the Personal Injury Law Journal.

Wrong on Guideline Hourly Rates


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In a previous post I wrote that I was going to admit to being wrong on three occasions.  Here is the second confession. 

Back in January, I predicted there would be no increase in the Guideline Hourly Rates.  That prediction turned out to be inaccurate and the rates were indeed increased in April.  However, as the Advisory Committee on Civil Costs observed, their decision to increase in line with the private wage index meant the 1.7% increase was “well below current RPI inflation and so will lead to a significant fall in the real pay of solicitors operating in this area”. 

They also made clear: “we  have  yet  to  complete  our  analyses  of  the  issues  raised  in  our  paper  The Derivation  of  New  Guideline  Hourly  Rates”.  So what is that review likely to conclude? 

The Senior Costs Judge, Master Hurst, commented at the Association of Law Costs Draftsmen’s National Conference that: “The chances of the advisory committee coming up with agreed hourly rates that would be universally accepted are absolutely zero”.    

ILEX Directory


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Those who act for paying parties are no doubt familiar with the Law Society’s Find a solicitor (see link) site that enables a check to be done on when a solicitor qualified.  This is an invaluable tool for checking PQE and whether a fee earner therefore qualifies for a particular grade of hourly rate.

The ILEX website also has a directory (see link) but until relatively recently it did not give the date of qualification as a Fellow. It now does and is therefore another useful tool for paying parties to ensure they are not paying too much. 

2010 Guideline Hourly Rates


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The Master of the Rolls has now considered the recommendation from the Advisory Committee on Costs further, and also additional material put to him by the Committee.

On the basis of the evidence available to him, the Master of the Rolls has decided to accept the Committee’s recommendation that the 2009 Guideline Hourly Rates should be increased (in line with inflation) by 1.7% for 2010. The intention is that this should take effect from 1st April 2010.

The Advisory Committee commented in their recommendations that this involves no substantial change as "we  have  yet  to  complete  our  analyses  of  the  issues  raised  in  our  paper  The Derivation  of  New  Guideline  Hourly  Rates”.  This increase should therefore not be treated as evidence that they are rejecting Lord Justice Jackson’s call for a "robust" review of current rates (ie a reduction in current rates).  On the other hand, the decision to make any increase suggests they are not persuaded that it is obvious current rates are too high.