Guideline hourly rates: PLK & Ors (Court of Protection: Costs) [2020]

In our November 2019 Alerter, we considered guideline hourly rates (“GHR”) which were last revised in 2010 and have been the subject of criticism within the legal profession, for example:

  • in Higgs v Camden and Islington Health Authority [2003] the Court concluded that GHR were of limited assistance;
  • in AA and others v TUI UK Ltd and others [2015] – “The Guideline Rates are published for the assistance of Judges and Court users in connection with Summary Assessment. They are guidelines only and the Court retains the discretion to allow rates which are reasonable in all the circumstances”;
  • in Arcadia Group & Ors v Telegraph Media Group Limited [2019] – “Of course, fees in excess of the guidelines can be and often are allowed, and in this case the defendants (who themselves claim up to £450 per hour) and I both accept that fees above those rates are justified”;
  • in Ohpen Operations UK Ltd v Invesco Fund Managers Ltd [2019] the Judge, urging a review of the guideline hourly rates, said “It is unsatisfactory that the guidelines are based on rates fixed in 2010 and reviewed in 2014, as they are not helpful in determining reasonable rates in 2019.  The guideline rates are significantly lower than the current hourly rates in many London City solicitors, as used by both parties in this case.  Further, updated guidelines would be very welcome”; and
  • The HMCTS Guide to Summary assessment states “in substantial and complex litigation an hourly rate in excess of the guideline figures may be appropriate … where other factors, including the value of the litigation, the level of the complexity, the urgency or importance of the matter, as well as any international element, would justify a significantly higher rate …”.

In our November 2019 Alerter, we mooted that, absent a review of GHR, a potential justification for an enhanced rate may be to account for inflation, noting, for example, that ‘Friston on Costs’ includes a table of calculations of GHR accounting for inflation.

The issue in PLK & Ors [2020] waswhether the court’s approach, of assessing costs incurred in the Court of Protection (“COP”) based on GHR, had, by 2020, become incorrect. The Applicants in the case contended that the Court should adopt a more flexible exercise of the discretion conferred by CPR 44.3(3), whereby the GHR are utilised as merely a ‘starting point’ and not a ‘starting and end point’.

PLK & Ors [2020] concerned COP Bills of Costs in which hourly rates had been claimed based on the GHR (of 2010) plus an uplift to reflect RPI inflation between 2010 and 2019. Master Whalan commented on the shifting approach to COP costs – from the ‘convention’ that COP costs were assessed at below GHR, to the position, post-2007, that GHR is applied (“slavishly”) in the vast majority of COP assessments. The Master considered the need for consistency and certainty in respect of COP costs – this was particularly important in COP cases because the protected party’s assets usually derive from an award of damages and solicitors in the substantive litigation therefore need to predict the deputy’s (future) costs in order to plead quantum accurately. The Master also, tactfully, suggested that costs officers, processing huge numbers of COP bills every year, may not have the broad judicial experience required to apply CPR 44.4(3) in all assessments.

The Master, having considered in detail the “discrete area of professional practice” of Deputies and COP teams, and having considered a significant amount of witness evidence, was unable to determine that COP practitioners have experienced a significant increase in overheads, nor that this work involves more irrecoverable time than other areas of practice. Based on this, the Master found that the court’s approach, to apply ‘the relevant guideline rate for the appropriate locality where the work was done for the grade of fee earner who carried out that work’, remains appropriate and applicable. In this regard the Master said:

the GHR is adopted properly as a ‘starting point’, most COP bills will be properly assessed by Costs Officers, who will apply the relevant GHR unless there is good reason to depart from them…  COP assessments can be conducted by Costs Officers utilising the GHR as the reasonable hourly rate”.

In respect of the court’s continued approach (to utilise GHR), the Applicants argued that the court must apply an empirical uplift to reflect the incidence of inflation between 2010 and 2019. Indeed, the Master acknowledged that:

the GHR cannot be applied fairly as an index of reasonable remuneration unless these rates are subject to some form of periodic, upwards review”.

The Master added his voice to those urging a review of GHR:

It seems clear to me that the failure to review the GHR since 2010 constitutes an omission which is not simply regrettable but seriously problematic where the GHR form the ‘going rates’ applied on assessment”.

Considering the effect of inflation (and, briefly, the tension between the use of the RPI or CPI indices) and other commercial pressures on practitioners since 2010 (for example, evidence of salary increases was adduced), the Master determined that, in 2010, “the GHR cannot be applied reasonably or equitably without some form of monetary uplift” and provided a direction that Costs Officers conducting COP assessments “should exercise some broad, pragmatic flexibility when applying the 2010 GHR to the hourly rates claimed.  If the hourly rates claimed fall within approximately 120% of the 2010 GHR, then they should be regarded as being prima facie reasonable” (emphasis added).