Guideline Hourly Rates
Unsurprisingly, notwithstanding cogent argument in opposition, the recommended increase to the GHR’s went through on the nod.
Update: The MOJ have advised that they intend to expand the use of the existing FRC regime
The intention is to extend fixed recoverable costs to cover all cases (including all non-PI cases) with a value up to £100,000. This will effectively extend the scope of the Fast Track to cover the majority of cases.
The aim of the proposal is to ensure proportionality and consistency in recoverable costs.
The proposals will create 4 complexity bands with Band 1 for the simplest of cases.
The MOJ has declined to provide further guidance on band allocation, instead stating that it will be for “the parties and judges to come to sensible conclusions on banding in light of the criteria set out”.
Previously Lord Justice Jackson had categorised 4 bands in chapter 5 of his 2017 report:
- Band 1: RTA non-personal injury claims
- Band 2: RTA personal injury claims.
- Band 3: ELA and PL accident claims.
- Band 4: ELD claims (non-NIHL) and the more complex fast track claims
At present it is unclear whether the MOJ and the courts will follow those bands.
The proposed rule changes include penalties for delays and increased reward for success with the addition of an uplift of 35% of FRC where claimants’ Part 36 offers are beaten. There will also be a 50% uplift on fixed costs where one party has engaged in ”unreasonable behaviour”.
There is no mention of any reduction to costs if it is the receiving party who has behaved unreasonably or what the costs position is on the claimant’s failure to beat a Part 36 offer.
In respect of unreasonable behaviour, the MOJ have indicated this may include an unsuccessful challenge to the allocation of cases to different bands. They have also stated that they do not propose to define what amounts to unreasonable behaviour, relying instead on the courts to decide these issues. This will no doubt lead to the next round of costs satellite litigation.
The next step is that draft rules will now be submitted for consideration by the Civil Procedure Rules Committee and the MOJ have advised that a number of issues require further consideration and may be subject to change before any further details can be finalised.
The extension of FRC will provide certainty to all parties on their maximum costs exposure/ recovery and will ensure costs are proportionate to the matters in issue, rewarding successful offers and penalising those who act unreasonably.
Update: Extension of fast-track
The proposed new increased guideline hourly rates coupled with the announcement of an extension to the fixed recoverable costs regime is likely to result in a state of ‘costs equilibrium’.
What was given in the form of increased Guideline Hourly Rates will be tempered by the extension of the fast track regime to claims valued up to £100,000.00. The extension of the fixed recoverable fee regime should bring greater consistency and afford greater certainty. However, fuelled with the knowledge of what adverse costs liability may arise, it raises the question as to whether we will see more claims proceeding to trial and differing tactics surrounding claims generally. As we and others digest the wider ramifications and opportunities of an extended fast track, watch this space for in-depth commentary in the coming weeks across all practice areas.
GHR's - Personal Injury related work
The increased GHR’s are not intended to have retrospective effect, albeit we anticipate that they will become the rate for the year 2021.
The GHR’s are not scale figures, rather broad approximations, intended to provide a starting point for the purpose of summary assessment. However, the guide for summary assessment makes the point that the GHR’s may also be a helpful starting point on detailed assessment.
It is important to note that the GHR’s are a “starting point”, albeit that will not necessarily mean a point from which to increase upon, as will be assumed by most. As a starting point, it may be that there is no reason to increase and in fact there may be good reason to decrease, dependent upon the facts on any one claim.
Reinforcing the fact that the GHR’s are not scale figures set in stone and that the GHR’s act as a starting point, in complex litigation, hourly rates in excess of the GHR’s may be appropriate for Grade A, B & C to justify significantly higher rates.
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