Legal Cost Specialists

25% uplift to Guideline Hourly Rates to reflect inflation

By on Feb 10, 2021 | 0 comments

The decision of His Honour Judge Mark Pelling QC in ABS Company Ltd v Pantaenius UK Ltd & Ors [2020] EWHC 3720 (Comm) has already generated a certain amount of interest in relation to his comments as to the appropriate hourly rates to allow in a summary assessment.

The underlying claim proceeded in the shorter trial scheme and concerned the costs of repairing a yacht under an insurance policy.  The claim settled for €244,000.

The comment which has generated interest is:

“There are at least two points which need to be made in relation to grade rates under the guideline rate scheme. First of all, the rates are significant out of date. They were fixed in 2010 and they, therefore, reflect the position as it was in 2010, not as it was in 2020. … The conventional approach in relation to guideline rates is to uplift them by about 25 per cent in order to reflect the effects of inflation on the figures previously arrived at.”

It is difficult to know exactly what to make of this, although receiving parties will no doubt seek to rely on it.

If this is the conventional approach, when did it develop?  Presumably not in 2011.  Did it only develop in 2020 and, if so, what was it before?

What does “conventional approach” mean?  Was the judge taking judicial notice that this is what judges up and down the country, whether County Court, High Court, Senior Courts Costs Office, Admiralty Court, etc, all routinely apply?  If so, the lengthy Civil Justice Council working group report on amending Guideline Hourly Rates, now out for consultation, could have been significantly shorter.  As it is, the Civil Justice Council working group certainly did not suggest that this was their research revealed into what is allowed on assessment.

The fact that this decision has been reported as “Legal News” suggests that these comments do not simply reflect what we all already knew judges to be doing.

As it was, this case was proceeding in the Business and Property Court.  Perhaps the comment was intended to simply reflect the judge’s experience of what was typically allowed in that court.  However, this then raises the question as to what extent should GHRs be departed from to reflect complexity.  If, in 2020, the Business and Property Court sticks fairly rigidly to GHRs but just adds an element for inflation, then this decision may be rather less favourable to receiving parties then in initially appears, at least so far as more complex litigation is concerned.

In fact, the judge commented:

“it has always been the case that specialist solicitors in specialist areas of activity should recover an uplifted fee to reflect that specialism”

It is entirely unclear from the judgment as to what is the interplay, if any, between the need to reflect inflation since 2010 and the need to reflect specialism.  Matters are not helped by the fact that the judgment does not specify what rates were claimed or actually allowed.

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