Life on Mars

Oh, well let’s entertain it, let’s take it out for a prawn cocktail, a steak and a bottle of Liebfraumilch, then let’s kick it into the gutter where it belongs!

-Gene Hunt.

In between tasks in the evenings, I have been catching up with some TV, including the very entertaining series Life on Mars, which I missed first time round. For the uninitiated, it involves a policeman from 2007 who wakes up in 1973 (or does he?) and finds himself a man out of time.

It was therefore with something of a sense of synchronicity that I read about the recent move to a review of guideline hourly rates later this year.

I remember the last attempt at a review in 2014, and wonder what might be different this time?

At that time, having undertaken a review, the then Master of the Rolls decided to leave the guideline hourly rates untouched with this announcement made on 28th July 2014:

The Master of the Rolls having considered the Report has not been able to accept that the new rates recommended by the Committee should be accepted. He has however accepted the following two recommendations, which will take effect on 1st October 2014:

• to amend the criterion for Grade A fee earners so that it includes Fellows of CILEX with 8 years’ post-qualification experience; and
• that, suitably qualified and regulated, costs lawyers be eligible for payment at GHR Grades C or B, depending on the complexity of the work.

The Guideline Hourly Rates 2010 will, subject to the 1st October 2014 amendment, continue to be applied. The Master of the Rolls will give urgent consideration, in consultation with the Law Society and the Ministry of Justice, to what further steps need to be taken to obtain the necessary evidence on which to base any revision of the GHR.

The approach of the then review was to adopt a similar approach to that advocated in The Expense of Time but which foundered over a failure to get in the detailed evidence which would give substance to an approach based upon quantitative data:

3.3 Following discussions the Committee agreed that the approach used should be the one recommended by the economic advisers – the ‘expense of time’ (‘EOT’) approach. This is a well-established formula and requires in the first instance estimating the cost to law firms of an hour of fee-earner time, taking into account the full salary cost paid to fee-earners for those hours and the expenses of the firm that need to be recovered from hours billed for the firm to break even (including a wide range of costs and overheads). Once this figure is arrived at, a percentage mark-up is added to it to represent a reasonable profit element.

3.4 Having reviewed all available data sources for the provision of material – salaries, billable hours, realisation rates, expenses, overheads and so on – on which an expense of time estimate could be made for each of the GHR grades and regional bands, the Committee’s advisers reported a shortfall of relevant data in some areas. As a result, the Committee conducted its own survey a) to produce new data to make good this shortfall of relevant data and b) to provide a more comprehensive set of data material to allow cross-checks and validation of the information from the other sources.

3.5 The Committee took a conscious majority decision – after some discussion – not to try to reflect the impact of the Jackson reforms for the 2014 GHR exercise. It felt that there was insufficient evidence in terms of throughput of cases under the new costs regime for the effects of the reforms to be taken into account. Since that decision was taken, the evidence has confirmed that this was an entirely justified position to take. Nonetheless, the Committee made provision for submissions to be made on that topic in its survey and call for written evidence, and sought views at the oral evidence sessions. The Committee has recognised that these matters will fall for more direct consideration in any future GHR exercise.

The Committee decided against advocating a new band of A* fee earner but did advocate a new grade E fee earner. In relation to grade A* the report states:

6.3.3 As already indicated, the Committee (by a majority) were of the view that a new Grade A* was not justified by the evidence at this stage. The overall decision was that this issue should be addressed in guidance accompanying the GHR, rather than being a discrete recommendation.

In relation to grade E the report states:

6.4.5 Having reviewed the evidence, the Committee’s overall conclusion was that there is undoubtedly force in separating out the existing Grade D, so that a new Grade E is established. Not to do so would have resulted in a dramatic reduction in the GHR for the existing, combined Grade D fee earners. However, the Committee

– having regard to the experience and value (and qualifications) built up by longer serving paralegals – agreed that they should be eligible for Grade D rates if they had at least 4 years’ civil litigation experience, and Grade C if at least 8 years (reference was made to old-style Managing Clerks in the latter respect).

One particular recommendation now lost in the mists of time, which would effectively sweep away many of the Wraith arguments that are still encountered on detailed assessment, concerned a single National Band for rates outside London:

6.5.13 Although this was an issue on which the Committee received considerable oral or written evidence, the statistical data was much less comprehensive. The Committee has lacked the means to commission a chartered surveyor to provide an analysis of property costs across the country. The various surveys analysed have some regional data, but not to the extent that has enabled the Committee to form any clear view on whether there is scope for regional variations. On the basis of the evidence at its disposal in the present exercise, the Committee feels left with no alternative but to recommend a single National rate outside London across each of the Bands. That will not, of course, prevent different rates being considered at the assessment stage in a case if good grounds are shown for a local variation (including the award of City Centre rates or rates appropriate for other locations with a higher cost base).

An old chestnut is the extent to which guideline hourly rates are applicable or relevant (at all) to detailed assessments. It is interesting that the then committee effectively took a line which represents the approach that many District Judges and Masters take in practice  still in 2020:

6.7.5 The Committee was generally of the view that, while summary and detailed assessments are distinct processes, it is unrealistic for them to be completely disaggregated and was mindful of the fact that the evidence considered by the Committee was not focused on seeking to distinguish between the expense of time and various mark ups associated with hourly rates for the kind of case which would result in a summary assessment compared with one that would be the subject of a detailed assessment. The GHR are themselves guidelines and a benchmark for summary assessments. As such, they may provide a helpful starting point in the detailed assessment process, but no more than that. The court’s discretion and exercise of judgment in the application of the eight pillars of wisdom will be will be of significance in both forms of assessment, more obviously so in detailed assessments.

Perhaps the most striking of the recommendations at the time, involved a decrease in hourly rates, particularly in relation to the new “E” grade. These conclusions (and recommendations) were set out in tabular form.

These could have been the rates for 2014:

 

Grade A Grade B Grade C Grade D Grade E
National 237 157 127 102 75
Inner London 375 265 194 147 109
Outer London 261 173 140 112 83

 

The proposal therefore contemplated not an increase, but an effective reduction in the hourly rate of those who then enjoyed the status of grade D fee earning status, with many of them being relegated to grade E status.

I suspect that those who are hoping for an increase in the guideline hourly rates, in a decade of sluggish inflation, are in for a rude surprise.

There is a real possibility that not only might there be no increase, there might be a decrease in the hourly rates.

Since 2014, much has changed, with further improvements in information technology, paperless working, reductions in secretarial and support staff, and a discernible move away from prestige buildings in expensive locations which should serve to decrease overheads.

The current public health emergency which is likely to provoke a real and long lasting change in working methods can only accelerate these trends.

In the next two articles, I shall consider a number of issues relating to hourly rates: expense of time calculations and how enhanced hourly rates may be claimed or argued against at a detailed assessment.

A fresh take on community policing-1970s style!

 

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