Enhancement on Hourly Rates
New SCCO Guideline Hourly Rates came into force on 21 October 2021:
It is commonly accepted that the Guideline Hourly Rates are simply a guide/starting point and the Court has discretion to apply an uplift to the hourly rates where it sees fit under CPR 44.4 (3):
44.4 Factors to be taken into account when deciding the amount of costs
(3) The court will also have regard to –
(a) the conduct of all the parties, including in particular –
(i) conduct before, as well as during, the proceedings; and
(ii) the efforts made, if any, before and during the proceedings in order to try to resolve the dispute;
(b) the amount or value of any money or property involved;
(c) the importance of the matter to all the parties;
(d) the particular complexity of the matter or the difficulty or novelty of the questions raised;
(e) the skill, effort, specialised knowledge and responsibility involved;
(f) the time spent on the case;
(g) the place where and the circumstances in which work or any part of it was done; and
(h) the receiving party’s last approved or agreed budget.
Two recent and notable cases considered the appropriate hourly rates.
In TRX v Southampton Football Club Ltd  EWHC B7 (Costs) Master Brown considered the above ‘8 pillars of wisdom’ under CPR 44.4 (3). Although substantial reductions were made to the costs overall, Master Brown stated at paragraph 17:
“I do not think there is any dispute that there should be an enhancement of the Guideline summary assessment rates”.
Following lengthy submissions Master Brown awarded the following rates:
|Rate (per hour)
Earlier this month the case of Samsung Electronics Co. Ltd & Ors v LG Display Co. Ltd & Anor (Costs) dealt even more directly with the issue of enhancement on costs. In this brief Court of Appeal Judgment, the Court considered whether an enhancement should be applied to the guideline hourly rates following the summary assessment of the successful Respondent LG’s costs. These were claimed in dollars and at the conversion rate used were equivalent to charges between £801.40 and £1,131.75 for Grade A and between £443.27 and £704 for Grade C.
Within the Judgment at paragraph 4 it was acknowledged that “The guide recognises that in substantial and complex litigation an hourly rate in excess of the guideline figures may sometimes be appropriate, giving as examples “the value of the litigation, the level of the complexity, the urgency or importance of the matter, as well as any international element”. However, it is important to have in mind that the guideline rates for London 1 already assume that the litigation in question qualifies as “very heavy commercial work”.
A well-prepared bill of costs should set out the justification for a further uplift on the rates included as per CPR 44.4 (3). As a firm, we do this in all our bills and it is evident from this Judgment how important it is to do so. In particular at paragraphs 5 – 7 Lord Justice Males confirmed:
“LG has not attempted to justify its solicitors charging at rates substantially in excess of the guideline rates. It observes merely ‘that its hourly rates are above the guideline rates, but that is almost always the case in competition litigation’.
I regard that as no justification at all. If a rate in excess of the guideline rate is to be charged to the paying party, a clear and compelling justification must be provided. It is not enough to say that the case is a commercial case, or a competition case, or that it has an international element, unless there is something about these factors in the case in question which justifies exceeding the guideline rate.
There is nothing in the present appeal to justify doing so.”
The costs were subsequently reduced and assessed at £55,000.
There is clear guidance under CPR 44.4 (3) as to what the Court will consider when looking at the costs claimed and in particular the hourly rates. Unfortunately, in the latter case (although costs were summarily assessed), there was a missed opportunity to ensure maximum recovery of costs due to the failure to include provide justification for the rates claimed.
It can be easy for a Defendant to retrospectively assert that a claim was simpler than it actually was and/or that the hourly rates claimed are excessive. By including appropriate justification within a bill or accompanying a schedule of costs, this gives the receiving party a greater chance of recovering higher hourly rates, particularly in more complex areas of law.
Paul is a Costs Lawyer with over 14 years’ experience in a broad range of areas, including clinical negligence, personal injury and commercial litigation. He qualified as a Costs Lawyer in 2012. Paul has a keen interest in costs and prides himself on providing a ‘second to none’ approach to client care.