How do the courts treat guideline hourly rates?

This briefing aims to answers the commonly asked question, what hourly rates will be allowed on detailed assessment?  Before answering that question, the current Guideline Hourly Rates (GHR) are set out below:

As can be seen from the table, the GHRs are divided into five areas.  London 1 relates to very heavy commercial and corporate work by centrally based London firms and London 2 area relates to all other types of work done by those London firms.  Centrally based London firms are those based in postcodes EC1 to EC4, W1, WC1, WC2 and SW1.  London 3 relates to all other London boroughs plus Dartford and Gravesend.

The national areas are largely divided between the large cities and home counties, which are placed in National 1 and all other areas are allocated to National 2.

Guideline Hourly Rates were introduced in the late 1990s and aim to assist judges in making summary assessments of costs after short hearings. Over the past three decades, they have become the standard for recoverable hourly rates across different regions of England and Wales. Updates to the GHR have occurred sporadically, with significant revisions in 2021 and a recent update in 2024, effective from 1 January 2024.

There has been considerable debate over the application of GHR. Paying parties argue that GHR should be the benchmark for hourly rates, while receiving parties contend that GHR are merely guidelines, useful mainly for summary rather than detailed assessments.

The Court’s stance on GHR is illustrated in Samsung Electronics Co. Ltd & Others v LG Display Co. Ltd & Anor [2022] EWCA Civ 466. In this case, the Court of Appeal ruled that any rate above the guideline requires a clear and compelling justification.  LJ Males emphasised that merely citing the case’s commercial nature or international elements is insufficient without specific factors justifying the higher rate. The receiving party’s failure to justify rates exceeding the guidelines was highlighted, with LJ Males noting that the claimed rates were not justified merely by the case’s competition nature.

The case of Athena Capital Services SICAV v Secretariat of State for the Holy See [2022] EWCA Civ 1061 further supported this view, emphasising the need for justification beyond general case characteristics.  LJ Birss mentioned that previous GHR did not address the heaviest work in Business and Property Courts, but the updated 2021 GHR, approved by the Master of the Rolls, included a specific “London 1” band for very heavy commercial work. This set a clear standard for such cases, necessitating justification for rates above the guideline.

In Hughes Fowler Carruthers v Gubbay [2023] EWHC 2188 (SCCO), a rate above the GHR was allowed only for inflation. Costs Judge Leonard, referring to Samsung, required clear and compelling justification for rates exceeding the 2021 guidelines.  He approved £280 per hour, considering inflation, but noted that rates above this were unjustified.

Conversely, in Kent v Apple Inc [2022] Costs LR 1433 (CAT), an hourly rate of £700.00 was claimed for a Grade A solicitor in a competition claim (against the GHR at that time of £512.00).  Other grades were also claimed at in excess of the GHR.  the receiving party justified rates above the GHR with the case’s value, complexity, urgency, importance, and international aspects. Chair, Ben Tidswell, anticipated that the receiving party would be able to justify hourly rates above the GHR for the reasons advanced and an overall reduction of 5% was made against the time spent by solicitors, recognising the significant uplift against the GHRs.