Guideline hourly rates for solicitors for the summary assessment of costs

Introduction

MPS welcomes the opportunity to comment on this questionnaire. We strongly feel that the time is right to revisit the guideline rates as the litigation environment has changed since they were first introduced, and the introduction of Conditional Fee Arrangements (CFAs) has made this even more urgently needed.

General comments

• We would suggest that the “profit” element of the guideline rate needs to be revisited and a more appropriate ratio applied to bring the profit in line with what the reasonable businessman would regard as fair. This should take into account that the rate applies to the paying party in litigation, and that it is now frequently subject to a further uplift under a CFA. 
• Sixty per cent of the payments we make to claimants in low value claims (the gross estimate less than or equal to £10,000) are in relation to their legal costs. Given the cost of litigation and the ongoing issue of disproportion between quantum and costs, consideration should be given to sliding scales of guideline rates, in order to ensure there is a real focus on costs in relation to value of claims. Discretion would still be available in appropriate cases under Part 44 of the Civil Procedure Rules. 
• Guideline rates vary across the country, which encourages some claimant solicitors to issue proceedings in courts where the guideline rates are higher. District judges are supposed to assess the costs according to where the solicitors’ practice is located, in our experience, this is not happening on a consistent basis. Consideration needs to be given to smoothing out the differentials in the guideline rates.
• It is also important to consider the impact of CFAs. When they were initially introduced, claimant firms lacked the historic evidence of what their overall success rates were. They approached the calculation of success fees with care because they had accountability to the claimant. This was because the claimant was responsible for paying the success fee. They did not have the degree of internal expertise or internal medical resource that enabled them to filter out cases. Notwithstanding this success fees were lower than they now are.  
• The claimant firms now have more data on their overall success rates and a more sophisticated filtering system for cases. They do not have the same accountability to the claimant of the success fee as this paid by the defendant.  This has resulted in a broad brush approach to the success fee and success fees have become higher.
• There has been an increase in technical expertise and risk assessment skills by the claimants’ solicitors; therefore, risk must have reduced but success fees have carried on increasing. It is likely that the claimant solicitor will argue that their expertise warrants a higher guideline rate; however, this means that their success fee must be lower, as their expertise will enable them to reduce the risk of taking on an unsuccessful case at the outset. 

Should you require further information about any aspects of this consultation, please do not hesitate to contact me.