Guideline Hourly Expense Rates revised: time to revise your rates?
With effect from 1 January 2025, Guideline Hourly Rates (“GHR”) have been increased by 3.65% under the Service Producer Price Index (“SPPI”), with the calculation having taken account of data up to the first quarter of 2024, but not beyond. The last revision took effect on 1 October 2021 and that was the first since 2010! It followed a Civil Justice Council Working Group Report published on 30 July 2020 which had recommended that regular revisions be made to the rates.
The Table below has just been published by the Ministry of Justice: the rates shown are those applying from 1 January 2025, with the 2021 rates appearing in brackets. The MOJ’s notes indicate that work in London 1 covers “Very heavy commercial and corporate work by centrally based London firms” and is not restricted to those in the City. London 1 covers postcodes EC1 to 4, W1, WC1, WC2 and SW1. London 3 includes all other London boroughs, plus Dartford and Gravesend.
| Grade | Fee Earner | London 1 | London 2 | London 3 | National 1 | National 2 |
| A | Solicitors and legal executives with over 8 years’ experience | £566 (£546) | £413 (£398) | £312 (£301) | £288 (£278) | £282 (£272) |
| B | Solicitors and legal executives with over 4 years’ experience | £385 (£371) | £319 (£308) | £256 (£247) | £242 (£233) | £242 (£233) |
| C | Other solicitors or legal executives and fee earners of equivalent experience | £299 (£288) | £269 (£260) | £204 (£197) | £197 (£190) | £196 (£189) |
| D | Trainee solicitors, paralegals and other fee earners | £205 (£198) | £153 (£148) | £143 (£138) | £139 (£134) | £139 (£134) |
What should practitioners make of the new GHR?
Firstly, the GHR are applicable to the Summary Assessment of costs where the court is undertaking that task following a trial or hearing not exceeding one day (see CPR 44 PD 9.2) and where the fixed costs regime under CPR 45 is not engaged. They do not apply to Detailed Assessments: rule 44.3 of the Civil Procedure Rules do, although the GHR “…may be useful as a starting point in a detailed assessment”. See judgement of Choudhury J in Powerrapid v Harlow District Council [2023] Costs LR 281.
Secondly, it is a hard task to persuade a judge who is carrying out a Summary Assessment to exceed those rates. Arguing that it was a high value, commercial court case will not do. 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: see Samsung Electronics Co Ltd v LG Display Co Ltd [2022] Costs LR 627. The position is different on Detailed Assessment (see above), but solicitors who intend to argue for higher rates, must be in a position to justify them by bringing themselves within the “pillars of wisdom” in CPR 44.3(5)(a) to (f).
Thirdly, Practitioners may have to make do with the new GHR until 2027 or 2028, as it was not envisaged in the CJC Report that they would be adjusted each year. In these circumstances, firms may well be advised that now is an opportune time to review their retainers with their clients or existing costs budgets. If they fail to do that, they may find themselves out of pocket if a shortfall between the GHR and solicitor-client rates develops over time. When raising rates, firms should remember to advise their clients and to update any estimates consequential to those adjustments. Easy to do, but also easy to overlook, as firms over the years have found to their peril.
Finally, practitioners should remember that the indemnity principle imposes a cap on the amount that a winning client can recover from a losing opponent. If the new GHR amount to more than the firm is charging the client, this will only benefit the party paying the costs, as the difference will be irrecoverable by operation of the indemnity principle. All the more reason to check you’re your retainers are up to date! An annual retainer “health check” is always a sensible step to take in any well-run practice.
Court of Protection
If you are running Court of Protection matters where retainers simply refer to GHR as opposed to confirming the actual figures, now is the time to check and update your retainers so as not to breach the indemnity principle. You still need to advise all relevant parties if you decide to increase your rates.
The team at Kain Knight are happy to advise on the reviewing and updating of retainers, estimates and costs budgets following the implementation of the new GHR.
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Author: Colin Campbell
