Justifying Enhanced Rates, Delegation & Filing Schedules of Costs Late
Posted on 16th June 2022 at 09:16
By Sean Linley, Costs Draftsman
The case of Rushbrooke UK Ltd v 4 Designs Concept Ltd [2022] EWHC 1416 (Ch) (15 June 2022) provides some interesting insight on the approach to be taken to hourly rates, particularly those claimed in excess of the Guideline Hourly Rates, delegation (or lack thereof) and how serving a Schedule of Costs less than 24 hours before an application hearing does not necessarily mean a disallowance of costs.
Practical Points
A number of practical points arise:
- Where hourly rates above the Guideline Rates are claimed, then there must be evidence at the work done was “above average in either difficulty, or in complexity, or in novelty, or in importance to the client.” Though the Court found here that the case at hand was “typical business” it did find that “a figure slightly above the guideline, so to say, within touching distance of it would not be too high.” The figure claimed of £350.00 (£89.00 higher than GHRs or 34% above) was too high.
- Solicitors should “know how to delegate less important work to less expensive fee-earners.” In Rushbrooke UK Ltd, HHJ Matthews was critical of the fact that all of the work claimed was done by a single Grade A fee earner. The fact that there might be no one to delegate to does not mean it is reasonable for an opponent to pay for the same. The test of reasonableness takes account of potential delegation and it is “not for the paying party to have to identify work which could have been done by a more junior fee earner.” One example HHJ Matthews gave was that he did not believe it was justified for a Grade A solicitor to sit behind experienced Counsel at the hearing and that this was capable of doing by a Grade C or D fee earner.
- The Court is entitled to take into account Schedules of Costs which are served less than 24 hours before an application hearing. Schedules are short and “the substance of them can be taken on board in a matter of minutes.” So long as the Paying Party has sufficient time to consider and take instructions then it would mean no prejudice was suffered.
Background and Filing of the Schedules of Costs
The claim concerned an application for an injunction to restrain presentation of a winding-up petition. The application was struck out and it was held that the Respondent be awarded costs.
The Respondent filed two Schedules of Costs totalling £8,988.00 including VAT.
The Applicant accepted that costs should follow the event but challenged the second Schedule of Costs “on the grounds that it was filed and served after the hearing, instead of 24 hours before” in accordance with CPR PD 44 para 9.5(4)(b) (i.e. that Statements of Costs for all other hearings must be filed and served not less than 24 hours before the time fixed for the hearing).
HHJ Matthews stated that: “I agree that it was not served in time. But costs statements are short, and the substance of them can be taken on board in a matter of minutes. There are plenty of cases in the books where the court has proceeded with a summary assessment of costs based on assessment delivered to the other side only a short time before the hearing. The reality in this case is the applicant has had sufficient time to consider and take instructions on the contents of the updated costs schedule, and will suffer no prejudice as a result. I will therefore take into account both the original and the updated schedules.”
Hourly Rates and Delegation
The Respondents’ hourly rates was claimed above the Guideline Hourly Rates. It was noted that:
“The first objection taken by the applicant is that the respondent's solicitor is a grade A fee-earner, practising in Bristol, in national band 1 of the costs guideline hourly rates, and the relevant rate is therefore £261. However, he has apparently charged at the rate of £350, £89 more. Secondly it is complained that there was no delegation to a less expensive fee-earner for those parts of the work which could properly be done by such a fee-earner. No objection is taken to counsel's fees, either in the first or the updated costs schedules. The respondent contends that the hourly rate of £350 for the respondent solicitor should be allowed by the court, and that there has been no attempt to identify work which could have been more properly incurred by a lower level of fee-earner.”
HHJ Matthews considered the issue of hourly rates and concluded thus:
“In my judgment, both criticisms of the respondent's costs schedules by the applicant have some force. The new costs guideline hourly rates came into force in October 2021. They are of course merely guidelines, but they represent a consensus view of what average work should cost in particular areas of the country (so taking into account regional variations) and the experience and expertise of the relevant fee-earner. I see nothing in the present case to suggest that the work done here was above average either in difficulty, or in complexity, or in novelty, or in importance to the client, or in some other way. This was, if I may respectfully say so, typical business work. A figure slightly above the guideline, so to say, within touching distance of it, would not be too high. A figure £89 (34%) above the guideline in my opinion is too high.”
“Secondly, I am unhappy with the notion that everything here has been done by a single grade A fee-earner. One of the important skills of a solicitor is to know how to delegate less important work to less expensive fee-earners. Sometimes it is said that, well, there was no one else to delegate to (I do not know whether that is the case here). The answer to that plea, of course, is that, as between himself and his solicitor, the client is quite entitled to insist on the grade A fee-earner doing everything. On the other hand, as between him and his opponent, he or she is not necessarily entitled to require the opponent to pay for it. At that stage the question is instead whether the costs are reasonably incurred and reasonable in amount. And reasonableness takes account of potential delegation. Moreover, it is not for the paying party to have to identify work which could have been done by a more junior fee-earner. In my former experience over 30 years as a practising commercial litigation solicitor, there were no litigation cases that I was involved in in which no work whatsoever could have been delegated to a more junior lawyer. In the present case, for whatever reason, it seems that it has simply not been considered. For example (and it is only an obvious example), there was no need for the grade A fee-earner to attend at the hearing and sit be”
Conclusions
Taking into account all the issues the costs claimed of £8,988.00 were reduced to £7,920.00.
Practically the judgment delivered does not materially alter matters and merely reinforces them. It is, however, a good reminder.
Where hourly rates above the Guideline Hourly Rates are claimed then they must be able to justify this by reference to the case at hand. A competent costs specialist will look to identify these factors within the costs documentation and also during negotiations / advocacy.
On the issue of delegation, the warning ought to be heeded. Where there is no delegation then expect a degree of costs to be found unreasonable. Though this test is only likely to apply to non-budgeted costs, as the Court will have already adduced a reasonable sum to be spent on any budgeted work. For those practitioners where delegation is not possible, it would be worth advising clients of possible reductions to the time spent where they may be on the hook for any short-fall.
Finally, we have seen contrasting decisions on the impact of serving a Schedule of Costs less than 24 hours before an interim hearing. Here we have the Court again concluding that so long as there is sufficient time for the same to be considered and consequently there is no prejudice then the same will be permitted. None-the-less, compliance remains the best form of defence. If you are unsure of any deadlines with respect to costs documentation then contact your trusted costs advisor who will be able to guide you. Take a look at our previous blogs on filing Schedules late with one decision disallowing costs and another allowing them.
Should you have any queries arising from this article or upon costs generally then please do not hesitate to get in touch with our friendly team either via phone 01482 534567 or e-mail info@carterburnett.co.uk
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