Rates Will Be Restricted to Guidelines Where No Justification
Posted on 6th April 2022 at 13:04
By Sean Linley, Costs Draftsman
The Court of Appeal have made it clear in the case of Samsung Electronics Co. Ltd & Ors v LG Display Co. Ltd & Anor (Costs) [2022] EWCA Civ 466 (06 April 2022) that parties who want to recover hourly rates above Guideline Rates must provide justification. The case highlights the importance of receiving parties ensuring that they set out their reasons for seeking enhanced rates to the Court.
LJ Males noted that the following hourly rates were claimed by the Respondents:
Grade A - £801.40 to £1,131.75 per hour
Grade C - £443.27 to £704.00 per hour
The Respondents' Schedule of Costs totalled £72,818.21.
The Appellant argued that:
"these are well above the guideline hourly rates set out in Appendix 2 to the "Summary Assessment of Costs" guide published in the White Book. Those guideline rates for London 1, which applies to "very heavy commercial and corporate work by centrally based London firms", are £512 for Grade A (solicitors and legal executives with over eight years' experience) and £270 for Grade C (solicitors and legal executives with less than four years' experience and other fee earners of equivalent experience)."
The Court of Appeal noted 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".
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"."
LJ Males was unequivocal:
"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. This was a one-day appeal, where the only issue was the appropriate forum for the trial, the documentation was not heavy, and the amount claimed (£900,000) was modest by the standards of commercial cases.
For the most part I would accept LG's submission that it allocated work to more junior members of the team where possible and that the allocation of work between solicitors and a single junior barrister was appropriate. Nevertheless, I would reduce the amount claimed to reflect the points made above and would summarily assess LG's costs of the appeal in the sum of £55,000."
The Respondents' costs claim was reduced from £72,818.21 to £55,000.00, a reduction of £17,818.21, nearly 25%.
Here at Carter Burnett we always ensure that we address the pillars under CPR 44 to ensure that justification is demonstrated to the Court where hourly rates above the Guideline Hourly Rates are claimed. This puts you in the strongest possible position when approaching assessment. We would also ensure that any practitioner at a summary assessment has access to a detailed costs briefing note which can be used for the basis of arguments at the hearing.
The case at hand highlights the need to ensure that all receiving parties who are seeking to recover enhanced rates set out justification. In Samsung Electronics Co. Ltd & Ors, the Court of Appeal was unanimous in this view.
We also have further resources on hourly rates:
We are always happy to have a no obligation chat about how we may be able to assist with all aspects of costs litigation. You can give us a call on 01482 534567 or email info@carterburnett.co.uk for a friendly and no obligation discussion with our experienced team.
Tagged as: Hourly Rates
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