What is the Increase to Guideline Hourly Rates in 2025?
Posted on 1st January 2025 at 07:34
The Guideline Hourly Rates have increased in line with SPPI (inflation) from 1 January 2025. The new rates are set out below (with the previous rates detailed at the bottom of this article). This would be a good opportunity for practitioners to review their current charges & retainer with a view to potential revisions to the hourly rates. It may also be a consideration when preparing Costs Budgets.
Sir Geoffrey Vos confirmed that: “These figures are now to be updated using more recent service producer price inflation (SPPI) values, to cover up to Q1 2024. This excludes provisional data from Q2 and Q3 2024 and amounts to an uplift of 3.65%."
He also made reference to on-going work to introduce Guideline Hourly Rates for Counsel & for the introduction of a new complex commercial work rate which will apply to the work itself rather than location:
“I would also like to highlight the ongoing work of the Civil Justice Council, who have established a working group to examine the issue of guidelines relating to Counsel’s fees, and a new top rate for complex commercial work and look forward to receiving its findings due course.”
Practitioners should take care to make sure that their retainers allow an increase to be made and that the correct notification is given.
You can read our article on the previous Guideline Rates here.
Visit the Government website to learn more about the new Guideline Hourly Rates.
What is the impact on new and existing matters?
If you are planning to increase your hourly rates, make sure your retainer reflects this and that clients are properly notified for existing cases.
Although the new Guideline Hourly Rates are not retrospective in the strict sense, they reflect increasing inflation to Q1 2024 (31 March 2024) so there is an argument that you should bear them in mind for work undertaken since 1 April 2023, the date to which inflation was reflected in the increased GHRs on 1 January 2024. It also means that inflation for Q2 to Q4 2024 is not taken into account at all.
For those already operating above Guideline Hourly Rates then consideration may be given to whether those rates also need to be reviewed. For example, if the current retainer rates are 20 per cent above the previous GHRs then it may be appropriate to consider increasing the rates to reflect the same margin as against the increased GHRs. Commercial considerations are required.
Does the new rate limit what Receiving Parties can recover?
In principle, the new GHRs will see the recoverable rates and solicitor-own-client rates increase. These rates, however, remain broad approximations and are only intended to be a starting point for summary assessment. This means that in appropriate circumstances the Court will allow a claim for an hourly rate exceeding Guideline Hourly Rates.
Paying Parties are likely to argue that the reviews will mean that the Guideline Hourly Rates are more reliable when it comes to assessment and, as a consequence, there should be less departures from them.
The change does not alter the position that clear and compelling reasons are required to recover rates exceeding guidelines. This means for higher-value and more complex cases the GHRs are unlikely to be appropriate.
It should be stressed that the increase in GHRs is not automatic and you will remain limited to the hourly rates agreed with the client, as per the indemnity principle. This is why it is important to review the rates currently agreed and to notify the client if it is considered reasonable to update the same.
How will the new GHR affect claims for Costs?
It will increase the starting point for Costs claims which may in turn see the hourly rate recovery increase. It’s a useful tool in Costs negotiations and will be taken into account by the Court at any assessment.
It may have practical implications where a Costs Budget has already been set on the basis of existing hourly rates and will also impact the preparation of any current Costs Budgets, if hourly rates are to be revised by Practitioners.
For those operating under Fixed Costs then the increase may see practitioners afforded less time to undertake work because whilst the GHRs have increased, FRC have not though a review of FRC is expected in 2025 which may include inflationary uprating.
How do they compare to the previous Guideline Rates?
The graphic below shows the difference between the previous guideline rates and the increased rates from 1 January 2024.
If you need some help or assistance in light of the increase to the Guideline Hourly Rates (GHRs), get in touch or call 01482 534567 for a friendly chat - we'll be happy to give you guidance or advice.
Tagged as: Hourly Rates
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