GUIDELINE HOURLY RATES CONSIDERED IN COURT OF PROTECTION: INFLATION CAN BE TAKEN INTO ACCOUNT ON ASSESSMENT

In  PLK & Ors (Court of Protection : Costs) [2020] EWHC B28 (Costs) Master Whalan considered the appropriate hourly rate for Deputies in Court of Protection matters. (I am grateful to Carter Burnett, Costs Consultants, for bringing my attention to this case).

“It seems clear to me that the failure to review the GHR since 2010 constitutes an omission which is not simply regrettable but seriously problematic where the GHR form the ‘going rates’ applied on assessment.”

THE ISSUE

The Guideline Hourly Rates were last revised in 2010.   The applicants were arguing that their use, without reference to inflation and increased expenses since that period, was incorrect and unust.

 

“The issue for determination concerns the method of assessment of the hourly rates claimed by Deputies.  It is the applicants’ submission that the court’s current approach which, broadly speaking, relies on the application of the Guidelines Hourly Rates (‘GHR’) approved by the Costs Committee of the Civil Justice Council is, by 2020, incorrect and unjust.  Instead the assessment of COP work should be predicated on a more flexible exercise of the discretion conferred by CPR 44.3(3), whereby the GHR are utilised as merely a ‘starting point’ and not a ‘starting and end point’.

THE TWO ARGUMENTS

The Master was not persuaded that firms carrying out Court of Protection work had experienced a significant increase in hard and soft overheads.  However the Master did find that the GHR should be used as a “starting point” and then apply an empirical uplift to reflect the incidence of inflation between 2010 and 2020.

THE MASTER’S JUDGMENT
  1. Three preliminary observations then inform my initial approach to the applicants’ secondary argument.  First, it should be emphasised from the outset that this court has no power to review or amend the GHR, either formally or informally, as this role is the exclusive preserve of the Civil Justice Council.  This reality is recognised properly by Mr Wilcock in his written and oral submissions.  Secondly, while the court has received submissions concerning the application of an inflationary uplift when applying the GHR, this is not just a ‘blunt tool’, but an approach which endorses the application of a practise which has been rejected explicitly since 2014, from which time the emphasis has been on a ‘comprehensive, evidence based review’.  Thirdly, however, it must be acknowledged that the GHR cannot be applied fairly as an index of reasonable remuneration unless these rates are subject to some form of periodic, upwards review.  O’Farrell J. in Ohpen (ibid) observed that it ‘is unsatisfactory that the guidelines are based on rates fixed in 2010’ as these ‘are not helpful in determining reasonable rates in 2019’. These observations were made in the context of an assessment of London City solicitor rates in an assessment where the court was not bound by the GHR.  It seems clear to me that the failure to review the GHR since 2010 constitutes an omission which is not simply regrettable but seriously problematic where the GHR form the ‘going rates’ applied on assessment.  I do not merely express some empathy for Deputies engaged in COP work, I recognise also the force in the submission that the failure to review the GHR since 2010 threatens the viability of work that is fundamental to the operation of the COP and the court system generally. 
  2. In support of the secondary argument the applicants have filed evidence of RPI inflation between 2010 and 2019, and of salary increases in various COP firms over the same period.
  3. The Brown Shipley & Co. report entitled ‘SCCO Guideline Rates and the Impact of Inflation’ and dated October 2019 demonstrates an RPI inflation rate increase of 31% between 2010 and the end of 2018.  The hourly rates claimed in the bills drafted by Clarion and considered in this assessment all apply RPI inflation to the 2010 GHR.  Indeed, this is the only basis upon which the hourly rates are argued in the PLK, Thakur, Chapman and Tate bills.  Mr Wilcock submits, as a secondary alternative to his primary argument, that the court ‘is invited to apply RPI inflation to the GHR and allow the rates as claimed’ (SA, paragraph 49).  But the problem with this approach (at least in empirical terms) is that most official indexes of the impact of inflation prefer the CPI to the RPI rate.  The official rate of UK inflation has used the CPI since 2004.  Dr Friston, as Mr Wilcock acknowledges, uses CPI inflation in his table(s) at 68.3 to 68.10 in the third edition of Friston on Costs.  CPI inflation from 2010 to 2019 is approximately 21%.
  4. The evidence on salary increases adduced by the applicants’ witnesses again suggests some considerable variation dependent upon geographical locality, the grade of fee earners and, I suspect, other firm-specific factors.  At Kingsley Napley LLP salary increases between 2010 and 2020 varied between 25% and 50%, corresponding to an average increase of 33.5%.  Enable Law reports salary increases averaged 32% between 2013 and 2020 (i.e. a 7 year period). In contrast, at Boyes Turner LLP, salary increases for the COP team between 2010 and 2020 total 11-13%.  Russell Caller, a director of The Professional Deputies Forum, adduces evidence of salary increases (since 2010) for private client solicitors in the regional offices of a leading firm; London 21.5%, Guildford 21.4% and Cheltenham 14.9%, producing an overall average of a cumulative 19.6% salary increase between 2010 and 2020.  Again, therefore, the evidence indicates a fairly broad range of salary increases, in circumstances where the uplifts are dictated (at least in part) by subjective factors.
  5. I am satisfied that in 2020 the GHR cannot be applied reasonably or equitably without some form of monetary uplift that recognises the erosive effect of inflation and, no doubt, other commercial pressures since the last formal review in 2010.  I am conscious equally of the fact that I have no power to review or amend the GHR.  Accordingly my finding and, in turn, my direction to Costs Officers conducting COP assessments is that they should exercise some broad, pragmatic flexibility when applying the 2010 GHR to the hourly rates claimed.  If the hourly rates claimed fall within approximately 120% of the 2010 GHR, then they should be regarded as being prima facie reasonable.  Rates claimed above this level will be correspondingly unreasonable. To assist with the practical conduct of COP assessments, I produce a table below which demonstrates the effect of a 20% uplift of the 2010 GHR.  I stress again that I do not purport to revise the GHR, as this court has no power to do so; instead this is a practical attempt to assist Costs Officers and avoid unnecessary delay (caused by individual re-calculation) in a busy department conducting over 8000 COP assessments per annum: