COST BITES 102: NOPE, YOU’RE NOT GETTING £870 AN HOUR: CREDIT CARD RATES ARE REDUCED
In Walter Hugh Merricks CBE v Mastercard Incorporated and Others  CAT 53 the Competition Appeal Tribunal held that the hourly rates charged by both sides were too high to be recovered inter partes. The Guideline rates still provide a guide as to the relevant rates even in the most complex of cases.
“We also take into account that the guideline rates are just a guide, and that the Guide recognises at para 29 that in substantial and complex litigation rates in excess of the hourly rates may be justified. Further, we note that the guideline rates are now over a year old. However, we do not consider that these considerations can begin to justify rates which are, for Mastercard Grades A and C solicitors some 70% over the guideline rates, and for the CR Grades A and C solicitors in excess of 60% over the guideline rates.”
The Tribunal was carrying out a summary assessment of costs following a four day hearing of a preliminary issue. The claimant succeeded on some issues and the defendant on others. Consequently the Tribunal had to assess the costs of both sides. The Tribunal held that the costs of both sides were disproportional. One cause of this was the hourly rates charged by the solicitors which were well above the Guideline rates.
THE JUDGMENT ON THIS ISSUE
9. As regards issue (1), Mastercard seeks total costs of £109,564.82. This comprises:
Solicitors’ fees (excl. costs submission) £ 38,060.40
Counsel’s fees (excl. costs submission) £ 64,873.67
Preparation of costs submissions (solicitors and counsel) £ 6,630.75
10. As regards the other three issues, the CR seeks total costs of £469,577.38, plus VAT.
He has apportioned those costs as between each of issues (2)-(4) and the costs
application itself, as follows:
Issue (2): PLSA s. 11(2) issue, and s. 6(4) PLSA:
Solicitors’ fees £ 50,499.30
Scottish Counsel’s fees £ 59,500
English Counsel’s fees £ 11,531.25
Issue (3): Proper Law issue:
Solicitors’ fees £ 27,955.75
Counsel’s fees £ 44,065.75
Total £ 72,021.50
Issue (4): Exemptibility:
Solicitors’ fees (incl Scottish solicitors) £ 69,265
Counsel’s fees £182,663.33
Preparation of costs submissions (solicitors and counsel) £ 24,097
11. We recognise that on a claim of this gigantic size, these various issues assume even
more than usual significance. Nonetheless, we regard these costs on both sides as
unreasonable and disproportionate to issues that were essentially matters of legal
argument which took under four days (the first day of the hearing being given over to
a question of amendment of the claim).
12. We think the enormous size of the costs claimed is largely explicable on the basis of
the hourly rates charged by the solicitors on both sides. In the earlier ruling on costs in
these proceedings given on 22 June 2022 ( CAT 27), which concerned only a
payment on account and not a final, summary assessment, the Tribunal referred to the
judgment of the Court of Appeal in Samsung Electronics Co Ltd v LG Display Co Ltd
 EWCA Civ 466, holding that there has to be “a clear and compelling
justification” for the award of costs in excess of the guideline rate. That is a reference
to the Guideline Figures at Appendix 2 to the Guide to the Summary Assessment of
Costs (“the Guide”) issued in November 2021. The guideline hourly rates for “very
heavy commercial and corporate work” by centrally based London firms by solicitor’s
grade are: Grade A: £512; Grade B: £348; and Grade C: £270. Here, the parties’
solicitors for the material period are charged as follows:1
Freshfields (for Mastercard): Grade A: £870; Grade B: £478; Grade C: £478.2
Wilkie Farr & Gallagher (for the CR): Grade A: £825//730; Grade B: £450;
Grade C: £450.
13. By way of justification, the CR says in his costs submission that:
“the issues addressed in this particular hearing were of such complexity and required
such specialist knowledge that one would expect solicitors to charge hourly rates which
exceed the guideline rates.”
Mastercard states that the hourly rates “are consistent with market rates for specialist
and experienced competition solicitors engaged to conduct high value and complex
14. We emphasise that we are concerned only with the costs that are recoverable from the
other side. Parties may agree with their solicitors to pay a much higher figure and we
recognise that some solicitors indeed charge much higher rates. We also take into
account that the guideline rates are just a guide, and that the Guide recognises at para
29 that in substantial and complex litigation rates in excess of the hourly rates may be
justified. Further, we note that the guideline rates are now over a year old. However,
we do not consider that these considerations can begin to justify rates which are, for
Mastercard Grades A and C solicitors some 70% over the guideline rates, and for the
CR Grades A and C solicitors in excess of 60% over the guideline rates. Taking a broad
brush approach, we think that some 30% over the guideline is reasonable (producing
rates for Grade A of £665.60 and Grade C of £351). Some further causes of the
disproportionate figures claimed are:
1 The CR’s schedule of costs does not include the rates charged by the Scottish solicitors.
2 By the time of preparation of the costs submissions, those rates had increased to £960 for Grade A and £525 for
Grades B and C.
(a) On both sides, for much of the hearing two partners attended. We consider that
attendance of only one partner is reasonable.
(b) Issue (2) concerned exclusively Scots law. While some assistance from English
counsel may be reasonable, we regard fees of over £11,000 for assistance from
two English leading counsel as disproportionate.
(c) We find the total of counsel’s fees for issue (1) and issue (4), and Scottish
counsel’s fees for issue (2), unreasonably high.
(d) We recognise that preparation of costs submissions for the CR was more timeconsuming than for Mastercard as it involved more issues. Nonetheless, we
regard a total fee of over £24,000 for that exercise as wholly disproportionate.
15. Accordingly, as regards Mastercard’s claimed fees, we shall (a) allow for only one
partner’s attendance at the hearing; (b) reduce the balance of the solicitors’ fees by 35%
to £22,590.36; reduce total counsel’s fees to £55,000; and reduce the costs of the costs
submissions to £5,000. That produces a figure of £82,590.36. Standing back, we think
that is a reasonable but still generous figure for the costs of issue (1) and the consequent
application for costs.
16. As regards the CR’s claimed fees, we shall (a) remove the costs of one partner’s
attendance at the hearing; (b) reduce the balance of the solicitors’ fees by 30%; (c)
reduce English counsel’s fees for issue (2) to £5,500 and for issue (4) to £90,000; (c)
reduce Scottish counsel’s fees for issue (2) to £55,000; and (d) reduce the fee for the
costs submissions to £15,000. That produces a figure of £307,866.78. That is still a
remarkably high figure for a hearing of under three days with no evidence, and well
above the figure which Mastercard submits should be awarded,3 but having regard to
the scale of this litigation we shall assess the CR’s costs on a summary basis in that
amount plus VAT, producing a total figure of £369,440.13.”