Guideline hourly rates (GHR) should be increased by 35% to reflect inflation pending the outcome of a review, a High Court has said.

Cohen v Fine and Ors [2020] EWHC 3278 (Ch) was a costs case involving the costs of a professional executor.

He applied for £48,000 in costs but the judge awarded him just £27,000, a sum then increased on appeal to nearly £36,000.

Judge Hodge QC, handing down the ruling, said in his experience of sitting in the business and property courts, “the present GHR are considerably below the rates actually being charged by the solicitors who practise in those courts”.

He added that the table of counsel's fees also “bears no relationship to the fees which the courts see being charged for counsel” appearing in those courts.

He stated: “In my judgment, pending the outcome of the present review, the GHR should be the subject of, at least, an increase that takes due account of inflation.”

Using the Bank of England Inflation Calculator, an increase of around 35% would be “justified as a starting point”, he said.

Existing GHRs are based on rates fixed in 2010 and are significantly lower than hourly rates charged by solicitors in the City. 

They were last reviewed in 2014.

However, they are currently under review by a Civil Justice Council working group which is expected to publish a report and consultation before the close of this year. 

Sean Linley, a costs draftsman at Carter Burnett, said: “There is undoubtedly now a chorus of judiciary members making plain that the GHR in their present form are antiquated and no longer fit for purpose.”

He added that the Cohen judgment also makes clear that specific factors in CPR r44.4 could justify the application of rates higher than the GHR, even after adjusting for inflation. 

“The comments made, however, have to be seen in the context of the pending Civil Justice Council review”, he said. 

“Once that is completed (which is meant to be by the end of the year) then the goal-posts are likely to shift again. 

“But until that time, solicitors have a very persuasive case for seeking costs above and beyond the guideline rates.”

He commented that the “slew of recent decisions” concerning hourly rates are already been relied upon regularly in costs proceedings, though he questioned how long they will continue`to bear relevance.