There remains uncertainty as to how the courts should address the issue of hourly rates when undertaking costs budgeting.
PD 3E para.7.10 states:
“The making of a costs management order under rule 3.15 concerns the totals allowed for each phase of the budget. It is not the role of the court in the cost management hearing to fix or approve the hourly rates claimed in the budget. The underlying detail in the budget for each phase used by the party to calculate the totals claimed is provided for reference purposes only to assist the court in fixing a budget.”
However, as many commutators have observed, how do you arrive at an appropriate total figure for each phase if not with reference to the notional number of hours that will be required to undertake the task and multiply that by an appropriate hourly rate?
This tension was recognised by Warby J in Arcadia Group Ltd & Ors v Telegraph Media Group Ltd [2019] EWHC 96 (QB)
“Although budgeting is not the same as detailed assessment, it is almost inescapable for the court to give some thought to the hours and hourly rates that are justified for the work in question.”
In terms of the level of hourly rates claimed, he concluded:
“The hourly rates claimed by the claimants range from £190 (for a Grade D lawyer, a trainee) to £690 (for a Grade A lawyer, a partner). Other partners’ rates claimed by the claimants are between £510 and £635 per hour. All these figures are well in excess of the guideline rates, which are £126 for Grade D to £409 for Grade A.
Of course, fees in excess of the guidelines can be and often are allowed, and in this case the defendant (which itself claims up to £450 per hour) and I both accept that fees above those rates are justified. But not to the extent of the differences here. I do not consider that hourly rates in excess of £550 can be justified, and proportionate reductions should be made in the lower partners’ rates.”