High Court judge: Counsel’s fees should be subject to guideline rates

Smith: Counsel’s fees can be an impediment to settlement on costs

It is “difficult to see the justification for treating counsel’s fees differently from solicitors’ fees” when it comes to applying guideline hourly rates (GHR), a High Court judge said yesterday.

Mrs Justice Joanna Smith acknowledged that such a move would not be popular with the Bar.

She chaired the GHR sub-group of the Civil Justice Council working party that issued its report on costs in May.

The report said counsel’s fees “should also be capable of being assessed by reference to a guideline hourly rate. Whilst we appreciate that this will pose numerous challenges, nonetheless, there is currently a real perception that counsel’s fees are not being adequately addressed”.

While “under no illusions as to the difficulties that may be involved in this exercise (and the importance of ensuring that any solution does not increase the risk of inflated and disproportionate sums)”, the working party said “we do not think those difficulties militate against trying to address this issue as soon as possible”.

Speaking yesterday to the Costs Law Reports Conference in London, the judge said: “I have little doubt that the Bar would have a great deal to say about any attempt to cap its recoverable fees, and I have already seen some comment to that effect. As someone who has relatively recently changed sides, I have considerable sympathy with their position.

“But looked at objectively, it is difficult to see the justification for treating counsel’s fees differently from solicitors’ fees, given that an important underlying rationale for GHRs is the provision of certainty for parties over their liability to pay the opposing parties’ costs.”

She highlighted recent cases that clearly illustrated how “the level of counsel fees is very often a significant impediment to agreement between the parties on costs”.

Ras Al Kaihmah Investment Authority v Farhad Azima [2023] EWHC 1923 (Ch) was a very substantial case in which Mr Justice Green “nevertheless described counsel’s brief fees as ‘excessive’”, she said.

Joanna Smith J also cited her own ruling last year in Various SAM Borrowers v Bank of Scotland [2022] EWHC 2594, “a case in which despite very significant figures being claimed by the bank’s counsel (described as stratospheric by opposing counsel), no information had been provided as to how those fees had been arrived at by counsel’s clerks”.

She continued: “Whilst GHRs for counsel may be difficult to set and liable to frequent changes in market rate, they are likely to assist in focusing the minds of the parties over what is reasonable and proportionate and what is not.”

The judge added that she was aware of “significant concern” in “some circles” that the report said the next formal review of the GHR should not take place for another five years so as to consider the impact of index linking (one of its recommendations) and of remote working by lawyers.

She said: “Changes in technology and remote working leading to changes in working patterns for many solicitors’ firms, together with a reduced physical footprint in offices, certainly militate in favour of a swifter review process.

“However, the difficulty is that the 2021 changes, made on the back of evidence collected in 2019 have been in place only for a relatively short timescale and the process of carrying out the review and evidence collection is extremely time consuming – aside from the fact that it will be difficult to achieve agreement around the method to be adopted.

“Five years was chosen by the working group as a pragmatic approach in the face of these issues.”

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