The nights are drawing in, there’s a nip in the air so it’s a good time to snuggle down with two cases from the Court of Appeal and the Competition Appeal Tribunal involving the reference to Guideline Hourly Rates. Partner and Costs Lawyer Gary Knight takes a closer look.
SAMSUNG ELECTRONICS CO. LTD v LG Display Co. Ltd.
LG were the successful party and submitted a schedule of costs for the sum of £72,818.21.
The claim included the claim of its solicitors who billed in US dollars – claiming costs at a rate of between US $1,045 and US $1,475.75 per hour for Grade A fee earners and between US $578 and US $918 for Grade C fee earners. At the conversion rate used, these are equivalent to charges between £801.40 and £1,131.75 for Grade A and between £443.27 and £704 for Grade C.
Unsurprisingly Samsung referred to the guideline rates for London 1, which they submitted applied to, “very heavy commercial and corporate work by centrally based London firms” and were £512 for Grade A (solicitors and legal executives with over eight years’ experience) and £270 for Grade C (solicitors and legal executives with less than four years’ experience and other fee earners of equivalent experience). In some cases, therefore, the rates claimed for LG were more than double the guideline rates.
Whilst accepted that the guide recognised hourly rates in excess of the guideline figures may sometimes be allowed with examples provided for the “value of the litigation, the level of the complexity, the urgency or importance of the matter, as well as any international element,” it was important to have regard that the published rates for London 1 assumed that the litigation in such areas would qualify as “very heavy commercial work”.
In the judgment LJ Males opined – If a rate in excess of the guideline rate is to be charged to the paying party, a clear and compelling justification must be provided. It is not enough to say that the case is a commercial case, or a competition case, or that it has an international element, unless there is something about these factors in the case in question which justifies exceeding the guideline rate. There is nothing in the present appeal to justify doing so. This was a one-day appeal, where the only issue was the appropriate forum for the trial, the documentation was not heavy, and the amount claimed (£900,000) was modest by the standards of commercial cases.
Recently the Competition Appeal Tribunal had cause to consider hourly rates when dealing with the class action
Merricks and Mastercard
Mastercard were entitled to costs arising from successful Issues before the Tribunal.
Issue 1 they produced a claim for Summary Assessment in the total of £109,564.82.
Issues 2-4 £445,480.38
These costs were described by the Tribunal as being a “claim of gigantic size,” whilst also describing the costs on both sides as “unreasonable and disproportionate to issues”.
The “enormous size of the costs claimed” was, the Tribunal considered, “largely explicable on the basis of the hourly rates charged by both sides”.
Reference made to an earlier ruling on costs in the proceedings involving an application for a payment on account when the Tribunal referred to Samsung and the need for, “a clear and compelling justification” to be awarded costs in excess of the guideline rate.
In the instant case Freshfields (Mastercard) sought Grade A: £870; B: £478; C:£478 (at the time of costs submissions rates had increased to Grade A: £960, Grade B and C: £525; for the Class Representative rates for Wilkie Farr & Gallagher (NYC) were A: £825/£730; B: £450 and C: £450.
The Tribunal referred to the published guideline rates for comparison.
The Tribunal did accept that the guideline rates were just a guide and that in complex litigation higher rates may be allowed, however in this matter Mastercard rates were some 70% higher than guidance and the CR rates 60% higher. Taking a broad brush approach a guideline rate plus 30% was considered reasonable – Grade A: £665.60 with Grade C: £351.00.
Further reductions were made to reflect dual attendances, excessive time and excessive fees for Counsel.
Issue 1 costs summarily assessed at £82,590.36
Issues 2-4 at £369,440.13
The above cases give reassurance that the Guideline Hourly Rates are not set in stone, but in matters where above guideline rates are sought be prepared to provide clear and compelling justification for the same.