The judiciary administration has recently confirmed the outcome of the first four-yearly review of solicitors' hourly rates (SHRs) for taxation of costs between parties in civil proceedings. Following the review, conducted by a committee comprising judges and judicial officers, a decision has been taken to maintain the existing level of SHRs for the next four years. The next review is due at the end of 2025. Despite inflation-adjusted increases of commercial litigants' solicitor and client contractual costs, the decision to maintain SHRs at the 2018 level reflects a cautious approach that probably took account of non-inflationary considerations.
The last time that SHRs for party and party taxations in civil proceedings were reviewed was in the fourth quarter of 2017. Before 2018, SHRs for party and party taxations had not increased since 1997. As a result of that delay, a review mechanism was established whereby a committee comprising judges and judicial officers (including taxing masters) would conduct periodic reviews of SHRs.(1) A review period of four years was initially adopted.
The SHRs announced for 2018-2022 took effect for litigation work done as from 1 January 2018 (for more background, please see "New year, new start for recoverable costs").
The adoption of a periodic review mechanism for SHRs for party and party taxations was a welcome development at the time. The delay in increasing SHRs before 2018 had been unfair and it was hoped that a regular review mechanism would prevent SHRs from falling too far behind litigants' solicitor and client (contractual) costs – as had been the case before 2018.
The decision to maintain the existing level of SHRs is generally disappointing – particularly given inflation-adjusted increases of litigants' solicitor and client legal costs in the past four years as a result of prevailing market conditions. The decision probably reflects concerns about cost pressures and access to justice for non-commercial clients, including the impact on the legal aid schemes and publicly funded litigants.
However, as a result of the decision to maintain SHRs at their existing level for another four years, the "recoverability gap" is likely to increase for many litigants – namely, the difference between the costs that a successful (receiving) party pays their solicitors as a matter of contract and the costs that they can recover on a court taxation (assessment) from an unsuccessful (paying) party.
As things stand, the existing SHRs will have been in place for approximately eight years by the time of the next scheduled review in 2025, which is not what many stakeholders envisaged when the review mechanism was adopted. The period of the review mechanism is not fixed by law. All things considered, there is much to be said for the next review being well before 2025. Market conditions are changing much faster than anticipated in 2017-2018, when the review mechanism was adopted.
For further information on this topic, please contact Antony Sassi at RPC by telephone (+852 2216 7000) or email ([email protected]). The RPC website can be accessed at www.rpc.co.uk.
Endnotes
(1) The Standing Committee on Review of the Solicitors' Hourly Rates for Party and Party Taxation.