Shulman -v- Kolomoisky (24/06/20) – Guideline Hourly Rates

This is a matter in which Master Rowley considered the appropriate hourly rate for the Second Defendant whose offices were in Canary Wharf when the value of the claim was circa $500M (US).

The Second Defendant claimed the following rates:

The opponent initially tried to argue that Canary Wharf should not attract the rates equivalent to City rates however this was rejected by Master Rowley who branded the argument “opportunistic” and stated that  “Whilst Canary Wharf may be located in a postcode outwith those allowed by the Guideline Rates for the City (EC1 to EC4), the presence of firms such as Skadden and Clifford Chance as well as many multinational financial institutions inevitably leads to the conclusion that rates equivalent to those to be found in the City are much more appropriate.”

Interestingly, Master Rowley went on to say the following; “This case is a good example of why Guideline Rates are often relied upon by advocates and the court. Despite the points of dispute challenging the rates wholesale, there is no evidence whatsoever from the second defendant or Skadden as to how the level of the hourly rates charged to the second defendant have been determined.”

In the absence of any such evidence, the Master deemed that the correct route was to consider the “Seven Pillars of Wisdom” found within CPR 44.3(3) and concluded the following “…the reasonable hourly rates have to be considered in the light of the factors in CPR 44.4(3). I have already set out my view of the nature of this case in that it was of significant value but was not otherwise unusual for a litigator in a City firm. That description does not seem to me to justify the hourly rates which the solicitors have claimed. Whilst it cannot be said that no client would pay the rates claimed in this case – since the second defendant has already paid these fees – I do not consider that they can be justified between the parties. If the case involved truly novel or ground breaking litigation, it might be possible to justify the figures claimed, or at least something close to them.”

Master Rowley concluded that the reasonable rates to be allowed were the following:

This is an interesting case for both paying and receiving parties and a timely reminder that guideline hourly rates are just that, guideline. Paying parties would do well to remember that simply arguing that guideline rates should apply will not suffice, there is a necessity to consider those factors within CPR 44.3 (3). On the flip side, receiving parties must do all they can to justify the rates claimed to the point of providing how they arrived at such a figure.

Please see the full Judgment here.

If you have any questions regarding this summary case law please contact Karl Robson here