As we begin 2025, the legal profession faces an important update to its fee structures. Following the Law Gazette’s recent coverage of the Master of the Rolls’ announcement, I wanted to share my thoughts on these new guideline hourly rates (GHR) and what they mean for both firms and clients.
The key update is straightforward: a 3.65% increase in rates effective from January 1st, 2025. To put this in perspective, Grade A fee earners handling commercial work in London can now charge up to £566 per hour, while rates for other work vary by location – £413 for central London general work, £312 for outer London, and £288 for national firms.
The timing of this change reflects a shifting landscape in legal costs. After a decade of static rates prior to 2022, we’ve seen a move toward more regular adjustments that reflect economic realities. This follows the Civil Justice Council’s earlier recommendation to align rates with inflation, which resulted in the previous 6.66% increase in early 2024.
Sean Linley from Carter Burnett makes a crucial point that resonates strongly: this isn’t an automatic permission to increase rates across the board. Law firms must carefully review their existing retainers and ensure they follow proper client notification processes. There’s a clear distinction between what the guidelines permit and what’s agreed with clients.
Looking Forward The Civil Justice Council’s working group is currently examining counsel fees and considering a new top rate for complex commercial work. What makes this particularly interesting is their focus on work complexity rather than geographic location – potentially signalling a fundamental shift in how legal services are valued.
Practical Steps for Law Firms:
- Review your current retainer terms
- Check if your agreements allow for rate increases
- Ensure proper client notification procedures
- Consider your market position and client base before making changes
- Document your reasoning for any rate adjustments
The Bottom Line
While these new guidelines provide a framework for rate adjustments, successful implementation depends on maintaining transparent client communication and ensuring changes align with existing agreements. As we move through 2025, firms must balance the opportunity to update their rates with maintaining strong client relationships and demonstrating clear value.
The potential shift toward complexity-based pricing could mark an important evolution in legal service valuation – moving away from geographic considerations toward a model that better reflects the expertise and effort different types of legal work require.