Changes on SHRs
The Law Society of Hong Kong just announced that the Chief Justice has approved the new set of Solicitors’ Hourly Rates for Party and Party Taxation (“SHRs”), which will take effect from 1 April 2026 in that it will apply to all work done from that date onwards. This is the first adjustment since the existing SHRs adopted on 1 January 2018. For legal work done prior to 1 April 2026, the existing SHRs will continue to apply.
The new sets of SHRs with comparison to the existing SHRs are now tabulated for easy reference.
The second four‑yearly review was conducted by a Standing Committee appointed by the Chief Justice, which took Composite Consumer Price Index movements as the starting point and then considered factors such as acceptability and affordability, access to justice, effects on firms of different sizes, impact on legal aid and prevailing economic conditions. The adjustment ranges from 6.9% to 8.00%, representing a modest increase tracking accumulated inflation.
Implications
With higher SHRs, the potential exposures on costs for fully contested proceedings increase. Litigants should be advised on their potential cost exposures/recoverability with the updated SHRs, so that decisions to fight or settle are made on an informed basis.
Litigants should be aware of the distinction between solicitor-client rates and party-and-party SHRs. Party-and-party taxation is designed to ensure that the successful party is compensated for the necessary and proper costs of litigation, but not for all costs actually incurred, thereby keeping litigation costs reasonable and proportionate. Even under the updated SHRs, a successful litigant is unlikely to recover 100% of its actual costs from the opponent. Besides, litigants should note that in line with the position since 2018, the SHRs remain guidelines only – taxing masters are not bound by them and retain a wide discretion to adjust rates upwards or downwards on a case‑by‑case basis.
As legal practitioners, we will facilitate litigation clients to assess cost-proportionality and explore alternative dispute-resolution methods, such as mediation, which are more commercially attractive than full-brown litigation. To assist litigants in pursuit of justice under an affordable fee structure, we may consider offering phased budgets and options such as deploying solicitors of different seniority for complex or strategic works depending on their nature, strategic value and time to be spent in accordance with the economic value and complexity of the dispute.
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