Mandatory Legal Fees in German Civil Law Matters
We have shown here that chasing a debt in Germany is fairly easy and quick. While we also explained the basic rules regarding court and lawyer fees in section 3 of said article many readers ask us how much an actual lawsuit will cost them. Thus, here a more practical approach to that question, explained by the German litigation experts of Graf & Partners (GP Chambers):
The Rechtsanwaltsvergütungsgesetz (Federal Act on Lawyer Remuneration) determines the fees a legal counsel is entitled (and actually also obligated) to charge his/her client. These lawyer fees depend on the amount in dispute. If the lawyer wants to charge higher rates he/she must conclude an express written agreement with the client. So, while billing by hourly rates is becoming more and more common in Germany, the general rule is still billing by the statutory table of lawyer fees. Please note that this table of fees has recently been updated with effect of 1 August 2013. So make sure you do not use an old fees table if you want to calculate your litigation cost risk.
Also, it is important to keep in mind that the fees shown in the “Tabelle” (table of fees) are the mandatory minimum and must not be undercut or circumvented in court cases. Generally, a lawyer is not allowed to accept lower fees than the RVG provides (§ 49b para. 1 BRAO).The idea behind this is to prevent lawyers from undermatching each other which would result in poor quality of legal counsel’s performance in court procedures.
Consequently, lawyer fees in forensic cases are the same regardless which lawyer a client chooses. In particular, contingency fees (“Erfolgshonorar”) are in principle illegal under German law. So do not be surprised if a German lawyer refuses to even discuss contingency fees. The reason is that such an agreement would in 99% of the cases be found void. There are, at least in theory, examples from this rule due to a judgment by the German Constitutional Court (1 BvR 2576/04), but the requirements are so high that in practice contingency fees still do not play a significant role in German civil litigation. Here is some more background information on this. The posting is from 2001 but the basic principles explained therein are still correct. In particular the statement at the end of section 4: “In any case, charging less than the statutory fee is illegal.”
Which fees are payable depends on how the lawsuit develops. Certain stages trigger certain fees: The basic court procedure fee (Verfahrensgebühr) covers the legal counsel’s work of drafting the written statements to the court (as many as are necessary). If it comes to an oral hearing this will trigger the next fee, the so called Terminsgebühr. If the case is settled, this triggers a settlement fee (Vergleichsgebühr). It still makes sense economically to settle because the court fees are being reduced by 2/3 in case of termination of the lawsuit without a formal court judgement.
If no settlement is reached and the lawsuit is being decided by the court, the party that loses the case will have to pay to the other party their entire legal fees as well (and of course the court fees). This is called “Prozesskostenrisiko” (total cost risk of litigation).
Please see this online lawyer and court fee calculator to get an idea of the dimension of the fees and costs of a lawsuit in relation to the amount in dispute. Simply insert the amount into the box called “Streitwert” (which means “amount in dispute”), click go and see which fees result. Heading 1 shows the court fees (Gerichtsgebühren), heading 2 the costs of your own legal counsel and heading 3 the costs of the opponent’s legal counsel.
More information on litigation and legal fees in Germany:
- Making a Court Claim for Money in Germany: It’s actually quite easy
- Standard of Proof in German Civil Litigation
- German Litigation Experts explain Civil Procedure Rules
- A German Claimant can’t be his own Witness
- Compensation for a wrecked Car under the German Law of Torts
- Does German Law of Torts know the Egg Shell Skull Rule?
- How expensive is a German Lawsuit?
- Expert Reports on German Law
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The law firm Graf & Partners and its German-English litigation department GP Chambers was established in 2003 and has many years of experience with British-German and US-German business and corporate matters, including the representation of clients in M&A transactions. If you wish us to advise or represent you please call German business lawyer Bernhard Schmeilzl, LL.M. (Leicester) or Munich based English solicitor Elissa Jelowicki on +49 941 463 7070.
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For more information on the German legal system: the bilingual brochures “Law – Made in Germany” (free download here) as well as “Continental Law” (free download here), published by the German Law Societies explain the basic principles of Continental Law. If you wish to look up specific German legislation you find central German statutes on the website of the German Department of Justice (here), including an English version of the Code of Civil Procedure. The German Civil Code (Bürgerliches Gesetzbuch) is available for download here: German_Civil_Code_in_English_language.