Ukrainian procedural legislation provides for the possibility of compensating legal assistance costs at the expense of the losing party. However, the court practice of their recovery contains many nuances and conflicting approaches, so action should be taken in a timely and thoughtful manner.
Deadlines for submitting evidence of expenses
Part 8 of Art. 141 of the Civil Procedure Code stipulates that a party must submit this evidence before the end of the court debates or within 5 days after the decision is made. However, in the latter case, the party must make a corresponding statement in advance (before the end of the court debates).
At the same time, Part 1 of Art. 246 of the Civil Procedure Code states: if a party, for valid reasons, cannot submit evidence of the amount of court expenses before the end of the court debates, the court, upon the application of this party submitted before the end of the court debates, may decide on the issue of court expenses after the decision on the merits of the dispute is made.
Therefore, do you need to prove the validity of the reasons if you submit evidence of expenses after the decision is made? On this issue, the Supreme Court has formed opposing positions.
In case No. 285/5547/21, it ruled that the party must justify the valid reasons for not submitting such evidence to the court before the end of the court debates in the case. In the absence of justification for valid reasons or their lack of validity, the court rejects the application for the recovery of expenses (ruling of 10.01.2024). The same position is set out in the ruling of the Supreme Court dated 13.02.2024 in case No. 757/33206/22-c, as well as in the ruling of the CAC No. 346/2744/21 of 22.04.2024).
A different opinion was expressed by the higher instance in case No. 520/8662/19 (ruling of 13.10.2021). The party may submit evidence to confirm the amount of expenses it has paid or is to pay in connection with the case, including after the court debates, but only subject to two conditions:
- these pieces of evidence are submitted within 5 days after the court’s decision;
- the party has made a corresponding statement regarding the allocation of court expenses before the end of the court debates.
If the party submits a statement to provide evidence of legal expenses within the 5-day period under Part 8 of Art. 141 of the Civil Procedure Code, the court is deprived of the opportunity to consider the issue of distributing expenses for professional legal assistance before the end of this period and must consider the evidence submitted during this period (ruling of the Higher Administrative Court of the Supreme Court dated 5.07.2023 in case No. 911/3312/21). Evidence confirming the amount of court expenses must be submitted before the end of the court debates or within 5 days after the court’s decision, provided that the court is notified in advance of this intention.
A similar position is also formulated in administrative proceedings. In particular, the additional ruling of the Higher Administrative Court dated 18.01.2024 in case No. 9901/459/21 contains the following conclusion: if the applicant specifies that evidence of incurred expenses for professional legal assistance will be provided to the court within 5 days after the court’s decision, this excludes a violation of the article that requires the presence of valid reasons for not submitting the relevant evidence before the end of the court debates.
Contract and fee calculation
One of the common reasons for refusal to compensate is the unclear calculation of the fee. In particular, courts do this due to the absence of a calculation method in the contract. However, the fee is determined only by agreement between the lawyer and the client, and the court has no right to interfere in these legal relations. The court’s failure to take into account the terms of the legal assistance agreement regarding the fee calculation method does not comply with the principle of freedom of contract as defined in Art. 627 of the Civil Code.
The Supreme Court’s practice in this matter is also ambiguous. On the one hand, the court wants to see a specific fee calculation method in the contract between the client and the lawyer. For example, in case No. 529/201/20, the Supreme Court noted (ruling of 28.09.2022) that in the absence of conditions (points) in the contract regarding the fee calculation method, form, and price of the lawyer’s services, the courts, depending on the specific circumstances of the case and other evidence, have the right to refuse to satisfy the application for the recovery of court expenses for professional legal assistance.
The absence in the contract of the amount or method of calculating the lawyer’s fee (hourly payment or fixed amount) does not give the court, as well as the other party to the dispute, the opportunity to be convinced of the actual agreement between the parties regarding the lawyer’s fee (additional ruling of the Supreme Court dated 6.03.2019 in case No. 922/1163/18). In the absence of such conditions (points) in the contract regarding the fee calculation method, form, and price of services, the courts have the right to refuse to satisfy the application for the compensation of court expenses, to satisfy it in full, or in part.
On the other hand, the Supreme Court also indicates that to determine the fee amount, it is sufficient to have a work completion report or other evidence of incurring such expenses.
In the additional ruling of 7.07.2021 in case No. 910/12876/19, the Higher Court confirmed that the fee amount is determined only by agreement between the lawyer and the client. The court has no right to interfere in these legal relations. However, the current procedural legislation has established criteria to be applied when determining the amount of legal assistance expenses.
The panel of judges also found it acceptable to provide a reasoned indication in the work completion report only of the total cost of the work performed, without tying such work to its hourly or fixed cost (ruling of the Supreme Court dated 23.01.2025 in case No. 240/32993/23). And in the ruling dated 13.12.2018 in case No. 816/2096/17, the Supreme Court noted that according to the content of Art. 134, Part 3 of the Commercial Procedure Code, the amount of legal assistance expenses of a lawyer… is determined in accordance with the terms of the legal assistance agreement and based on evidence of the volume of services provided and work performed and their cost, paid or payable.
What is the conclusion? Contract terms can vary, and a lawyer and client can agree on post-payment for each order with consideration of its complexity and time spent. They can fix these expenses in the work completion report. Under such conditions, the lawyer should ensure in advance that the contract contains terms for determining and agreeing on the fee amount. These terms should be spelled out in as much detail as possible. At a minimum, it should be stipulated that the specific cost of the work is determined in the invoice, and by paying the invoice, the client agrees to the service cost indicated in the invoice. At the same time, the invoices should be detailed, with a description of each service and its cost separately for each service. And, of course, when recovering legal expenses, it is always necessary to provide the court with the full text of the contract. Considering that for representation in court, it is sufficient for the lawyer to provide only an order, the court may refuse to recover expenses because the lawyer did not provide a copy of the contract.
Documents for reimbursement
Article 134 of the Civil Procedure Code obliges parties to submit to the court a preliminary (approximate) calculation of the amounts of court expenses they have incurred or expect to incur in connection with the case. The Supreme Court’s practice confirms this as well.
In the opinion of the Supreme Court (ruling of 12.11.2019 in case No. 904/4494/18), this provision gives the court the right (but not the obligation) to refuse to reimburse these expenses if the party fails to fulfill the obligation to provide a preliminary calculation of court expenses, except for the amount of the court fee paid by the party.
The list of documentary evidence of legal assistance provided includes the ruling of the Supreme Court dated 20.07.2021 in case No. 922/2604/20):
- a contract for legal assistance;
- a detailed description of the client’s tasks performed;
- acts of acceptance and transfer of completed work (if provided for in the contract, this is mandatory);
- bills for legal services;
- payment orders or receipts to confirm the actual expenses incurred by the client;
- evidence of sending the application with all attachments to other participants in the case.
Another contentious issue: is it necessary to specify the amount of time spent on performing the client’s tasks. If the contract does not specify a fixed fee, it is better to indicate the amount of time spent in the detailed description and the work completion report to prevent objections.
At the same time, in case No. 240/32993/23, the panel of judges disagreed with the defendant’s arguments about the need to mandatory specify in the work completion report the calculation of the cost of such work on an hourly basis or indicate this cost in a fixed amount (ruling of 23.01.2025). The participant in the case must provide evidence of the volume of services provided and work performed and their cost, but not evidence justifying the time spent by the legal expert. Therefore, it is sufficient to confirm only the amount of time spent, but not to justify the specific amount of time spent on the relevant actions. Ultimately, the judges found it acceptable to provide a reasoned indication in the work completion report only of the total cost of the work performed by the lawyer, without tying such work to its hourly or fixed cost.
Reduction of the court expenses amount by the court
The court does not have the right to reduce the amount of legal expenses on its own initiative. This contradicts the norms of the Civil Procedure Code, the Commercial Procedure Code, and the Administrative Procedure Code. After all, the fee amount is determined only by agreement between the lawyer and the client, and the court cannot interfere in these legal relations. The reduction of expenses can only be done at the request of the other party, which has proven their disproportion.
Therefore, the other party must object to the amount of legal expenses (additional ruling of the Supreme Court dated 11.12.2020 in case No. 911/4242/15). And if it does not object, then there are no grounds for the court to assess the amount of time spent by the lawyer on performing the work.
In applying the criterion of proportionality of lawyer fee payment, the court has fairly broad discretion. However, this discretion must be based on the criteria defined in Part 4 of Art. 126 of the Commercial Procedure Code. The court applies these criteria in the presence of evidence provided by the party indicating the disproportion of expenses (ruling of the Commercial Court dated 13.06.2019 in case No. 922/1350/18).
At the same time, the lawyer’s experience cannot be a basis for reducing expenses. In case No. 910/12155/22, the Higher Court stated: the assertion that ‘the more experienced the lawyer, the less he should receive compensation for legal expenses’ does not correspond to the principle of reasonableness (ruling of 13.02.2024).
Compensation for unpaid expenses
Compensation is due not only for actually paid expenses. If the parties to the legal assistance agreement have agreed on payment of expenses in the future, these amounts must also be reimbursed. And providing the court with bank documents proving the payment of the lawyer’s fee is not a mandatory condition for recovering court expenses for professional legal assistance. This is confirmed by the rulings of the Supreme Court dated 26.06.2019 in case No. 813/481/18, dated 2.10.2019 in case No. 815/1479/18, and dated 29.10.2020 in case No. 686/5064/20.
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Analyzing the Supreme Court decisions cited, it can be concluded that it is advisable to provide as much evidence of incurring these expenses to the court as possible.
The practice of compensating legal assistance costs is diverse. Therefore, lawyers should take into account the conflicting positions of the Supreme Court, anticipate risks, and formulate the provisions of the legal assistance agreement correctly.
Recovering court expenses is also a legal service that should be communicated to the client at the very beginning of cooperation. During the trial in court, maximum efforts should be made to provide this service qualitatively.
The material was published in the publication ‘Law and Business’.