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19.01.2022

How to collect costs for a lawyer in court?

What nuances must be paid attention to in order to receive reimbursement of expenses for professional legal assistance?

The reform of the procedural legislation carried out in 2017, among other things, significantly improved the possibilities for collecting costs for the payment of attorney services in civil, economic and administrative proceedings. Of course, it took some time for the disputed issues related to the recovery of such costs to be resolved in the Supreme Court. However, it is now possible to generalize court practice regarding the reimbursement of expenses for professional legal assistance (that is what the expenses for legal services in court are officially called).
With whom to conclude a contract?
Professional legal assistance, as a type of legal assistance in the form of representation in court, can be provided exclusively by a lawyer (Article 16 of the Code of Civil Procedure, Article 16 of the Civil Code, Article 15 of the Code of Civil Procedure). Therefore, if a person wishes to receive compensation for the costs of legal assistance, before concluding the contract, he should make sure that his interests will be represented in court by a lawyer. Expenses for the same services provided by lawyers who are not lawyers are not subject to reimbursement (see, for example, the resolution of the Supreme Administrative Court of the Supreme Court dated September 12, 2018 in the case No. 810/4749/15 ). And the opportunities for them to represent the client’s interests in court are limited: only in minor cases or through the mechanism of self-representation (for legal entities).
Lawyers can practice individually or as part of a lawyer’s association or a lawyer’s office (Part 3, Article 4 of the Law “On Advocacy and Advocacy”). Therefore, in order to receive compensation, an agreement can be concluded both with an individual lawyer and with a law firm (this is a legal entity created by one lawyer) or an association of lawyers (a legal entity created by the union of two or more lawyers (participants)).
Please note that the Bar Office (AB) and the Bar Association (AO) are separate organizational and legal forms of a legal entity. An indication of this should be before its own name. LLC, TDV and PP are not forms of advocacy. Therefore, there may be problems with reimbursing the costs of paying for their services. Although so far the courts do not always pay attention to this, the evidence of why is the resolution of the Supreme Court of Ukraine dated 02.07.2020 in case No. 520/11557/18 , in which the demand for the recovery of costs for legal assistance submitted by the lawyer of a legal company in the form of an LLC was satisfied, despite to the objection of the other party.
Similarly, the courts do not always pay attention to the fact that the contract is concluded not with a lawyer engaged in independent professional activity, but with a natural person – an entrepreneur who is a lawyer. According to the KAS of the Supreme Court, reflected in the resolutions dated 08.10.2019 in the case No. 922/1747/19 and from 09.09.2021 on the case No. 910/7304/20, the procedure for drawing up an account by a lawyer to pay for the services rendered by him and tax the monetary income of an individual entrepreneur and a self-employed person who conducts independent professional activity at the rates of contribution to the budget is beyond the scope of the research on the issue of costs for professional legal assistance.
Therefore, for the purposes of reimbursement of legal aid costs, it is important that such assistance is provided by a lawyer. The form of carrying out the relevant activity by him (through AB, JSC, LLC or FOP) is secondary. Although, of course, it is more reliable to conclude a contract with a lawyer engaged in independent professional activity, a law firm or a bar association.
What to pay attention to when concluding a contract with a lawyer?
For the purposes of further reimbursement, the key provisions of the contract with the lawyer, AB or AO are the provisions on the subject matter and the fee.
The contract must specify what kind of professional legal assistance will be provided by the lawyer and what its cost will be. Based on the provisions of Art. 137 of the Civil Code, Art. 126 of the Code of Civil Procedure, Art. 134 CAS and Art. 19, 30 of the Law “On Advocacy and Advocacy”, the following types of compensation are subject to compensation:
  • lawyer’s fee for representation in court;
  • services of providing legal information, consultations and clarifications on legal issues;
  • drawing up statements, complaints, procedural and other legal documents;
  • costs of gathering evidence;
  • the cost of services of a lawyer’s assistant;
  • expenses for arriving at the court and waiting for the court session;
  • other types of professional legal assistance related to the case.
In the contract or in another document related to it (specifications, orders, annexes, etc.), it is necessary to define exactly what types of legal assistance will be provided by the lawyer and what kind of case they will relate to. If this is not indicated in the contract (for example, if it is general), then this should at least be reflected in the act of services provided under this contract. As follows from the resolution of the Supreme Administrative Court of the Supreme Court dated 15.05.2018 in case No. 821/1594/17, the report on the services provided must contain information about a specific court case, within which legal costs are claimed before reimbursement.
The lawyer’s fee can be hourly or fixed. The latter is more convenient not only for clients (it makes it possible to clearly calculate the amount of court costs), but also for the purposes of reimbursing the costs of its payment. As noted by the KAS of the Supreme Court in the resolution of 12/28/2020 in case No. 640/18402/19, the amount of the attorney’s fee, set by the parties to the contract in a fixed amount, does not depend on the volume of services and time spent by the plaintiff’s representative. Therefore, in this case, it is not necessary to submit a description of the work performed by the lawyer. The hourly amount of the fee payment more accurately corresponds to the amount of legal assistance provided, but it is also easier to dispute it.
The fee can be paid both before and after the provision of relevant services by the lawyer. The procedure and terms of its payment are determined by the contract on the provision of legal assistance. And for the purposes of legal costs it shouldn’t matter.
It should be noted that the Supreme Court adheres to the position according to which both the costs that have already been paid and those that must be paid by the relevant party in accordance with the terms of the contract are subject to compensation. Such conclusions are reflected, for example, in the resolutions of the OP KGS of the Supreme Court dated 03.10.2019 in case No. 922/445/19 , OP of the KGS dated 22.01.2021 in case No. 925/1137/19 .
That is, even if the lawyer’s services were not paid, but the contract provides for their payment after the fact, the court can collect their compensation from the party that lost the legal dispute.
In this aspect, the issue of charging a “success fee” is also important. The possibility of its recovery was once questioned by the Supreme Court. The CCS of the Supreme Court decided that the “success fee” is not a payment for the services provided by the lawyer (it is not the price of the contract), but is a payment for the result itself, the achievement of which is not dependent on the services actually provided (decision dated 12.06.2018 in case no. 462/9002/14-ts ).
Fortunately, the Grand Chamber of the Supreme Court did not support this approach. In the decision dated 12.05.2020 in case No. 904/4507/18, she came to the conclusion that the “success fee” is an amount stipulated by the parties to be paid in a fixed amount under a suspensive condition, is a component of the attorney’s fee, and therefore belongs to court costs.
However, regardless of the procedure for calculating the fee, the form and terms of its payment, it is important that its amount meets the proportionality criteria defined by the procedural codes. Namely:
  • the complexity of the case and the work performed by the lawyer (services provided);
  • the time spent by the lawyer on performing the relevant work (providing services);
  • the amount of services and works performed by the lawyer;
  • the value of the claim and/or the importance of the case for the party, including the impact of the resolution of the case on the party’s reputation or public interest in the case.
In general, as noted by the Grand Chamber of the Supreme Court in the resolution dated February 19, 2020 in case No. 755/9215/15-ts , the following criteria for determining and distributing court costs are provided for: 1) their validity; 2) necessity; 3) the reasonableness of their size, taking into account the complexity of the case and the financial condition of the parties to the case.
Examples of Supreme Court decisions in which the amount of declared expenses for professional legal assistance was reduced due to non-compliance with the specified criteria are:
  • Resolution of the Central Committee of the Supreme Court dated 06.06.2019 in case No. 752/4513/17 : costs were reduced from UAH 20,000. up to UAH 5,000 in view of the criterion of the need to file a response to a cassation appeal and the significance of such actions in the case, as well as the fact that the description of services includes participation in a court session, which did not take place, because the case was considered without summoning the parties;
  • Resolution of the KGS of the Supreme Court dated 11.03.2021 in case No. 911/2681/19: costs reduced from UAH 22,000. up to UAH 11,000, because the lawyer’s meeting with the client’s representatives and discussion with the client of ways to strengthen the client’s legal position, which took 2 hours. 00 min., does not meet the criteria for the reality of attorney’s fees (establishing their validity and necessity), a response to the cassation appeal of 3 pages, on which the attorney spent 3 hours. 00 min. is not commensurate with the complexity of the case, and the hearing on the case lasted not 0.5 hours, but 18 minutes.
Therefore, when determining the amount of the fee, it is necessary to take into account the above criteria of validity, necessity and reasonableness of the amount so that they are collected from the other party in full.
In what order is reimbursement made?
No less important for obtaining compensation is compliance with the procedure for recovery of costs for professional legal assistance defined by the procedural codes.
First of all , it is necessary to submit a preliminary (estimated) calculation of court costs, including for professional legal assistance, together with the first statement on the merits of the case (a statement of claim, appeal, cassation or appeal or appeal to them) or indicate it directly in the appropriate documents The submitted preliminary calculation does not limit the party in proving a different actual amount of expenses.
A copy of the relevant calculation must be sent to the other party, so that it can submit a petition to the court to reduce the amount of such expenses. Otherwise, their collection may be refused (see resolution of the KGS of the Supreme Court dated August 21, 2019 in case No. 922/2821/18 ).
At the same time, the failure of a party to submit a preliminary (estimated) calculation gives the court the right to refuse reimbursement of the corresponding court costs. At the same time, we draw your attention to the fact that in the event of failure to submit a preliminary settlement, the court has the right, but not the obligation, to refuse reimbursement of the relevant court costs. That is, its non-submission is not an unconditional basis for refusing to reimburse costs (resolution of the Supreme Administrative Court of Ukraine dated 08.04.2021 in case No. 161/20630/18 ).
Secondly , before the end of the court debates (and if the case is considered in the order of written proceedings – before a decision or resolution is issued on the case), you need to submit an application (petition) for reimbursement of expenses for professional legal assistance (a copy should be sent to other participants). In the absence of such a petition, the court has no grounds for consideration of the issue of distribution of expenses incurred by the participant for professional legal assistance (resolution of the Supreme Administrative Court of the Supreme Court of January 14, 2019 in case No. 927/26/18 ).
Thirdly , it is necessary to provide evidence that confirms the fact of incurring expenses for the lawyer’s services in court: a copy of the contract with the lawyer, an invoice for the payment of his services, a payment order (receipt) for the payment of the lawyer’s services, an act of services rendered (work performed), etc. The specific content of the documents depends on the terms of the contract and the actual status of payments.
Such evidence must be submitted before the end of the court debate in the case or within 5 days after the court decision, if the party has made a corresponding statement, and their copies must be sent to the other party. Otherwise, the application for reimbursement of expenses may be left without consideration.
Fourthly, it is worth providing a description of the work (services) performed by the lawyer and the expenses incurred by him. If the contract provides for an hourly fee payment, then providing such a description is mandatory. In the case of a fixed payment, as was indicated above, it may not be submitted, but, in our opinion, it is better to provide it anyway. At a minimum, to estimate the amount of work performed at a fixed cost, which was specified in the contract.
In turn, the losing party, in order to reduce the amount of expenses for professional legal assistance incurred by the winner, must declare this in the relevant statement. Otherwise, taking into account the principles of dispositiveness and competition, the court does not have the right to decide on its own initiative the issue of reducing such expenses that are subject to distribution (the resolution of the OP of the Supreme Court of Ukraine dated 03.10.2019 in case No. 922/445/19 ).
Thus, in order to receive reimbursement of expenses for professional legal assistance, it is necessary to:
  • conclude an agreement on the provision of legal assistance (preferably with a lawyer, bar association or law firm);
  • correctly determine the amount of the attorney’s fee, based on the criteria of validity, necessity and reasonableness;
  • perform the specified procedural actions necessary to receive compensation.
But the most important thing, of course, is to win the case. In the event of a loss, you should submit an application for a reduction of the expenses for professional legal assistance declared by the other party.
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