The institute for compensating the costs for professional legal aid is becoming more and more popular among litigants.
However, according to the EBA Court Index expert study, conducted by the European Business Association (EBA) in partnership with GOLAW Law Firm, in general, business representatives negatively assessed the level of compensation of court costs for professional legal aid. Almost equal number of respondents is completely dissatisfied with the level of compensation: 18—19% of all respondents.
We suggest studying the mechanism of compensation of such costs and identifying what caused such a low level of satisfaction among respondents.
Procedure for compensating the attorney’s fees
As a general rule, the party in whose favour the case was resolved shall have the right to get compensation for the court costs at the expense of the other party to the dispute. If the claim is satisfied partially, the court shall allocate court costs among the parties in proportion to the amount of satisfied claims.
Different procedural codes provide different requirements on the time of claiming the costs for professional legal aid. Thus, according to the Commercial Procedure Code of Ukraine and Civil Procedure Code of Ukraine, it is required to inform the court about the tentative (approximate) calculation of the amount of court costs incurred or to be incurred by the party along with the first statement on the merits of the case. Unless it is done, the court may further refuse to compensate the party for the relevant court costs. In turn, the Code of Administrative Proceedings of Ukraine contains no such requirement.
All procedural codes stipulate the same procedure for providing evidence to prove the costs incurred by a party. The legislator gives applicants a choice: either to submit evidence to support the costs incurred before the completion of pleadings in the case or within five days after the court decision is adopted, if a relevant statement before the completion of pleadings is filed.
Confirmation of legal aid costs
The current procedural legislation of Ukraine does not provide any certain list of evidence to be submitted to the court to confirm the costs incurred for professional legal aid.
According to the Supreme Court case law, the mandatory list of documents proving such costs, regardless of the jurisdiction of a dispute, includes:
- Agreement on the provision of legal aid (engagement agreement, legal services agreement, etc.);
- estimate of services provided with the detailed description thereof;
- documents proving the payment of fees and other costs related to the provision of legal aid executed in accordance with the procedure established by law (receipt to the cash voucher, payment order with a bank mark or other bank document, cashier’s receipt, etc.).
This list was outlined by the Supreme Court in resolutions in cases No. 821/227/17, 726/549/19, and 810/3806/18 and is still relevant.
We suggest providing the court with as much evidence as possible to prove the fact and scope of legal aid, as well as the payment made by a client, for example, services provision certificate, invoice, any supplementary agreements, etc.
The Grand Chamber of the Supreme Court concluded that the “success fee” was an integral part of the attorney’s fee and therefore was a part of the court costs. It is determined that the court may compensate the success fee if it is proportionate to the amount of the claim, complexity of the case and its importance for the party. Amount of the “success fee” must not exceed the reasonable limit (resolution of the Grand Chamber in case No. 904/4507/18).
Therefore, provided that the procedure for compensating the costs is complied by the claiming party, the “success fee” may be awarded against the opponents.
Amount of costs for professional legal aid
The final amount of costs to be compensated shall be in any case determined by the court. At the same time, the criterion of proportionality of the amount of costs set by the procedural codes contain no minimum or maximum limits of such compensation.
Unfortunately, despite complying with the formal requirements and provision of all required documents by attorneys, the courts do not always award 100% of the costs incurred by a client for professional legal aid.
For example, the Supreme Court in case No. 922/2321/20 awarded the amount of costs for professional legal aid which is almost five times less than the amount paid by the applicant, namely UAH 10,000 instead of UAH 47,000 spent.
In this decision, the Supreme Court noted that the applicant’s position had not changed since the consideration by the first-instance court, it had been represented by the same attorney, and hearing in the court of cassation had lasted only 23 minutes. Therefore, according to the court, the scope of provided professional legal aid services was not be significant, and the claimed amount of court costs fails to meet the proportionality criterion.
Therefore, the dissatisfaction of the business community is mainly caused by court’s reduction of the amount of compensation of the costs for professional legal aid already incurred by a client. The way out of this situation may be the revision and clarification of the procedural norms in regard to the level of compensation of costs for professional legal aid, which has to be done by the legislator. In the meantime, we hope that courts will better rate the work of attorneys, which will undoubtedly increase the level of business confidence in the judiciary.
Partner, Head of Litigation and Dispute Resolution practice, Attorney at law
- The Legal 500 EMEA 2022
- Who's Who Legal 2022