Pay Rise for German Lawyers: Fees to Go Up By 19% !

Sounds great. In theory. In practice, statutory legal fees for lawyers have not been raised since 2004, and notary’s fees have even remained unchanged since 1987. So there is a bit of catching up against inflation to be done – a technicality not likely to be picked up by the popular press. Anyway, draft legislation (Zweites Kostenrechtsmodernisierungsgesetz) that is currently being discussed proposes to increase legal fees in the order of 19%.

Statutory legal fees are still widely used in German litigation – and even where lawyers are instructed on the basis of fee agreements deviating from the statutory fees, the statutory fees remain relevant for two reasons: First, they are the basis for any reimbursement of costs by the losing party to the winning party in litigation; if higher fees were agreed on a fixed fee or on a time-spent basis, the difference must be borne by the winning party. And secondly, statutory fees are minium fees, and agreed fees may not be lower. That’s obviously of relevance mainly for high-value claims. Generally, fees are a fraction of the amount in dispute. But before you get too exited: The fee schedule is capped at a maximum amount in dispute of EUR 30 million.

The statutory fees are set in the Laywers’ Compensation Act (Rechtsanwaltsvergütungsgesetz) and the Fee Schedule hereto.  Here’s an illustration of how the schedule works:

Taking a commercial litigation worth EUR 500,000 to trial at the first instance court with trigger legal fees of EUR 7,510 (net of VAT and expenses) per party, and EUR 8,868 in court fees, resulting in a total cost risk of EUR 23,888. The schedule’s tariffs are digressive. For a claim of EUR 5,000,000, the cost risk is not ten times that amount, but only EUR 131,888, or about 5.5 times more.

 

 

 

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One thought on “Pay Rise for German Lawyers: Fees to Go Up By 19% !

  1. Hi Peter – I am a US lawyer living in Berlin for a few months. I have been admitted to the Berlin RAK to practice US and international law in Germany. I’m trying to figure out the fee schedules contained in the Compensation Act. Have you come across an English translation of these schedules? I’d like to know what the minimum rates are for out of court business related legal advice. Any help would be much appreciated. Thanks in advance. Patrick

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