Fixed fee: time of work is important for reimbursement of attorney's fees – SC

The procedure for calculating the hourly fee differs from the fixed fee, which does not take into account the actual time spent. However, in both cases, they are taken into account when deciding on the reimbursement of legal aid expenses.

This was pointed out by the Commercial Court of Cassation of the Supreme Court in its additional resolution No. 910/12155/22 dated February 13, 2024, the text of which has recently appeared in the USRCD.

Having won the dispute in the cassation instance, the company asked the court to recover legal aid costs in the amount of UAH 18 thousand from its procedural opponent. The latter considered this amount to be excessive and filed a motion to reduce the legal fees to UAH 3 thousand.

Among the reasons for reducing the costs, he pointed out that the amount of costs was not commensurate with the complexity of the case and the work performed by the lawyers.

The high judges reminded that the main grounds and principles for reimbursement of legal aid costs are set out in paragraphs 7.1 - 7.9 of the resolution of the Supreme Court of Ukraine dated 05.07.2023 in case No. 911/3312/21. Also, the Supreme Court composed of judges of the Joint Chamber of the CGS considered the issue of expenses for the payment of attorney's fees in its resolutions of 02.02.2024 in case No. 910/9714/22 and of 03.11.2023 in case No. 914/2355/21.

According to part 4 of Art. 126 of the EPC, the amount of expenses for attorney's fees should be commensurate with:

1) the complexity of the case and the work performed by the attorney (services rendered);

2) the time spent by the advocate to perform the relevant work (services);

3) the scope of services rendered by the advocate and work performed;

4) the value of the claim and (or) the importance of the case for the party, including the impact of the case resolution on the reputation of the party or public interest in the case.

In case of non-compliance with these requirements, the court may, at the request of the other party, reduce the amount of costs. In this case the burden of proving disproportionality of expenses is on the party applying for their reduction.

In the case under consideration the fixed amount of the fee was established. In this case, the actual amount of time spent by the attorney in providing services to the client is not calculated. The amount of the fee is determined only by agreement between the advocate and the client, and the court has no right to interfere in these legal relations. At the same time, the obligations between the advocate and the client are not binding on the court in the context of deciding on the distribution of court costs.

Therefore, a party may prove the disproportionality of expenses, including, but not limited to, without specifying in the detailed description of the work (services rendered) information about the time spent on the provision of legal assistance. And taking into account the specific circumstances, the court may limit the amount, taking into account the reasonable necessity of court costs in the case.

Taking into account the disproportionality of the amount of the fixed fee to the complexity of the case, the price of the claim, the volume of materials in the case, the number of procedural documents prepared, and the number of meetings, the Supreme Court concluded that the claimed amount of compensation for expenses was excessive, and therefore awarded it partially in the amount of UAH 10 thousand.