Who bears legal costs in civil proceedings? Questionable legal expenses

In practice, it is quite difficult to recover in full the costs of paying for the services of a representative, which constitute a significant share of legal costs - in most disputes, the amounts claimed for collection are recognized by the courts as excessive and are reduced.

Nevertheless, precedents for multimillion-dollar compensation still exist. For example, in 2013, the Supreme Arbitration Court of the Russian Federation found no grounds for canceling the decision to recover from LLC "B." in favor of company "A." more than 32 million rubles. legal expenses (). It is worth noting that in many respects the practice of collecting costs in amounts at least close to those declared was formed thanks to decisions of the Supreme Arbitration Court of the Russian Federation. So, for example, the Court found that the costs of travel for a non-resident representative, even by Aeroexpress and taxi (taking into account the time of arrival of the plane and the distance of the hotel from the airport), accommodation in a hotel of a certain class, and payment of daily allowances, were not excessive.

After the abolition of the Supreme Arbitration Court of the Russian Federation, a number of experts expressed the opinion that such practices will remain a thing of the past. However, at the beginning of last year, the Supreme Court of the Russian Federation gave clarifications on issues (; hereinafter referred to as Resolution No. 1), including those that the highest courts had not previously addressed in their clarifications. In particular, the Court directly pointed out the possibility of collecting legal fees incurred at the stage of pre-trial settlement of the dispute, explained how the issue of distribution of legal costs associated with the consideration of an application for the collection of legal costs (the so-called costs), etc. is resolved.

Despite this, the practice of reimbursement of legal expenses still remains varied and largely depends on how much the party manages to justify the amounts claimed for collection. Let's see what criteria influence the court's decision on the amount of legal costs in the arbitration process and what advice practicing lawyers give on justifying them.

What needs to be proven?

As a general rule, the costs of paying for the services of a representative incurred by the winning party are recovered by the court from the losing party within reasonable limits (). In this case, the court may reduce the amount of compensation at the request of the person from whom legal costs are being recovered if he provides evidence of their excessiveness ().

It will help to reflect legal costs in accounting "Encyclopedia of decisions. Accounting for legal expenses" Internet version of the GARANT system.
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In fact, when considering the recovery of representative costs, consideration is given to whether they were actually incurred (the validity of the costs), the relationship of the costs to the matter in question and the reasonableness of their amount. The Supreme Court of the Russian Federation emphasized that the person collecting costs must prove the first two criteria, and the party from whom it is intended to collect legal costs has the right to prove their excessiveness (,).

At the same time, the court does not have the right to reduce the amount of legal costs if the party from whom the costs are recovered does not raise objections and does not provide evidence of their excessiveness, the Supreme Court of the Russian Federation indicated. The exception is when the court, having studied the case materials, comes to the conclusion that the amount declared for collection is clearly unreasonable (excessive) in nature (). The court willingly uses this opportunity when the person from whom expenses are recovered is a state body; in such cases, legal costs are reduced many times, noted the managing partner of the Bartolius law office. Yuliy Tai during the conference “Collection of legal costs: practice and trends” organized by the VETA expert group.

The leading lawyer of Pepeliaev Group also agrees with the injustice of this position of the courts. Konstantin Sasov. He noted that the practice of collecting legal costs in full, for example from the Russian Ministry of Finance, as was the case in the case of an energy company appealing the ministry’s letter on documentary confirmation of the taxpayer’s right to receive a social tax deduction (), will improve the quality of the explanations of tax legislation provided by the ministry .

By the way, the Federal Tax Service of Russia recommends that tax authorities, when deciding whether to initiate legal proceedings with taxpayers, be guided by established judicial practice in similar cases, especially acts of higher courts, in order to reduce the number of lost disputes and save the budget (,).

Confirmation of the validity of legal costs involves the provision of evidence that they were incurred by the time the application for recovery of costs is considered, no later. Thus, if there is an agreement for the provision of legal services and a report on the work performed by the lawyer under the specified agreement, but there is no receipt for payment for these services, the court may recognize the fact of incurring legal expenses in the declared amount as unproven and refuse to collect them (resolution of the Arbitration Court of the Moscow District dated 1 March 2017 in case No. A41-8865/2015). Moreover, cash documents are considered by the courts as evidence of expenses even if they are executed incorrectly, emphasizes senior lawyer of Incor Alliance Kristina Walachowicz( , ).

Reasonable nature of expenses

In established judicial practice, reasonable costs mean those costs that, under comparable circumstances, are usually charged for similar services. The same opinion is shared by the RF Armed Forces (). At the same time, according to the explanations of the Court, when determining reasonableness, the volume of the stated requirements, the cost of the claim, the complexity of the case, the volume of services provided by the representative, the time required for the preparation of procedural documents, the duration of the consideration of the case and other circumstances may be taken into account.

It is interesting that when comparing the cost of similar services, both the regional and professional markets are considered. The first implies, in particular, the use of minimum fee rates for the provision of legal assistance approved by the council of the bar chamber of a particular region (approved in the Voronezh, Kirov, Samara, Omsk regions, Krasnoyarsk Territory, etc.). So, for example, the court reduced the amount of recoverable expenses for the services of a representative, guided by the minimum amount of attorney's fees approved for the Omsk region, where the case was heard, and not by data on the cost of legal services in Moscow (by the way, in Moscow there is no such decision of the council of the bar chamber) – location of the representative ().

Estimating the cost of similar services in the professional market involves, for example, comparing the rates set for representing clients' interests in courts in a specific category of cases by employees of a certain qualification ().

A special reservation directly concerns the personality of the representative. The Supreme Court of the Russian Federation indicated that the reasonableness of legal costs for paying for the services of a representative cannot be justified by his fame (). However, this does not mean that the amount of payment for a lawyer cannot depend on his qualifications and experience, experts believe and advise submitting relevant information to the court, including information about the education of the representative, his teaching activities, the availability of awards from public organizations, etc. d.

As for the cost of the claim, the mere fact of its significant size, without taking into account the complexity of the case and the volume of directly provided services, cannot influence the amount of expenses recovered (). But in the case where the amount of expenses for a representative significantly exceeds the cost of the claim, the court may find these expenses unreasonable ().

The concept of “case complexity” is not sufficiently defined. Let us recall that the Supreme Arbitration Court of the Russian Federation at one time tried to determine (). But the courts still do not have a consensus on which cases are considered complex. The high complexity of the case, in their opinion, may be evidenced by the lack of uniform judicial practice (although such an argument can be made in almost every case on the collection of costs) or decisions of higher courts, the need to prepare or collect technical and other documentation, the volume of case materials, number of court hearings (,).

At the same time, even if the complexity of the case is not high, legal costs can be recovered in a significant amount - in the event of unfair procedural behavior of the opposite party, for example, deliberate delay in the consideration of the case, etc. (,).

By the volume of services provided, courts understand the specific actions of a representative in connection with the consideration of a particular case. Moreover, if the act of acceptance and transfer of services provided only indicates that the services were performed and their total cost is given, but does not specify what actions were carried out and how much each of them costs, the courts have doubts about the reasonableness of the costs for these services ().

Such problems, as a rule, do not arise for law firms that use automated systems for recording the provision of services (billing), since billing records contain information about both the actions performed and the time spent on them. By the way, lawyers advise keeping records of the time spent even in cases where the contract for the provision of services specifies a fixed amount of remuneration for the representative. Such accounting data can prevent a reduction in the amount of expenses claimed for collection, as they show the court how much time and effort is spent on collecting evidence, notes Yuliy Tai.

Reducing the amount of recovered expenses

When deciding to change the amount of expenses claimed for collection, the court does not have the right to reduce it arbitrarily. This position has been repeatedly expressed by the Constitutional Court of the Russian Federation, noting the need to motivate this decision (,).

However, in practice, courts do not always carefully justify relevant decisions. “Today, many rulings on the collection of legal costs look like this: the court refers to the law, to judicial practice on this issue, and then follows the key phrase: taking into account the totality of evidence and the peculiarities of the present case, the court considers a reasonable amount of ...,” emphasizes Konstantin Sasov. At the same time, sometimes a decision to reduce the amount of expenses is made by the court, even if the party from whom they are recovered does not provide sufficient evidence of their excessiveness, although, according to the law, it is she who bears the burden of proving this fact (). The Supreme Arbitration Court of the Russian Federation overturned such judicial acts, referring, among other things, to the explanations of the Constitutional Court of the Russian Federation and pointing out that the court in this case, in fact, releases the party from the obligation to prove the stated claim, and this violates the fundamental principle of the arbitration process - the principle of adversarial behavior of the parties ().

Since the Supreme Court of the Russian Federation also agreed with the position of the Constitutional Court of the Russian Federation and indicated that the court does not have the right to arbitrarily decide the issue of the amount of amounts collected for reimbursement of legal costs (), it can be assumed that in the event of an appeal against decisions to reduce this amount, which do not contain a calculation of those amounts, which the court considers reasonable, it will make similar decisions.

As can be seen from the analyzed judicial practice, recovery of expenses incurred to pay for the services of a representative, especially on a large scale, is not an easy matter. Especially when it comes to issues on which the opinions of the courts differ diametrically. Among them is the question of whether the amount of a lawyer’s fee can be influenced by the place occupied in the ratings of law firms by the company of which he is an employee (partner), and whether it is possible to reimburse the amount paid to the representative as part of legal expenses.

However, if there is sufficient justification for the amount claimed for collection, legal costs can still be reimbursed in full.

When defending his rights in court, a citizen is necessarily faced with the concept of legal costs in civil proceedings. This may include a range of costs incurred by the plaintiff before and during the process. Costs are not limited to the payment of mandatory state duties.

Typically, the loser of the hearing will pay the costs incurred by the parties. Of course, all this is regulated by a number of legislative acts:

• Article 88, 99 of the Civil Procedure Code, which describes in detail what amounts make up the final amount of costs.
• Resolution of the Supreme Court, which states that even if the submitted application was not considered or a decision was made to stop the process, then all expenses incurred by the defendant are borne by the plaintiff who submitted the application, Article 101 of the Civil Code of the Russian Federation.
• Supreme Court Ruling No. 18.

What are legal costs

The costs of a lawsuit may include all costs incurred by the accusing party, including time spent. The expenses incurred consist of two parts:

• the first is mandatory state. fee paid for consideration of the application,
• the second is the additional costs incurred by the party during the period of consideration of the claim.

The share of compensation for all costs falls on the losing party, which is why in any court hearing you should use the services of professional lawyers. Timely and competent consultation will help you win your court case.

Often, due to savings on the services of a defense lawyer, a person loses the trial, even when he was absolutely right. The outcome of a court decision is influenced not only by the evidence base, but also by the correct approach to the case. Therefore, weigh your decisions carefully.

In case of victory in court, the winning party shifts all the costs of a lawyer to the losing party. But even in this case, the court takes into account the capabilities of the defendant and assigns compensation within reasonable limits.

Types of legal costs in civil proceedings

What exactly is included in the concept of costs:

• Payment for legal services representing the interests of either party.
• If certain specialists were involved in the process, this includes commission opinions required as evidence.
• Costs for specialists involved in the process.
• If a translator is required, the cost of his services is also included in the costs.
• When witnesses are called during the hearing, all their expenses, including travel or mandatory time off, to testify.
• Accommodation expenses for third citizens involved in the process: payment for hotels, travel tickets.
• Payment for postal services required during a court hearing.
• According to Article 99 of the Code of Civil Procedure, costs include the cost of time spent during the period of all hearings.
• And a number of additional expenses.

Of course, each expense item must be supplemented with relevant evidentiary documents such as checks, contracts, and others.

Distribution of legal costs - who should pay

In order not to burn out on the costs associated with the civil process, you should first consult with a competent lawyer. He will give sound advice on all issues that arise during the hearing and what costs will be required to carry out the process.

The court always awards the losing party compensation for all monetary expenses that were required for the entire period of the process. This includes the costs of collecting the necessary evidence, medical or commission reports, as well as the cost of the services of a lawyer representing the interests of the party.

But there is a possibility that the claim will only be partially satisfied; in this case, the losers will pay only part of the costs determined by the court for compensation.

There are cases when the claim was not considered, but the defendant spent time and money to investigate all the circumstances. In this case, all costs are reimbursed by the person who filed the application to the court. A similar outcome awaits in the case where the case was terminated for a number of reasons, the defendant has the right to demand compensation for everything from the plaintiff.

A citizen can also file a private complaint against a court decision on reimbursement of expenses, in accordance with Article 104 of the Code of Civil Procedure of the Russian Federation.

Procedure and deadline for collecting legal expenses

It is possible to recover from the responding party the full amount of all costs incurred by the injured party both during the process and after the completion of the court hearings. Regarding the second case, it should be remembered that it is necessary to submit an application for compensation of expenses before the court decision enters into force.

The standard deadline is 10-15 days after the end of the hearing, the same period is given for appealing the court decision. Based on Article 201 of the Code of Civil Procedure, the injured party may file a petition for reimbursement of the funds spent after the end of the case, then the court will make an additional decision on reimbursement of expenses from the defendant.

The court has the right to determine the final amount of compensation independently, based on the financial situation of both parties.

Conclusion

Any lawsuit is a waste of money, energy, and health. Therefore, everyone has the right to demand, in addition to reimbursement of expenses, moral compensation. As for the costs incurred in court, it is necessary to remember that victory depends on many circumstances. Therefore, approach the matter carefully.

The court may also decide to reimburse all expenses incurred without further filing a claim for compensation.

Litigation costs in civil litigation are nothing other than the costs incurred by the parties to the hearing in pursuing and resolving the business case.

There are several types of such expenses, and each time a person has the legal right to recover part of the money that was spent on paying for defense specialists in the courtroom. But now you will find out how they are divided and compensated.

Kinds

According to the current legislation, legal expenses include state fees and various costs, which are prescribed in paragraph 1 of Art. 88 Code of Civil Procedure of the Russian Federation dated November 14, 2002 No. 138 Federal Law.

A claim for reimbursement of legal expenses in civil proceedings is the inalienable right of any citizen.

The amount of state duty that must be paid to the participants in the trial will be calculated in accordance with Chapter 25.3, Part 2 of the Tax Code of the Russian Federation. Decree of August 5, 2000 Federal Law No. 117.

1. But, in order to more fully understand how much the state duty can amount to, it is best to be guided by the following list:
2. The type of treatment you came to the courtroom with.
3. The subject of a legal dispute between the parties to the proceeding.
4. What category does the person who pays the fee belong to - an individual or legal entity, or a government body?
5. The role a person occupies in a hearing is the plaintiff or the defendant.

For certain cases of appeals, the state provides preferential positions, which are clearly stated in Article 89 of the Civil Procedure Code, Articles 333.35-333.37 Part 2 of the Tax Code of Russia.

Also, not all individuals need to pay the full amount of state taxes on litigation matters. Also, according to Article 90 of the Civil Procedure Code and Article 333.41 of Part 2 of the Tax Code, installment payments are provided for certain types of expenses on the part of the payer.

If a person or legal entity has not paid the state fee, in accordance with Article 136, paragraph 1 of the Code of Civil Procedure of the Russian Federation, the case will not be considered until the full cost is paid.

If you calculate tax payments for state duties, it is possible, but with personal expenses or legal costs it is more difficult.

It is impossible to say how much the entire process may cost, because the costs of companies that provide services for maintaining and representing the interests of the plaintiff or defendant are very different.

In addition, during the proceedings, it may be necessary to conduct additional investigative experiments or examinations, which are also not done free of charge.

Litigation costs are not limited to the parties to litigation. As judicial practice shows, third parties who make certain claims in matters of dispute may also incur costs.

Video: Legislation and practice

How to share

1. The principle of dividing costs into state duty and other expenses is clearly regulated by Article 98 of the Civil Procedure Code.
2. The party that is defeated in the courtroom will reimburse the winner in full for all legal costs. But this does not include the costs of calling witnesses to testify in the courtroom, the work of specialists, and additional examinations that are ordered at the initiative of the court. Such costs will be reimbursed through payments from the budget.

In addition to the main parties to the dispute, it may involve persons who indirectly relate to the subject of the proceedings.

However, they also have their own civil rights, or a decision in favor of the winner of the meeting will directly affect these persons. In this case, according to paragraph 1 of Art. 42 of the Civil Procedure Code, such persons will have all the obligations of the plaintiff.

If at the time of the proceedings the plaintiff decided to withdraw his appeal to the court, then the defendant is completely exempt from paying costs to his opponent. And if the defendant voluntarily accepted the plaintiff’s demands upon request to the judge, this will not relieve him of the obligation to pay the costs that the opponent had to spend to bring the case to the current stage.

Therefore, if you turn to a judge with a request to exempt you from paying state duties, the latter may refuse under completely legal circumstances.

If both parties to the dispute reach a settlement agreement, then they will determine how and in what proportions they will pay the costs. If it is not possible to reach a decision, then the judge himself, in accordance with paragraph 2 of Art. 101 of the Code of Civil Procedure, will render a verdict on this issue.

Reimbursement of legal expenses in civil proceedings

Parties to the hearing may submit a request for the recovery of legal costs at any stage of the hearing or investigation of the case. They can also submit such a petition even when the judge has made a decision and announced it in the courtroom.

The plaintiff himself, when filing his claim against the defendant to the judicial authority, has the right to draw up a petition for compensation. Then you will not need to submit several documents, but it will be enough to enter a sample of your petition into the current claim.

If this issue has not been resolved, then the judge is simply guided by his own initiative, which is stated in subsection. 3, paragraph 1, Article 201 of the Civil Procedure Code, will make a decision regarding reimbursement of material costs for preparing and conducting the hearing.

Even when the judge's verdict on the issue of the claim has been announced, the attacking party has the opportunity to file a petition for damages related to the costs of holding a hearing in the courtroom.

Then you need to contact the court that was involved in the consideration and decision.

For the services of representatives in the meeting room

• Receipts, tickets or receipts that confirm expenses.
• Information about prices for specialist work.
• All other documents that were required to pay for the needs or support of a person to be present at the court hearing.

In turn, the defendant may file a protest regarding payment for the services of the plaintiff’s representative. The amount will be partially reduced or canceled altogether.

The latter is possible only if the representative of the plaintiff is:

• Blood relatives (father, mother);
• The person with whom he is married (husband/wife);
• In-house lawyer, if this is a legal entity.

If the defendant manages to prove that the representative could save money for maintenance and movement around the city and used excessive expenses, then the judge will cut the amount of payment.

This is interesting! Don't chase the best price. If a representative stays in a suite, there is no need to compare economy; it is better to choose the average cost of hotel rooms, because the judge may reject your protest.

The fact is that the representative himself has the right to decide where to stay, whether this choice was economically reasonable or exorbitant in terms of spending - the judge will decide.

In the form of filing an independent dispute

If the judge has denied your award of costs, you as the plaintiff have every right to bring the same claim to the same court, but presented as not a petition or motion, but as a new and entirely separate claim.

This is regulated and permitted by current legislation, namely Article 15 of the Civil Code of Russia.

Only this time, after the appeal, your costs will be presented in the form of damages incurred at the hearing of the previous case.

In this situation, your attacking party will have to prove and provide the judicial body with arguments and facts that will show that expenses of this nature are necessary to restore their violated rights on the part of the defendant. Important!

Conclusion

In any case, the plaintiff has the right, if he wins, to file a petition for reimbursement by the defendant of the funds that were needed to prepare the case and consider it in the courtroom.

If the judge refuses, you can file a separate lawsuit, where compensation will be presented in the form of direct damage to your wallet.

The defendant has no right to demand compensation from the plaintiff. But if the claim is partially satisfied, then the losing party will not have to pay the attacking party the full amount. In addition, the plaintiff has the right in the courtroom to relieve the defendant of responsibility for paying costs.

You can submit an application for compensation of legal expenses at any time when a claim is filed, as well as after a verdict in the case is rendered by a government agency.

Court proceedings always involve costs for the plaintiff and the defendant: payment of state fees, the cost of services of a human rights defender, travel to the place of the trial, accommodation in a foreign city. Legal expenses in civil proceedings incurred by the winning party can be fully or partially transferred to the shoulders of the second participant or repaid from the budget.

What legal costs are eligible for reimbursement?

• The composition of court costs is covered in Art. 88, 94 Civil Procedure Code of the Russian Federation, 106 Arbitration Procedure Code of the Russian Federation. According to the provisions of the current legislation, the costs consist of two parts: the amount of the transferred state duty and other costs associated with the course of the trial. The second category includes the following expenses:
• the cost of assistance from a human rights defender;
• price of services of hired professionals - experts, translators, etc.;
• costs incurred by witnesses;
• the cost of travel and accommodation in the area where the case is being heard for non-resident participants in the process;

compensation for temporary losses of hearing participants, etc.

The legislation does not provide an exhaustive list of legal costs. In theory, a party to the case has the right to recover any costs associated with the hearing. The position of the judges will depend on the evidence base and proper motivation.

The text of the petition for the recovery of legal costs does not indicate the cost of the measures initiated by the court. Example: the involvement of a medical expert and the calling of a witness are covered from budget funds.

How to collect funds due?

The law stipulates the following period for recovery of legal costs in civil proceedings – 3 years. This is the standard statute of limitations period for civil litigation. For an arbitration case, the deadline is six months later.

Filing a request for compensation for expenses incurred does not create a separate subject of the claim and does not imply the need to pay a state fee.

An application for reimbursement of legal costs must be submitted in writing at any stage of the proceedings:

• simultaneously with a lawsuit;
• during the hearing of the case, before the judges retire to the deliberation room;
• after the court's decision.

If the filing of an application for reimbursement of legal costs occurred before the decision was made, the court will include the decision regarding the payment of compensation in the reasoning and operative part of the decision.

When a petition is filed after a decision has been made, the court issues an additional order setting forth the procedure for payment of compensation if this issue has not been considered earlier.

Features of reimbursement of the cost of a lawyer’s services

Representation services and their compensation are discussed in Art. 100 Code of Civil Procedure of the Russian Federation. It states that reimbursement of legal expenses for hiring a lawyer is carried out within reasonable limits. This provision is aimed at stopping abuses when the plaintiff deliberately inflates the cost of the services of a human rights defender in the hope that he will recover them from the defendant who loses the trial.

Reasonable cost is determined taking into account the following factors:

• duration of the trial;
• complexity of the case;
• the average price tag for the services of lawyers in a specific constituent entity of the Russian Federation;
• presence of other expenses (travel, accommodation, etc.).

If the initiator of the case includes the costs of a lawyer in the statement of claim for the recovery of court costs, he must prove that they were justified. For example, the second party will not cover the cost of subscription services; it is possible to pay the price of one-time services.

How to make an application to reimburse expenses?

The costs incurred by the plaintiff are recovered from the losing party in the case on his initiative. To do this, within the deadlines established by law, you need to prepare an application and submit it to the court. This application does not imply the need to pay a fee.

Current legislation does not offer a unified application template. When drawing it up, you must be guided by the general rules for petitions to the justice authority. The decision of the judges depends on the brevity, completeness and validity of the document.

The application is prepared in writing. It must include the following information:

• name of the recipient ship;
• Full name of the parties to the hearing;
• Case number indicating at what stage of the proceedings it is;
• a list of the plaintiff’s expenses for which collection is planned;
• reference to the provisions of current regulations;
• designation of a specific requirement - to reimburse expenses incurred;
• list of application documents.

The application indicates the date of preparation and is certified by the handwritten signature of the author or his legal representative.

Who should compensate for the expenses incurred? This depends on the decision of the case made by the court. There are probably two outcomes: the costs are fully reimbursed by the losing party if the justice authority 100% satisfies the plaintiff’s demands; costs are divided between the parties in the established proportion if the claim is partially satisfied.

Part of the costs (for example, reimbursement of time costs, accommodation and travel of witnesses and experts) is compensated from the federal or regional budget.

If the defendant does not agree with the plaintiff’s demands, he has the right to prepare an objection to the application for recovery of costs. The court will consider the arguments of both parties and make a fair decision regarding the procedure for compensating expenses.

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