“That makes another 132,000 euros.” The defendant had not expected such a high bill from the lawyer. An hourly rate of 190 euros was agreed in the inheritance dispute, which increased depending on the value in dispute. In addition, there was five percent of the fee for expenses. In his lawsuit, the lawyer demanded the aforementioned 132,000 plus another sum as “remaining compensation”.
According to the ruling of the Federal Court of Justice (BGH), this is generally permissible; lawyers can also agree hourly fees with consumers. This can even be permissible and effective if the lawyer has neither given an estimate of the total costs nor promised interim invoices, as the BGH announced on September 23, 2024. According to the ruling, however, the time billed must be “reasonable” (case no. IX ZR 65/23).
The BGH confirmed that the standard agreement of a reasonable hourly fee was also acceptable in itself. This is because such a clause does not serve from the outset to “conceal economic contractual risks”.
Lawyers have an advantage when it comes to hourly fees
The court considers it a given that the lawyers have an advantage here because they can better estimate the time required. In return, however, in the event of a dispute they are generally obliged to “present the services provided during the billed time interval in a concrete and verifiable manner”. In addition, the billed fee must be “reasonable in relation to the difficulty, scope and duration” of the dispute.
However, if a lawyer does not provide a rough cost estimate in advance and does not inform the client about the costs incurred so far, a time-based fee clause may be non-transparent in individual cases. A lawyer exceeds his discretion, for example, if he “inflates the time-based fee by processing the case in a way that is not time-efficient and in bad faith.”
Performance and consideration must be of equal value
Even though the Federal Court of Justice classifies hourly fees as generally permissible, there was a setback in the present case: The judges objected to the increase in the hourly rate depending on the value of the dispute. The “price-driving effect” of this clause was not immediately apparent to consumers and could “lead to hourly rates that cannot be reconciled with the principle of equivalence of performance and consideration.
The same applies to the flat-rate percentage for expenses, the judges explained. It is not apparent that additional expenses are directly dependent on the necessary processing time.
In addition, the BGH annulled other clauses as invalid.
The Amberg Regional Court, where the case was previously heard, is now to redefine the fee according to the statutory rules, so it could be significantly lower.
An article by SUPER.MARKT, with material from AFP, 23.09.2024.
