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Towards a paradigm shift in the appraisal of costs

14/12/2023

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Javier Tarjuelo

Litigation and Arbitration Associate at Pérez-Llorca / Coach of subject of Arbitration in the Double Master's Degree in Law of business and Access to the Bar of the University of Navarra.

The appraisal of costs is the procedure to determine the amount with which the losing party in a judicial procedure must compensate the winning party for the expenses incurred by the latter for the fees of lawyers, attorneys, experts and others1

With regard to attorneys' fees, until now, the appraisal of costs was carried out by means of a series of scales approved by the Bar Associations. These scales allow, in most cases, to accurately determine the fees for the purposes of the appraisal, by means of a simple table of amounts and percentages, and based only on the amount of the procedure and the specific action or actions carried out by the lawyer.

This method has an obvious disadvantage, as the result of the appraisal will not usually coincide with the fees actually paid by the winning party to its lawyers (which are usually agreed according to market criteria, without taking into account the bar associations' scales), so that the compensatory effectiveness of the costs is significantly diluted. However, there is no doubt that this method guarantees, at least, a certain legal certainty, given its predictability and simplicity of calculation. Thus, despite the aforementioned shortcoming, this method allows the parties to know, prior to initiating a judicial procedure , the economic risk they face in the event of being defeated in the same.

However, it seems that this way of assessing attorneys' fees is coming to an end. In the last year, the Third conference room of the Supreme Court has issued five rulings2 declaring that the scales issued by the Bar Associations, for the purposes of the assessment of costs, are contrary to the rules and regulations of skill and, if the Bar Associations wish to avoid repeating this infringement, they must replace these scales with "mere guiding criteria" in which there is "no exact quantitative determination effect assimilated to that of a lawyer", high school they should replace such scales with "mere guiding criteria" in which "any effect of exact quantitative determination comparable to a tariff or price list" is "absent", as the Barcelona Bar Association (ICAB) has already done.

In fact, the ICAB issued a document with fourteen general criteria3 that take into consideration the economic interest of the lawsuit, the subject of procedure, the phases of the process, the duration of the professional action and the complexity of the case, among others. In short, it is a series of programmatic principles, which "shall be taken as a parameter of reasonableness" and which should not be "interpreted as a minimum or a maximum, but in a flexiblemanner". These criteria do not include reference letter any numerical criteria that would allow, even in an approximate manner, to objectively quantify the fees and, therefore, do not allow the parties to know in advance the costs they will have to face in case they are ordered to pay costs.

In view of the new scenario created by the Supreme Court's rulings, the judicial system is at a status impasse with respect to the assessment of costs, since, with the sole exception of the ICAB, the bar associations have not yet issued guiding criteria that are in line with the Supreme Court's ruling. In other words, in most of the country, the parties, lawyers and judges do not have any reference letter to assess fees that is compatible with the rules and regulations of skill, as interpreted by the Supreme Court.

In this status, there are two options to try to get the judicial system out of this impasse. The first option would be for the different bar associations to issue new guiding criteria that, similar to those of the ICAB, establish a series of programmatic principles, without any quantitative reference letter , for assessing costs. This option could give rise to great legal uncertainty, at least until, in the framework of the resolution of the incidents of challenge of costs raised by the parties, a body of case law precedents that interpret and objectify in some way such principles is developed, thus serving as guide to be able to anticipate, at least approximately, the amount of possible costs.

As an alternative to the above, some voices in the legal sector4 have raised the possibility of the legislator approving a rule that sets fee criteria at national level, containing quantifiable parameters that provide certainty to the market following the Supreme Court's rulings. 

However, for the time being, there has been no progress in either direction. It is therefore urgent that the operators involved take the appropriate steps to refund, as soon as possible, the legal certainty in such a relevant subject when making the decision to litigate, as are the costs.


1 article 241.1 of Law 1/2000, of January 7, 2000, on Civil Proceedings.

2 Rulings of the Supreme Court (conference room 3ª) of 19 December 2022 [RJ 2022, 5201], 23 December 2022 [RJ 2023, 756], 23 December 2022 [RJ 2023, 417], 13 June 2023 [RJ 2023, 3570] and 18 September 2023 [JUR 2023, 364352].

3 Guiding Criteria of the ICAB in subject of appraisal of costs of 2020. Declared adequate to the legality of skill by Resolution of the CNMC of February 27, 2020. In force since March 5, 2020. Available here.

4 "ICAM calls for a modification rules and regulations to give certainty to the market after the Supreme Court ruling on professional fees". available here.