Initiating legal proceedings or organising one's defence involves calling on the services of a lawyer, an investment in time, confidence and, of course, money. The question of the cost of this intervention is central. Another, just as essential, follows: if you are successful, how much of these costs will you be able to recover from the opposing party? The widespread idea that "the loser pays the winner's lawyer" is a simplification that ignores the subtleties governing the burden of costs in French law. The reality, governed by the concept of "succombance" and an abundance of case law, is far more nuanced.
The truth is that most of the sums you pay to your lawyer are not "costs", a term that refers to a very specific category of expenses that the losing party is, in principle, ordered to pay back. Understanding this distinction, as well as the concepts of disbursements, irreducible costs and default interest, is fundamental to anticipating the final cost of a dispute. The aim of this article is to clarify the full range of legal costs, so that you can approach any proceedings with an accurate and informed view of the financial implications. For personalised advice, please contact contact our firm.
Expenses, irreducible costs and fees: the key distinction for controlling your legal costs
To assess what you could recover if you win, it is essential to distinguish between three key concepts, which are often confused by litigants: costs, lawyers' fees and irreducible costs.
Costs (article 695 CPC): a restrictive list of procedural costs
But what exactly are costs? Article 695 of the Code of Civil Procedure sets out a precise and, above all, restrictive list. This means that only the costs explicitly listed in this article can be classified as costs. These mainly include :
- Fees, taxes or charges levied by court registries.
- The cost of translating documents where required by law.
- Compensation paid to witnesses.
- The remuneration of technicians appointed by the judge (for example, a court-appointed expert), including the remuneration of the person appointed.
- The fees of public or ministerial officers (such as judicial commissioners, formerly bailiffs, for certain acts).
- The regulated remuneration of lawyers, in cases that have become very specific, including pleading rights.
The principle, set out in article 696 of the same code, is that the unsuccessful party is ordered to pay the costs. This is a quasi-automatic order, which does not require the judge to give any specific reasons.
Lawyers' fees: remuneration for strategy and advice
Legal fees are the largest part of a lawyer's remuneration. They cover all the lawyer's intellectual work and strategic diligence: analysis of your case, legal research, meetings, advice, drafting of conclusions (the written arguments submitted to the judge), preparation of pleadings, any negotiations, and general monitoring of the case. These fees are freely agreed between the firm and its client. This written fee agreement, which is essential, specifies the calculation methods (hourly rate, fixed fee, performance fee) and guarantees the transparency of the relationship. The fundamental point to remember is that these fees are never part of the costs These costs are not included in this list.
Article 700 of the CPC: reimbursement of irreducible costs (including legal fees)
Since your lawyer's fees are not costs, how can you hope to get them reimbursed? This is where the mechanism of Article 700 of the Code of Civil Procedure comes into play. This article allows the winning party to ask the judge to order the opposing party to pay it a sum to cover the costs it has incurred and which are not included in the costs. These are mainly lawyers' fees, but also other costs incurred in the proceedings. However, unlike costs, this reimbursement is neither automatic nor in full. The judge has a discretion As confirmed by established case law, the court has sovereign power to set the amount of this compensation, taking into account equity and the economic situation of the unsuccessful party. The court may even decide not to award any sum. The compensation awarded is a lump sum and rarely covers all the fees paid. For a more complete overview, see case law analysis of the judge's assessment criteria for Article 700.
The judge's assessment criteria: how are fairness and economic situation assessed in practice?
The judge is not bound by any scale, a position reaffirmed by the case law of the Cour de cassation. The judge's assessment is sovereign, i.e. it is based on his or her own personal conviction in the light of the evidence in the case. However, its decision, guided by a wealth of judicial case law, is based on two principles. Firstly, fairness: the judge analyses the behaviour of the parties throughout the proceedings. A party that has multiplied delaying tactics or shown bad faith could see its claim rejected or be more heavily condemned. Secondly, the economic situation: the judge takes into account the resources and respective expenses of each party. A person on a modest income who is ordered to pay a large amount of compensation to a large company could see this amount moderated. Case law shows that the judge seeks a balance so that the winning party is not penalised by the costs incurred, without ruining the losing party.
How much of the lawyer's fees are actually included in the costs?
Once the distinction has been made, it is clear that the proportion of lawyers' fees actually included in the costs is very small. It is currently limited to two well-defined elements.
Tariffed emoluments: now an exceptional case
Historically, part of a lawyer's remuneration was fixed. These were emoluments of postulation, inherited from the former profession of avoué. Law no. 2015-990 of 6 August 2015, which has since come into force, has virtually put an end to this system. Today, the lawyer's regulated remuneration, which is included in the costs, remains only for his involvement in a very limited number of technical disputes, listed in article L. 444-1 of the French Commercial Code. These are essentially the following procedures:
- Foreclosure The procedure for the forced sale of a property.
- Judicial partition in the event of disagreement over the liquidation of an estate or community of property.
- Auction auction of an undivided property.
- Judicial sureties measures to secure a claim, such as the establishment of a judicial hypothec. Our firm has a recognised practice in judicial sureties and guarantees.
In these few areas, certain specific acts (such as drafting the conditions of sale) give rise to fees, the rates for which are set by decree.
Legal fees: the only contribution systematically included
Only one item is still systematically included in the costs as legal fees: the right of appeal. This is a fixed sum, currently set at 13 euros. This fee is payable for each actual pleading, as well as for any representation at a hearing leading to a court decision, even if there is no formal pleading. This sum, which is similar to a contribution equivalent to a tax, is not retained by the lawyer but paid to the Caisse Nationale des Barreaux Français (CNBF) to help fund the profession's basic pension scheme. Article 695, 7° of the Code of Civil Procedure confirms that this pleading fee does indeed form part of the costs. Consequently, the losing party will systematically be ordered to reimburse this €13 for each hearing concerned, with certain exceptions (proceedings before the Industrial Tribunals or in the event of full legal aid, for example). To find out more about the conditions and coverage of legal aidSee our dedicated article.
Costs: who pays and how can recovery be obtained?
While the principle of ordering costs to be paid is clear, the practical details need to be clarified, as effective recovery requires a rigorous procedure to be followed and a clear understanding of the financial implications.
Principle and exceptions (article 696 CPC): judgment against the unsuccessful party
As explained, article 696 of the Code of Civil Procedure sets out a clear principle: the losing party is ordered to pay the costs. The concept of succombance is assessed with regard to the claims of each party: the party whose claim is dismissed is considered to be the losing party. In the event of reciprocal claims (principal claim and counterclaim), the court may order that the claim be shared and apportion the costs. The same article 696 allows the court to depart from this principle. He may, "by reasoned decision, order that all or part [of the costs] be borne by the other party". This derogation remains exceptional and must be justified by considerations of equity, the application of which is followed by case law.
The recovery procedure in detail: verification, tax and enforcement order
Once the sentence has been handed down in the judgment, the recovery of costs follows. the detailed procedure for checking and charging costs. The successful party's lawyer draws up an itemised statement of costs. This statement of costs is then submitted to the court registry for review as part of the costs tax. The court clerk then issues a "verification certificate". Once this certificate has been served on the opposing party, and if it is not contested within one month, it becomes a "certificate of verification". enforcement orderIn the event of disagreement, the party contesting the amount may apply to the president of the court. In the event of disagreement, the party contesting the amount may apply to the president of the court for a fee, who will rule on the application by means of a decision. tax order. This body guarantees control over the sums claimed. Beyond debt collection, it is essential to understand the tax implications of legal costs for each party.
Beyond costs: other legal costs (disbursements, legal aid)
The total cost of litigation is not limited to costs and fees. Other costs, often unrecognised, may be added and must be anticipated.
Disbursements: distinguish between the lawyer's costs and advances (court fees, legal notices, etc.)
The disbursements are sums that the lawyer advances on behalf of his client in order to carry out the acts necessary for the proceedings. They are not his remuneration but the reimbursement of costs incurred with third parties. Some disbursements are included in the list of costs (such as the remuneration of a legal expert or travel expenses), but others are not, constituting costs not included in the costs which remain payable by the client if they are not recovered via Article 700. A common example is the publication costs of a legal noticeThis is mandatory in many company law procedures. As a result of the PACTE Act, which came into force in 2019, most fees are now charged on a flat-rate basis. These costs, advanced by the firm, are then re-invoiced to the client.
Legal aid: how are costs covered?
L'legal aidIf you are eligible, the State will pay all or part of your lawyer's fees (according to an official scale) and costs. If you are eligible, the State will pay all or part of your lawyer's fees (according to an official scale) and costs. In the event of victory, if the opposing party is not itself a beneficiary of legal aid, it will still be ordered to pay the costs. The lawyer may then recover these sums on behalf of the State. Similarly, the judge may order the losing party who is not in receipt of legal aid to pay a sum under article 700 of the CPC, which will then be paid to the State, pursuant to a specific legal provision.
Specific costs depending on the procedure: social enquiry, payment order, etc.
Some procedures involve specific costs. In family matters, the judge may order a social survey to inform its decision. The cost of this measure, which may be substantial, is considered to be an expert's fee and is therefore included in the costs (art. 695, 10° CPC). The parties are generally asked to pay a deposit before the work begins. Another example is theorder for paymentThe procedure, which is quick and inexpensive, particularly before the Commercial Court, involves court registry fees for the application and costs for service of the order by a court commissioner, which are payable by the creditor but included in the costs if the party is convicted.
Financial and tax implications: insurance, interest on arrears and tax
The financial management of a lawsuit extends beyond simply paying the bills. Mechanisms such as insurance, legal interest and taxation play a decisive role in the final cost.
Legal expenses insurance: essential but limited cover
L'legal protection insurance is a contract that covers legal costs (lawyer's fees, expert's fees, costs) in the event of a dispute. It is undeniably useful, but there are limits. Most policies set ceilings on cover per claim and reimbursement scales for fees, which do not always cover the full amount invoiced. It is therefore essential for policyholders to check the terms and conditions of their policy before taking legal action.
Statutory interest and surcharges: how to optimise financial penalties?
Any order for the payment of a sum of money (costs, Article 700, damages and interest) produces interest at legal rate from the date of the court decision. But there is a powerful and often overlooked mechanism for speeding up recovery. Article L. 313-3 of the French Monetary and Financial Code provides for a increase of 5 points of the legal interest rate. This increase applies automatically two months after the date on which the court decision becomes enforceable (whether this enforcement is final or provisional, which was known as provisional enforcement before the reform came into force on 1 January 2020). This is an effective way of encouraging a recalcitrant debtor to settle his debt quickly.
Tax treatment of costs and irreducible expenses: what to declare
La taxation The question of the deductibility of legal costs is a complex one, the contours of which are regularly refined by administrative case law. For a company, legal fees and awards (costs, article 700) are generally considered as deductible expenses from its taxable income. Reimbursements received under Article 700, on the other hand, are taxable income, which is vital information for accounting purposes. The situation is different for private individuals. Expenses incurred are deductible from income only in very limited cases, for example if the purpose of the dispute is to acquire or retain income (a labour dispute to obtain payment of wages, for example). Compensation received under Article 700 is not, in principle, taxable as it is considered to be a simple reimbursement of expenses, a position validated by case law and which differs from the system of damages provided for in the Civil Code.
The distinction between lawyers' fees, irreducible costs and costs is therefore essential for anyone involved in legal proceedings. It is the key to understanding the financial implications of the dispute, in particular the burden of costs, and the real significance of a legal victory. This complexity reinforces the importance of a transparent discussion with your lawyer about his fees. For an analysis of your situation and tailored support, please do not hesitate to request legal advice made to measure.
Sources
- Code of Civil Procedure (CPC): Articles 695 to 725 (version in force on 1 January 2024).
- Monetary and Financial Code: Article L. 313-3.
- French Commercial Code: Articles L. 444-1 et seq.
- Social Security Code (CSS) : Articles R. 652-26 et seq, relating to contributions.
- Law no. 71-1130 of 31 December 1971 reforming certain judicial and legal professions.
- Act no. 2019-486 of 22 May 2019 on the growth and transformation of businesses (PACTE Act).
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