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Questionnaire on

FUNDING, COSTS AND PROPORTIONALITY IN CIVIL JUSTICE SYSTEMS




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Questionnaire on .......................................................................................................... 1
1.     WHAT ARE THE COSTS INCURRED IN CIVIL LITIGATION? .................. 5
1.1.       Court charges. ................................................................................................. 5
1.1.1.     Value in dispute ............................................................................................... 6
1.1.2.     Fees ................................................................................................................. 6
1.1.3.     Characteristic features and principles ............................................................... 6
1.1.3.1.   First instance ................................................................................................... 7
1.1.3.2.   Second instance (appeal) .................................................................................. 7
1.1.3.3.   Third instance (review appeal on a point of law and procedure) ........................ 8
1.2.       Other official charges (VAT, translator, bailiff, service or process,
           enforcement of a judgment). ............................................................................ 8
1.2.1.     Various court expenses .................................................................................... 8
1.2.2.     VAT ................................................................................................................ 9
1.2.3.     Enforcement of a judgment .............................................................................. 9
1.3.       Lawyers‟ fees. Please cover all information on fee agreements, hourly rates,
           fixed fees, success fees, uplifts/contingency fees, pro bono, etc. and say how
           extensive each method is in practice, and what the size (or range) of fees are
           in each case. .................................................................................................... 9
1.3.1.     Fees according to the RVG .............................................................................. 9
1.3.1.1.   Characteristic features and principles ............................................................. 10
1.3.1.2.   Fee for proceedings (Verfahrensgebühr)......................................................... 10
a)         First instance: ................................................................................................ 11
b)         Second instance (appeal): ............................................................................... 11
c)         Third instance (review appeal on a point of law and procedure): ..................... 12
1.3.1.3.   Fee for court hearings (Terminsgebühr) .......................................................... 12
a)         First instance ................................................................................................. 13
b)         Second instance ............................................................................................. 13
c)         Third instance (review appeal on a point of law and procedure) ...................... 14
1.3.1.4.   Fee for settlement (Einigungsgebühr) ............................................................. 14
1.3.2.     Negotiated fees .............................................................................................. 14
1.3.3.     Lawyer´s expenses ......................................................................................... 15
1.3.4.     Contingency fees ........................................................................................... 16
1.3.4.1.   Legal Basis .................................................................................................... 16
1.3.4.2.   Preconditions for a contingency fee ................................................................ 17
1.3.4.3.   Agreement on the amount of the contingency fee ........................................... 17
1.3.4.4.   Content of the contingency fee agreement ...................................................... 18




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1.3.4.5.   Quota litis Agreements .................................................................................. 19
1.4.       A witness of fact. ........................................................................................... 19
1.4.1.     In general ...................................................................................................... 19
1.4.2.     Costs and compensation ................................................................................. 19
1.5.       An expert. ...................................................................................................... 20
1.5.1.     Court expert .................................................................................................. 20
1.5.1.1.   In general ...................................................................................................... 20
1.5.1.2.   Remuneration and reimbursement of expenses................................................ 21
1.5.1.3.   Reimbursement of travelling and other necessary expenses ............................. 22
1.5.1.4.   Daily allowance ............................................................................................. 22
1.5.2.     Party´s expert ................................................................................................ 22
1.6.       Any other costs .............................................................................................. 22
1.6.1.     Representation of one client by two lawyers – correspondence lawyer and
           trial lawyer .................................................................................................... 22
1.6.2.     Representation of several clients by one lawyer .............................................. 23
1.7.       What other factors constitute a “price” for bringing a claim, such as delays in
           the legal process, complex procedure, unpredictability of the outcome,
           opportunity cost, and other strains? How long do (different types of) cases
           usually take? .................................................................................................. 24
1.7.1.     Default judgment ........................................................................................... 24
1.7.1.1.   Lawyers‟ fees ................................................................................................ 24
1.7.1.2.   Court fees ...................................................................................................... 25
1.7.2.     Withdrawal .................................................................................................... 25
1.7.2.1.   First Instance ................................................................................................. 25
1.7.2.2.   Second Instance (appeal) ............................................................................... 25
1.7.2.3.   Third instance (review appeal on a point of law and procedure) ...................... 26
1.7.3.     Other non-reasoned judicial decisions: judgment by acknowledgement,
           judicial settlement and declaration of settlement ............................................. 26
1.7.3.1.   First instance ................................................................................................. 26
1.7.3.2.   Second instance (appeal) ................................................................................ 26
1.7.3.3.   Third instance (appeal on a point of law and procedure) ................................. 27
1.7.4.     Costs not depending on complexity or length of the legal proceedings ............ 27
2.     WHO BEARS THE COSTS? ........................................................................... 27

3.     WHAT ARE THE SOURCES OF FINANCE FOR BRINGING OR
       DEFENDING A LEGAL CLAIM? .................................................................. 32
3.1.       Personal funds. .............................................................................................. 32




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3.2.       Legal aid. ...................................................................................................... 33
3.2.1.     Legal aid for litigation ................................................................................... 33
3.2.2.     Legal aid for extra-judicial advice .................................................................. 34
3.3.       Legal Expenses Insurance (LEI, i.e. before-the-event), for individuals or
           companies. .................................................................................................... 34
3.4.       After-the-event (ATE) insurance. ................................................................... 36
3.5.       Loans or grants from banks, trade associations, etc. ........................................ 36
3.6.       Funding from a lawyer or other third party investor. ....................................... 37
3.6.1.     Consumer Organisations ................................................................................ 37
4.     FURTHER ISSUES .......................................................................................... 38
4.1.   How predictable are the amounts involved? .................................................... 38
4.2.   What strategies are used by the parties to lower costs (e.g. tactics in cases, or
       procedural options like budgets, cost capping orders, costs protection
       orders)? ......................................................................................................... 39
4.3.   How proportionate are the sums involved? ..................................................... 39
4.4.   How long do the procedures take? .................................................................. 39
4.5.   What proportion of cases is settled and how long do they take? ...................... 39
4.6.   What figures (or estimates) are available on the numbers of civil litigation
       cases started, completed, or settled before judgment, for different available
       procedures, e.g. general courts, small claims, commercial or other special
       courts or tribunals, ombudsmen, special schemes, codes of business conduct,
       etc? Please give figures back to 2000 if available. ......................................... 40
4.7.   What restrictions apply to appeals? Are appeal courts bound by the findings
       of fact at first instance? How do the costs of an appeal compare to first
       instance? ....................................................................................................... 40
           Case Studies ........................................................................................ 41
4.8.   Questions for Scholars only ........................................................................... 46
Thank you for completing this questionnaire ............................................................... 47




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Please quote verbatim, or attach, all source documents.




1.       What are the costs incurred in civil litigation?

What do the parties (claimants, defendants etc, or persons acting on their behalf)
have to pay to the following persons and institutions, and at what stage of the
proceedings do they have to make such payments?


1.1.     Court charges.

         Court fees are lump-sum compensation for the services of the court and are
         regulated by the legal provisions of the GKG. The court costs of civil actions
         depend – like the lawyer´s fee – on the value of the disputed subject matter
         (c.f. section 3 GKG).




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1.1.1.   Value in dispute

         The value of the disputed subject matter is determined by the claim asserted.
         Provisions on the calculation of the value in dispute are contained in the
         German Civil Procedure Law (Zivilprozessordnung, ZPO). There are special
         provisions for the value in dispute regarding the claim for possession (section
         6 ZPO) and rent (section 8 ZPO). The value in dispute regarding an action for
         payment is equal to the amount of the payment claimed. In other cases, in
         which the value in dispute cannot be easily determined, e.g. in case of an a f-
         firmative action for a right, the value in dispute has to be investigated under
         the principle of the economic value of the claim and lies in the discretion of
         the court (section 3 ZPO). The value of the matter is determined by court o r-
         der, generally issued in conjunction with the decision of the court.

1.1.2.   Fees

         In schedules, which as appendices constitute part of the GKG, the amounts of
         the respective fee are specified for the different instances and types of jud i-
         cial decisions (annex 1 to the GKG) and for the respective applicable margins
         of values in dispute (annex 2 to the GKG). The calculated fee constitutes one
         fee unit and every court fee is defined as a multiple calculated fee.

1.1.3.   Characteristic features and principles

         Typical for the German fee system are the cost degression and the once-only
         levy of the fees in each instance.

         Degression means that that the increase of the value in dispute does not lead
         to an equivalent increase of the fees. Consequently, the higher the value of
         the disputed subject matter is, the lower the fees are in relation to the value in
         dispute.

         The only-once levy of the fees means that in each instance the fees are only
         chargeable once irrespective of the court‟s efforts. Consequently, in each i n-
         stance the court fees must be paid only once irrespective of how many court
         hearings are held. Thus, the fees have the character of a lump-sum fee.

         The court fee increase in the different instances.




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         As court fees are statutory fees and governed by the provisions and schedules
         of the GKG, they are transparent and predictable.

         For a better overview of the court fees, examples of the calculation of court
         fees in case of a value in dispute of 10,000 €/100,000 €/1,000,000 € for all
         instances are given below.

1.1.3.1. First instance

         In the first instance, the court fee is 3.0 of the calculated fee when – as in
         most cases – the court has to render a reasoned decision (c.f. number 1210 of
         annex 1 to the GKG).

         Calculation examples:

         Value in dispute: 10,000 €: If the value in dispute is 10,000 €, the calculated
         fee amounts to 196 € (c.f. annex 2 to the GKG). Hence, the court fee in the
         first instance amounts to 588 € (3.0 x 196 €).

         Value in dispute: 100,000 €: If the value in dispute is 100,000 €, the calcu-
         lated fee amounts to 856 € (annex 2 to the GKG). Hence, the court fee the
         first instance amounts to 2,568 € (3.0 x 856 €).

         Value in dispute: 1,000,000 €: If the value in dispute is 1,000,000 €, the ca l-
         culated fee amounts to 4,456 € (annex 2 to the GKG and section 34 (1)
         GKG). Hence, the court fee in the first instance amounts to 13,368 € (3.0 x
         4,456 €).

1.1.3.2. Second instance (appeal)

         In case of second instance (appeal), the court fees increase up to 4.0 of the
         relevant fee (number 1220 of annex 1 to the GKG).

         Calculation examples:

         Value in dispute: 10,000 €: If the value in dispute is 10,000 €, the calculated
         fee is 196 € (c.f. annex 2 to the GKG). Hence, the court fee in the second i n-
         stance amounts to 784 € (4.0 x 196 €).




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         Value in dispute: 100,000 €: If the value in dispute is 100,000 €, the calcu-
         lated fee amounts to 856 € (annex 2 to the GKG). Hence, the court fee the
         second instance amounts to 3,424 € (4.0 x 856 €).

         Value in dispute: 1,000,000 €: If the value in dispute is 1,000,000 €, the cal-
         culated fee is 4,456 € (annex 2 to the GKG and section 34 (1) GKG). Hence,
         the court fee in the second instance amounts to 17,824 € (4.0 x 4,456 €).

1.1.3.3. Third instance (review appeal on a point of law and procedure)

         In case of review appeal on a point of law and procedure, the court fees in-
         crease up to 5.0 of the corresponding fee (number 1230 of annex 1 to the
         GKG).

         Calculation examples:

         Value in dispute: 10,000 €: If the value in dispute is 10,000 €, the calculated
         fee amounts to 196 € (c.f. annex 2 to the GKG). Hence, the court fee in the
         third instance amounts to 980 € (5.0 x 196 €).

         Value in dispute: 100,000 €: If the value in dispute is 100,000 €, the calcu-
         lated fee amounts to 856 € (annex 2 to the GKG). Hence, the court fee the
         third instance amounts to 4,280 € (5.0 x 856 €).

         Value in dispute: 1,000,000 €: If the value in dispute is 1,000,000 €, the ca l-
         culated fee amounts to 4,456 € (annex 2 to the GKG and section 34 (1)
         GKG). Hence, the court fee in the third instance amounts to 22,280 € (5.0 x
         4,456 €).

1.2.     Other official charges (VAT, translator, bailiff, service or process, e n-
         forcement of a judgment).

1.2.1.   Various court expenses

         The rules regarding of various expenses of the court are set out in number
         9000 et seq. of annex 1 to the GKG. Hereafter, court expenses are expenses
         for official acts of the court, e.g. for witness´ and experts summons, for
         postal deliveries, copies, etc. Consequently, the court can charge expenses
         for copying (0.50 €/page for the first 50 pages, then 0.15 €/page for each fur-
         ther page – c.f. number 9000 of annex 1 to the GKG), for service of the writ




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         with affidavit of service or by judicial officers (c.f. 9002 of annex 1 to the
         GKG), and for public notices (c.f. number 9004 of annex 1 to the GKG). The
         expenses also include the remuneration of a court-appointed expert and wit-
         nesses´ or translators‟ costs who are at first compensated by the court (c.f.
         number 9005 of annex 1 to the GKG and the Justizvergütungs- und -
         entschädigungsgesetz – JVEG).

1.2.2.   VAT

         All court charges and court costs include 19 % VAT.

1.2.3.   Enforcement of a judgment

         Enforcement of judgment is a special procedure ruled by sections 704 subseq.
         ZPO. No court costs strictly speaking arise in case of enforcement, since en-
         forcement is not carried by the court, but by the bailiff. The applicable fees
         for the bailiff are contained in the Gerichtsvollzieherkostengesetz, GvKG. For
         every official act of the bailiff a statutory fixed lump-sum applies: e.g. dis-
         tress costs 20 €, however if the distress takes longer than three hours, the
         bailiff charges for every further hour 15 €.

1.3.     Lawyers’ fees. Please cover all information on fee agreements, hourly
         rates, fixed fees, success fees, uplifts/contingency fees, pro bono, etc. and
         say how extensive each method is in practice, and what the size (or
         range) of fees are in each case.

         In Germany, a lawyer's remuneration is calculated on the basis of either sta t-
         utes (since 1 st July 2004 the Rechtsanwaltsvergütungsgesetz (RVG) – Act on
         Lawyers‟ Fees) – in this case one talks about statutory fees – or on the basis
         of negotiated fees.

1.3.1.   Fees according to the RVG

         The RVG provides for several types of fees. The fees depend on the value in
         dispute. The value of the disputed subject matter is determined by the claim
         asserted, please see above 1.1.1.1.

         For the determination of the fees, the German legislature developed sche d-
         ules (Vergütungsverzeichnis (VV), which as appendices are part of the RVG.




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         According to these schedules, fees are provided for the individual acts pe r-
         formed by a lawyer (annex 1 to the RVG) and for the respective applicable
         margins of values (annex 2 to the RVG). The level of the fee that is depend-
         ent on the value in dispute is therefore indicated in the fee scale in annex 2 to
         Section 13 RVG.

         Nota bene: The value in dispute is capped at a maximum of 30,000,000 € (c.f.
         section 22 (2) RVG). That means that even if the claim is effectively higher
         than 30,000,000 € the value in dispute does not exceed 30,000,000 €. Cons e-
         quently, in case of a value in dispute of 30,000,000 € or more the lawyer´s
         fees do not increase any further.

         There are three types of lawyers‟ fees for judicial work: fee for proceedings,
         fee for court hearing and fee for settlement.

1.3.1.1. Characteristic features and principles

         The principles of degression and only-once levy also apply to the lawyers‟
         fees. The only-once levy of the fees means in this context that in each in-
         stance the lawyer receives the fees only once irrespective of whether he or
         she appears in court once or several times and irrespective of whether he or
         she writes one or more briefs.

         The statutory fees are specified in the provisions and schedules of the RVG
         and are thus transparent and predictable.

1.3.1.2. Fee for proceedings (Verfahrensgebühr)

         The fee for proceedings arises with a lawyer´s procedural transaction for the
         client (preliminary note 3 (2) of annex 1 to the RVG), hence upon filing the
         claim and litigating.

         The fee for proceedings for negotiation in court is levied once in each i n-
         stance irrespective of the number of court hearings in each instance. Such fee
         increases in the subsequent instances.

         For a better overview of the lawyer´s fee system, examples of the amount of
         a lawyer´s fee for proceedings with a value in dispute of 10,000 €/100,000 €
         /1,000,000 € are given for all instances.




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a)      First instance:

         If the lawyer´s work is not limited to the collection of information for the
         case and the lawyer brings an action to court, the general fee in court pro-
         ceedings then is 1.3 of the calculated fee (c.f. number 3100 of annex 1 to the
         RVG).

         Calculation examples:

         Value in dispute: 10,000 €: If the value in dispute is 10,000 €, the calculated
         lawyer‟s fee amounts to 486 € (c.f. annex 2 to the RVG). Hence, the law yer‟s
         fee for proceedings in the first instance amounts to 631.80 € (1.3 x 486 €).

         Value in dispute: 100,000 €: If the value in dispute is 100,000 €, the calcu-
         lated fee amounts to 1,354 € (annex 2 to the RVG). Hence, the lawyer‟s fee
         for proceedings in the first instance amounts 1,760.20 € (1.3 x 1,354 €).

         Value in dispute: 1,000,000 €: If the value in dispute is 1,000,000 €, the ca l-
         culated fee amounts to 4,496 € (annex 2 to the RVG and section 13 (1)
         RVG). Hence, the lawyer‟s fee for proceedings in the first instance amounts
         5,844.80 € (1.3 x 4,496 €).

b)      Second instance (appeal):

         In the second instance (appeal), the fee for proceedings for lodging an appeal
         is 1.6 of the calculated fee (c.f. numbers 3200 of the annex 1 to the RVG).

         Calculation examples:

         Value in dispute: 10,000 €: If the value in dispute is 10,000 €, the calculated
         fee amounts to 486 € (c.f. annex 2 to the RVG). Hence, the lawyer‟s fee for
         proceedings in the second instance amounts 777.60 € (1.6 x 486 €).

         Value in dispute: 100,000 €: If the value in dispute is 100,000 €, the calcu-
         lated fee amounts to 1,354 € (annex 2 to the RVG). Hence, the lawyer‟s fee
         for proceedings in the second instance amounts 2,166.40 € (1.6 x 1,354 €).

         Value in dispute: 1,000,000 €: If the value in dispute is 1,000,000 €, the cal-
         culated fee amounts to 4,496 € (annex 2 to the RVG and section 13 (1)




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         RVG). Hence, the lawyer‟s fee for proceedings in the second instance
         amounts 7,193.60 € (1.6 x 4,496 €).

c)      Third instance (review appeal on a point of law and procedure):

         In case of a review appeal on a point of law and procedure in the third i n-
         stance, one has to distinguish between proceedings in which the clients can
         be represented by lawyers who are admitted to the Oberlandesgericht (OLG –
         Higher Regional Court) and proceedings in which the clients have to instruct
         a lawyer admitted to the Bundesgerichtshof (BGH – German Federal Court of
         Justice).

         If the client can be represented by a lawyer admitted to the OLG, the fee for
         proceedings reaches a level of 1.6 of the calculated fee for filing an appeal on
         a point of law and procedure (c.f. number 3206 of annex 1 to the RVG).

         If the client has to be represented by a lawyer admitted to the BGH, the fee
         for proceedings amounts to 2.3 of the calculated fee (c.f. number 3208 of an-
         nex 1 to the RVG).

         Calculation examples:

         Value in dispute: 10,000 €: If the value in dispute is 10,000 €, the calculated
         fee amounts to 486 € (c.f. annex 2 to the RVG). Hence, the lawyer‟s fee for
         proceedings in the third instance amounts to 1,117.80 € (2.3 x 486 €).

         Value in dispute: 100,000 €: If the value in dispute is 100,000 €, the calcu-
         lated fee amounts to 1,354 € (annex 2 to the RVG). Hence, the lawyer‟s fee
         for proceedings in the third instance amounts to 3,114.20 € (2.3 x 1,354 €).

         Value in dispute: 1,000,000 €: If the value in dispute is 1,000,000 €, the cal-
         culated fee amounts to 4,496 € (annex 2 to the RVG and section 13 (1)
         RVG). Hence, the lawyer‟s fee for proceedings in the third instance amounts
         to 10,340.80 € (2.3 x 4,496 €).

1.3.1.3. Fee for court hearings (Terminsgebühr)

         The fee for court hearings is triggered by the lawyer´s representation of the
         client in a hearing and taking of evidence in court or the participation at a
         hearing of an expert appointed by court or at meetings with the opposing




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         party in order to avoid litigation (cf. preliminary note 3 (3) of annex 1 to the
         RVG).

         The fee for court hearings is levied once in each instance and covers all court
         hearings of the respective instance. Therefore, it has the character of a lump -
         sum fee. The amount of the fee for court hearings also increases from the
         first to the third instance.

         The fee for court hearings is calculated in the same way like the fee for pr o-
         ceeding (c.f. sec. 1.3.3). To understand the lawyer´s fee system and to get an
         idea of the development of the lawyer´s fee for court hearing, examples for
         the calculation of the fee for court hearings in case of a value in dis pute of
         10,000 €/100,000 €/1,000,000 € for all instances are given.

a)      First instance

         The fee for court hearings is 1.2 of the respective calculated fee (c.f. number
         3104 of annex 1 to the RVG).

         Calculation examples:

         Value in dispute: 10,000 €: If the value in dispute is 10,000 €, the calculated
         fee amounts to 486 € (c.f. annex 2 to the RVG). Hence, the lawyer‟s fee for
         court hearings in the first instance amounts to 583.20 € (1.2 x 486 €).

         Value in dispute: 100,000 €: If the value in dispute is 100,000 €, the calcu-
         lated fee amounts to 1,354 € (annex 2 to the RVG). Hence, the lawyer‟s fee
         for court hearings in the first instance amounts to 1,624.80 € (1.2 x 1,354 €).

         Value in dispute: 1,000,000 €: If the value in dispute is 1,000,000 €, the ca l-
         culated fee amounts to 4,496 € (annex 2 to the RVG and section 13 (1)
         RVG). Hence, the lawyer‟s fee for court hearings in the first instance
         amounts to 5,395.20 € (1.2 x 4,496 €).

b)      Second instance

         The fee for court hearings in the second instance corresponds to the fee for
         court hearings in the first instance and amounts to 1.2 of the relevant fee (c.f.
         3202 of annex 1 to the RVG).




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          Calculation examples: c.f. sec. 1.3.4.1.

c)       Third instance (review appeal on a point of law and procedure)

          In case of a review appeal on a point of law and procedure, the fee for court
          hearing is 1.5 of the corresponding fee (number 3210 of annex 1 to the
          RVG).

          Calculation examples:

          Value in dispute: 10,000 €: If the value in dispute is 10,000 €, the calculated
          fee amounts to 486 € (c.f. annex 2 to the RVG). Hence, the lawyer‟s fee for
          court hearings in the third instance amounts to 729 € (1.5 x 486 €).

          Value in dispute: 100,000 €: If the value in dispute is 100,000 €, the calcu-
          lated fee amounts to 1,354 € (annex 2 to the RVG). Hence, the lawyer‟s fee
          for court hearings in the third instance amounts to 2,031 € (1.5 x 1,354 €).

          Value in dispute: 1,000,000 €: If the value in dispute is 1,000,000 €, the ca l-
          culated fee amounts to 4,496 € (annex 2 to the RVG and section 13 (1)
          RVG). Hence, the lawyer‟s fee for court hearings in the third instance
          amounts to 6,744 € (1.5 x 4,496 €).

1.3.1.4. Fee for settlement (Einigungsgebühr)

          If the parties reach a settlement after proceedings have been initiated, the
          lawyer may charge a fee for settlement. This fee amounts to 1.5 of the rele-
          vant fee (c.f. number 1000 of annex 1 to the RVG). In the second instance
          (appeal) and the third instance (review appeal on a point of law and proc e-
          dure) the fee for settlement decreases to 1.3 of the respective fee (c.f. number
          1004 of annex 1 to the RVG).

          The fee for settlement is payable on top of the fee for court proceedings and
          the fee for court hearings.

1.3.2.    Negotiated fees

          A lawyer can also agree with his or her client on remuneration based on ne-
          gotiated fees rather than statutory fees provided for in the RVG.




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         However, if the negotiated fee is higher than the statutory fee, the rules pro-
         vided in section 49 b (1) BRAO (Bundesrechtsanwaltsordnung – Federal
         Lawyers Act) and in section 3 a (1) RVG have to be taken into account: Ac-
         cording to section 49 b (1) BRAO, it is in general, not permissible to agree
         on or to bill lower fees and disbursements than the amount set forth by the
         statutory fee. Section 3 a (1) RVG provides that the client´s agreement to a
         lawyer´s fee higher than the statutory fee has to be made in a separate agre e-
         ment in writing.

1.3.3.   Lawyer´s expenses

         Beside the fees, a lawyer can charge expenses for mail, telephone, copying,
         etc.

         Here, too, agreements are always possible instead of or in addition to the
         statutory provisions. They are advisable where e.g. extensive mat erial has to
         be photocopied or the lawyer has to travel large distances on behalf of the
         client.

         Unless otherwise agreed, the numbers 7000 et seq. of annex 1 to the RVG
         govern the lawyer‟s expenses. According to numbers 7000 et seq. of annex 1
         to the RVG, the lawyer can charge the actual expenses incurred, if he or she
         can prove them. Consequently, the lawyer can charge expenses for photocop-
         ies which are 0.50 € for each page for the first 50 pages and 0.15 € for each
         further page (c.f. number 7000 (number 1) of annex 1 to the RVG). But as it
         is quite difficult to prove these expenses since hardly any lawyer in Germany
         predetermines the number of photocopies, a lawyer usually does not charge
         the expenses for photocopies.

         Furthermore, the lawyer may charge travel expenses. The travel expenses
         amount to 0.30 €/kilometre if the lawyer goes by his/her own car (c.f. number
         7003 of annex 1 to the RVG) or are fully chargeable if the lawyer uses other
         means of transport and if the expenses are adequate (c.f. number 7004 of a n-
         nex 1 to the RVG).

         Concerning the expenses for mail and telecommunications, the lawyer can
         demand the payment of the actual costs (c.f. number 7001 of the annex 1 to
         the RVG); instead of the actual costs, however, he/she may also charge a
         lump-sum. This lump-sum amounts 20% of the lawyer´s fees, but a maximum




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         of 20 € (c.f. number 7002 of the annex 1 to the RVG). Since, as a rule, law-
         yers do not record the costs for mail and telecommunication, they regularly
         charge the lump-sum of 20 €.

1.3.4.   Contingency fees

         The new statutory provision on contingency fees is in force since 1 July
         2008. In spite of the amendment, the principle in § 49b (2) Lawyers' Federal
         Order (Bundesrechtsanwaltsordnung abbr. BRAO), according to which
         agreements which make remuneration or the amount thereof dependent on the
         result of the matter or the success of the lawyer‟s work or according to which
         the lawyer receives a part of the amount recovered as his fee, are inadmissi-
         ble, continues to apply. Agreements in this direction are, however, admissible
         if the Lawyers‟ Fees Order (Rechtsanwaltsvergütungsgesetz abbr. RVG) pro-
         vides otherwise. Section 4 a RVG loosens the prohibitions and provides that
         a contingency fee agreement must be related to the individual case and is
         permitted if the client because of his financial situation would, on informed
         consideration, be prevented from pursuing his rights in the absence of such
         an agreement.

1.3.4.1. Legal Basis

         On 12.12.2006, the Federal Constitutional Court (Bundesverfassungsgericht
         abbr. BVerfG) decided that the prohibition of contingency fees for lawyers
         including the prohibition of quota litis is inconsistent with Art. 12 (1) of the
         Constitution to the extent that no exception is admitted for the event that the
         lawyer intends with the agreement on contingency fee to take account of the
         financial circumstances of the client which would otherwise prevent the cl i-
         ent from pursuing his rights (BVerfG, published in AnwBl. 2007, 297). This
         judgment required the legislator to bring in a new provision by 30.06.2008 in
         accordance with the constitutional reservations against the blanket prohibi-
         tion. The federal government therefore introduced the RVG reform which
         came into force on 01.07.2008.

         The loosening of the prohibition on contingency fees is contained in § 4a
         RVG which reads as follows:

         A contingency fee (§ 49b (2) sent. 1 BRAO) may be agreed only for an indi-
         vidual case and only if the client would, on informed consideration, be pre-




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         vented due to his financial circumstances from pursuing his legal rights wit h-
         out the agreement of a contingency fee. In litigation, it may be agreed for the
         event of losing the case that no fee or a fee less than the statutory fee is pay-
         able if a reasonable supplement above the statutory remuneration is agreed in
         the event of success.

1.3.4.2. Preconditions for a contingency fee

         A contingency fee therefore may be agreed only in a particular case and only
         for specific legal matters with a specific client (explanatory memorandum
         BT-Drs. 16/8384, p. 13). It is a condition that the client would, on informed
         consideration, otherwise be prevented due to his financial circumstances
         from pursuing his legal rights (§ 4a RVG).

         This could be the case if the client were not in a position financially to pay
         the costs of the case without the agreement of a contingency fee. It could also
         be the case if the client would not take the financial risks in pursuing the case
         due to lack of or only minimal prospects of success in the absence of a con-
         tingency fee agreement. According to the explanatory memorandum, § 4a (1)
         sent. 1 RVG provides “… a flexible standard which should afford even a m e-
         dium-sized company in the case of a major construction claim the possibility
         to agree a contingency fee ..” (BT-Drs. 16/8916 to § 4a, p. 17).

1.3.4.3. Agreement on the amount of the contingency fee

         According to § 4a (1) sent. 2 RVG, it may be agreed in the event of the loss
         of a court case that no fee or a fee less than the statutory fee is payable if a
         reasonable supplement to the statutory fee is agreed for the event of success.
         In the explanatory memorandum, on the question of when a supplement
         agreed for the event of success is reasonable the following is stated:
         “Whether the supplement is reasonable is to be assessed from the point of
         view of the contractual partners at the time of the conclusion of the contract.
         In the course of the assessment, two factors, in particular, should be consi d-
         ered: firstly, the supplement must be higher, the greater the reduction from
         the statutory minimum fee in the event of failure is. If, for example, it is
         agreed that in the case of failure the lawyer receives no fee (no win, no fee)
         the supplement must be greater than in the case in which the lawyer will re-
         ceive a fee less than the statutory minimum fee in the event of failure (no




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         win, less fee). The supplement must be greater, the less the chances of su c-
         cess are. If the chances of success are 50%, in general a supplement corr e-
         sponding to the reduction of the statutory fee in the case of failure would be
         reasonable. If the prospects of success are greater, a lesser supplement is
         adequate. If the prospects of success are smaller, the supplement must be
         greater (BT-Drs. 16/83/84, p. 11).

1.3.4.4. Content of the contingency fee agreement

         For the agreement of a contingency fee, the form provisions of § 3a RVG ap-
         ply. In addition, the contingency fee agreement should, according to § 4a (2)
         (3) RVG, contain the following:

         -      the anticipated statutory fee and the contractual fee irrespective of the
                outcome, as the case may be, at which the lawyer would be prepared to
                take the case, and

         -      the fee which is intended to be earned on the happening of which condi-
                tions,

         -      the main grounds on which the contingency fee is assessed,

         -      a statement that the agreement has no influence on the court costs, ad-
                ministrative costs and the costs of other parties which may be payable
                by the client, as the case may be.

         In all cases, the basic facts assumed by the lawyer and the client on the
         agreement of a contingency fee should be recorded in the contingency fee
         agreement. In addition, it is to be stated that the agreement does not affect
         the court costs, administration costs and the costs of other parties which may
         be payable by the client, as the case may be. The prospects of success need
         not be stated in the agreement in detail. In the explanatory memorandum it is
         stated as follows: “It may be adequate to state that in view of a certain ge n-
         eral litigation risk, for example, in medical negligence cases, this risk can be
         anticipated in the present case” (BT-Drs. 16/8916, p. 18).




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1.3.4.5. Quota litis Agreements

         A contingency fee agreement is understood in law (§ 49b (2) BRAO) as an
         agreement in which a fee or the amount thereof is made dependent on the
         outcome of the case or the success of the lawyer‟s work and/or according to
         which the lawyer is intended to receive part of the amount recovered as his
         fee. This definition includes a quota litis agreement and therefore section 4
         RVG opens the possibility in Germany for the making of quota litis agree-
         ments. In this form of agreement, the lawyer receives a part of the amount r e-
         covered whether by settlement or judgment.

1.4.     A witness of fact.

1.4.1.   In general

         A witness is a person who shall make representations on past observations of
         fact. The applicable provisions are set forth in sections 373 et seq. ZPO.

         The court can – and regularly does - require that the witness´ summons de-
         pend on the advance payment of his or her expenses by the party who bears
         the burden of proof (c.f. section 379 (1) ZPO).

1.4.2.   Costs and compensation

         The expert is compensated and remunerated for his services according to the
         JVEG.

         Firstly, the witness receives compensation for his travelling expenses if he
         travels by public transport (c.f. section 19 (1), section 5 (1) JVEG) or if he
         uses his own car (section 5 (2) no. 2 JVEG). In the first case, the compens a-
         tion amounts to the actual costs for first-class travel by rail. In the second
         case, the compensation is 0.30 € per kilometre.

         Secondly, the witness is compensated by a daily allowance if he participates
         in a court hearing at a place where he does not live or work according to se c-
         tion 19 (1), section 6 (1) JVEG.

         Thirdly, the witness can charge other necessary expenses, e.g. the co sts for
         necessary representation and necessary accompanying persons, etc. (c.f. se c-
         tion 19 (1), section 7 (1) JVEG).




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         Fourthly, the witness receives compensation for lost income according to se c-
         tions 19, s. 1 no. 6, 22 s. 1 JVEG: The amount of this compensation corre-
         sponds to the regular gross income with a maximum of 17 € per hour.

         If a witness is not working or is only employed part-time and manages an
         own household for several persons, the witness is entitled to compensation of
         12 € per hour according to the sections 19 (1), 21 (1) JVEG.

         Lastly, if a witness is not compensated for loss of income or inconveniences
         concerning the household, he receives 3 € per hour for loss of time (c.f. se c-
         tions 19 (1), 20 JVEG).

1.5.     An expert.

         Expert reports that have been commissioned by the parties must be distin-
         guished from reports of experts appointed by the court.

1.5.1.   Court expert

1.5.1.1. In general

         The court normally appoints an expert if this has been provided as evidence
         by one of the parties and if the court considers it necessary to call in an inde-
         pendent expert. This expert is a court expert.

         The provisions regarding court expert are set forth in sections 402 et seq.
         ZPO. According to section 402 ZPO, the rules concerning the witness (sec-
         tions 373 et seq. ZPO) apply accordingly.

         The court expert supports the court in its understanding of complex and spe-
         cial matters of fact through his or her particular knowledge and draws his or
         her conclusions from those facts in the form of an opinion. Thus, an expert is
         not limited to the pure testimony of past facts like a witness. Natural persons,
         scientific or other institutions and public authorities may be called as experts.

         The expert must be impartial and can be disqualified in the same way as a
         judge for the suspicion of being prejudiced.

         Concerning the number of experts, there is no limitation. According to se c-
         tion 404 (1) ZPO, the court selects the person and the number of experts.




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         Only if the parties have agreed upon an expert is the court bound by their
         proposal.

         The court can – and regularly does – require that the expert‟s summons de-
         pends on the advance payment of the expert‟s expenses by the party bearing
         the burden of proof (c.f. sections 402, 379 (1) ZPO). This advance payment is
         qualified as a court expense according to section 1 GKG.

1.5.1.2. Remuneration and reimbursement of expenses

         The expert is compensated and remunerated for his or her services according
         to the Justizvergütungs- und –entschädigungsgesetz (JVEG – Act on the Re-
         muneration and Compensation for Experts, Translators, Witnesses and oth-
         ers). For his/her work the expert receives a remuneration, a daily allowance
         and reimbursement of travel and other necessary expenses (c.f. section 8 (1)
         JVEG).

         (1)    Principles of remuneration

         The legal framework for the remuneration of the expert‟s report is based on
         sections 8 (1) no. 1, section 9 et seq. JVEG. According to section 9 (1)
         JVEG, the expert is remunerated per hour. The remuneration is determined
         by the fee group to which the expert belongs. The allocation of the expert‟s
         work to a fee group is determined by the expertise subject that is listed in a n-
         nex 1 of the JVEG. The fee rates per hour worked for the different fee groups
         are regulated in section 9 (1) JVEG.

         The court expert‟s remuneration is the same in all instances and for the dif-
         ferent types of cases because the scope and kind of the expert report does not
         depend on the procedural stage and type of case. Once the expert is appointed
         by the court, he/she has to prepare his/her opinion conscientiously.

         To understand the principles of the expert‟s remuneration, some examples are
         given:

         If the expert´subjects are e.g. electrical equipments and machines, the expert
         belongs to fee group no. 5 (c.f. annex 1 to the JVEG). In this case, he is r e-
         imbursed with 70 €/hour (c.f. section 9 (1) JVEG).




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         If, however, the expert´s subjects are errors in medical treatment, the expert
         belongs to fee group “M 3” (c.f. annex 1 to the JVEG). In this case, the ex-
         pert´s remuneration amounts 85 €/hour (c.f. section 9 (1) JVEG).

1.5.1.3. Reimbursement of travelling and other necessary expenses

         The expert is reimbursed for his/her travelling expenses if he/she travels by
         public transport (c.f. section 8 (1) no. 2, section 5 (1) JVEG) or by (his/her
         own) car (section 5 (2) no. 2 JVEG). In the first case, the reimbursement
         amounts to the actual costs for first-class rail travel. In the second case, the
         reimbursement is 0.30 €/kilometre.

         Furthermore, the expert can charge other necessary expenses, e.g. the costs
         for necessary representation and necessary accompanying persons, for the
         preparation of the expert opinion, copies, etc. (c.f. section 8 (1) no. 4, 7 (1)
         and (2), section 12 JVEG).

1.5.1.4. Daily allowance

         Moreover, the expert is compensated by a daily allowance if he or she pa r-
         ticipates at a court hearing at a place other than his/her place of work and
         domicile according to sections 8 (1) no. 3, 6 (1) JVEG.

1.5.2.   Party´s expert

         Expert opinions can be offered by a party in support of the party´s particular
         statement of fact and are annexed to the respective pleading. Thus, the expert
         report commissioned by a party is nothing else than proof by documents for a
         party‟s statement. The party mandating such expert must bear his costs.

         As regards the possibility to recover the costs of the party´s expert c.f. the
         above mentioned for the court expert.

1.6.     Any other costs

1.6.1.   Representation of one client by two lawyers – correspondence lawyer and
         trial lawyer

         The correspondence lawyer is the lawyer between the party and the trial la w-
         yer who arranges and manages the communication between them. The corre-




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         spondence lawyer does not act as representative of the trial lawyer in a court
         hearing. The correspondence lawyer rather represents the client together with
         the trial lawyer. His duties are to advise the client, to collect information
         from the client and to give this information to the trial lawyer.

         Although the institute of the correspondence lawyer relinquished its impo r-
         tance due to the amplification of the lawyers‟ right of audience nationwide,
         the correspondence lawyer will not disappear and become meaningless.

         One of the typical cases where a correspondence lawyer is still important is
         where a party seated in a foreign country cannot mandate abroad a lawyer
         who is admitted to practice before a German court. For example: a company
         seated in England is sued in Germany. If the English company has only Bri t-
         ish lawyers for its everyday legal affairs, the company will need to mandate a
         German lawyer because its British lawyers usually are not admitted to pra c-
         tice before a German trial. In this case the client has the choice to mandate
         exclusively a German lawyer for this affair or to mandate both his British
         lawyer and a German lawyer. In the latter case the British lawyer acts as cor-
         respondence lawyer and the German lawyer as trial lawyer. When a client
         mandates both a correspondence and a trial lawyer, the two lawyers may
         charge fees.

         Concerning the trial lawyer´s fees, there are no particularities. Consequently,
         his/her fees are determined by the above mentioned principles of the RVG.

         In regard to the correspondence lawyer, he/she receives the same fee as the
         trial lawyer, but not exceeding 1.0 of the relevant fee (c.f. number 3400 of
         annex 1 to the RVG).

1.6.2.   Representation of several clients by one lawyer

         If one lawyer represents several clients in the same legal matter, he/she, of
         course can charge the fee for proceedings, the fee for court hearings and the
         fee for settlement according to the above mentioned principles of the RVG.

         In addition, however, the lawyer may charge 0.3 of each fee for each addi-
         tional client up to a maximum of 2.0 of each fee (c.f. number 1008 of annex 1
         to the RVG). This additional fee is then called fee of increase (Erhöhungsge-




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          bühr) and serves to remunerate the lawyer´s extra work for several clients in
          the same legal case.

1.7.      What other factors constitute a “price” for bringing a claim, such as de-
          lays in the legal process, complex procedure, unpredictability of the ou t-
          come, opportunity cost, and other strains? How long do (different types
          of) cases usually take?

          In cases in which the court decides without taking the parties‟ reasoning in
          consideration, the court charges and the lawyers‟ fees might be reduced; such
          cases are rendering a default judgment or of a judgment by acknowledge-
          ment, withdrawal of a claim, judicial settlement or declaration of settlement.

1.7.1.    Default judgment

          In case of a default judgment, different lawyers‟ fees and court costs are
          charged.

1.7.1.1. Lawyers’ fees

          In case of a default judgment, a special lower lawyer´s fee for court hearings
          arises if the lawyer appeared only once in court and if counsel for the oppos-
          ing party did not appear at all (c.f. number 3105/3203/3211 of annex 1 to the
          RVG). If the counsel of the opposing party, however, appears in court but
          neither negotiates in court nor files a motion, this leads to a default judgment
          but does not decrease the lawyer´s fees. So, in this case, the “normal” fee rate
          of the respective instance arises.

a)       First instance and Second instance (appeal)

          In case of a default judgment in the first and second instance, the lawyer´s
          fees decrease from the “normal” fee rate of 1.2 to 0.5 (c.f. number 3105/3203
          of annex 1 to the RVG).

b)       Third instance (review appeal on a point of law and procedure)

          In case of a default judgment in the third instance the lawyer´s fee for court
          hearing decreases from 1.5 to 0.8 of the relevant fee (number 3211 of the an-
          nex 1 to the RVG).




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1.7.1.2. Court fees

          The court fees for a default judgment are also lower than the court fees for a
          litigious final judgment. The fees in regard to the default judgment decrease
          irrespective whether the opposing party appears or not. It suffices that the
          opposing party appears but does not negotiate in court or make a motion.

a)       First instance and second instance (appeal)

          If the court renders a default judgment in the first or second instance, the
          court fees amount 1.0 of the relevant fee instead of 3.0 or 4.0 of the respe c-
          tive fee (c.f. number 1211 and 1222 of annex 1 to the GKG).

b)       Third instance (review appeal on a point of law and procedure)

          In case of a default judgment in the third instance, the court fees decrease
          from 5.0 of the relevant fee (c.f. number 1230 of annex 1 to the GKG) to 3.0
          of the corresponding fee (c.f. number 1232 of annex 1 to the GKG).

1.7.2.    Withdrawal

          When the action, the appeal or the appeal on a point of law and procedure is
          withdrawn, lower court fees arise as the court needs not render a reasoned
          decision. The amount of the fees in case of withdrawal depends on the in-
          stance and on the date of withdrawal.

1.7.2.1. First Instance

          In case of withdrawal of the action, only 1.0 instead of 3.0 of the correspo n-
          dent fee falls due (c.f. number 1211 of annex 1 to the GKG).

1.7.2.2. Second Instance (appeal)

          In the second instance, the amount of the court fee in case of withdrawal is
          determined by the date of withdrawal.

          In case of withdrawal of the appeal before filing the brief with the grounds of
          the appeal, only 1.0 instead of 4.0 of the relevant fee falls due (c.f. number
          1221 of annex 1 to the GKG).




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         In case of a later withdrawal of the appeal, the court fee decreases from 3.0
         to 2.0 of the respective fee (c.f. number 1222 of annex 1 to the GKG).

1.7.2.3. Third instance (review appeal on a point of law and procedure)

         In case of an appeal on a point of law, the amount of the court fee for wit h-
         drawal is also determined by the date of withdrawal.

         If the appeal proceeding is terminated by withdrawal of the appeal on a point
         of law and procedure or of the action before filing the brief with the grounds
         of the appeal on a point of law and procedure, the court fee payable decreases
         from 5.0 (c.f. number 1230 to annex 1 to the GKG) to 1.0 of the correspond-
         ing fee (c.f. number 1231 of annex 1 to the GKG).

         In the case of a later withdrawal the court fee decreases to 3.0 of the corre-
         sponding fee (c.f. number 1232 of annex 1 to the GKG).

1.7.3.   Other non-reasoned judicial decisions: judgment by acknowledgement,
         judicial settlement and declaration of settlement

         In further cases where judicial decisions do not require a reasoned statement,
         the fee rates are lower than the fees for a litigious final judgment. Cases
         where a reasoned decision is not necessary are the judgment by acknowl-
         edgement, judicial settlement and the declaration of settlement. The decrease
         in fees varies in the instances.

1.7.3.1. First instance

         In case of a judgment by acknowledgement, judicial settlement or in the
         event that the parties have declared in an oral proceeding, in a pleading or in
         a protocol at the clerk´s office, that the dispute in the principal proceeding
         has been settled, the court fee decreases from 3.0 (c.f. number 1210 of annex
         1 to the GKG) to 1.0 of the relevant fee (number 1211 of annex 1 to the
         GKG).

1.7.3.2. Second instance (appeal)

         In the case of a judgment by acknowledgement, judicial settlement or in the
         event that the parties have declared in an oral proceeding, in a pleading or in
         a protocol at the clerk´s office, that the dispute in the principal proceeding




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         has been settled, the court fee decreases from 4.0 (c.f. number 1220 of annex
         1 to the GKG) to 2.0 of the corresponding fee (c.f. number 1222 of annex 1
         to the GKG).

1.7.3.3. Third instance (appeal on a point of law and procedure)

         In the case of a judgment by acknowledgement, judicial settlement or in the
         event that the parties have declared in an oral proceeding, in a pleading or in
         a protocol at the clerk´s office, that the dispute in the principal proceeding
         has been settled, the court fee decreases from 5.0 (c.f. number 1230 of annex
         1 to the GKG) to 3.0 of the corresponding fee (number 1232 of annex 1 to the
         GKG).

1.7.4.   Costs not depending on complexity or length of the legal proceedings

         Court charges and lawyers‟ fees depend in Germany strictly from the amount
         in dispute, not on the complexity of the case or length on the expected length
         of the proceedings. The principle of only-one levy fits well in this system,
         since neither court charges nor lawyers‟ fees will change depending on the
         number or length of the hearings or proceedings.

2.       Who bears the costs?

How are the costs ultimately divided between the parties and/or others (the state
etc)? Who reimburses/indemnifies/pays which of the items listed in paragraphs
1.1-1.7 above?

         Before answering the question as to how the costs are apportioned between
         the parties, one has to analyse at first whether and which costs have to be ad-
         vanced by which parties. If there is an obligation to make advance payments,
         the question then arises if and how the costs are apportioned and if and how
         the party who advanced the payments can obtain reimbursement.

2.1.     Debtor of the costs

2.1.1.   Lawyers’ cost

At first, each party must pay its own lawyer as each party must perform its own con-
tract with its lawyer whereby the lawyer normally asks for advance payment.




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Whether the winning party can ultimately recover its advance payments for its lawyer
is governed by the section 91 et seq. ZPO (see section 2.2.1) .

2.1.2.   Court costs

The court fees are initially owed by the person who initiates the proceedings (section
22 (1) GKG). The court fees are due with the filing of the action (section 6 (1) GKG).
Without payment of the court fees, the court will not order the service of the sum-
mons on the respondent (section 12 (1) GKG) and therefore not set a date for the
hearing.

The possibility to recover the advance payments of the court by the winning claimant
costs is governed by the sections 91 et seq. ZPO (see section 2.2.1)

2.1.3.   Expert´s and witness´ costs

The court can – and regularly does – require that the expert‟s and witness‟ summons
depend on the advance payment of the expert´s and witness´ expenses by the party
that bears the burden of proof (c.f. sections 402, 380 (1) ZPO). Consequently, the
debtors of the expert‟s and witness´ costs are the respective parties submitting evi-
dence.

2.2.     Apportionment of the costs

The party ultimately liable for all the costs of the proceeding and therefore the que s-
tion whether and which costs a party who advanced payments can recover is deter-
mined at the end of the proceedings by judicial decision or settlement (c.f. section 29
no. 1 GKG) according to the sections 91 et seq. ZPO.

2.2.1.   General rule: section 91 ZPO

2.2.1.1. Complete success and complete failure (section 91 (1) ZPO)

The unsuccessful party must bear the costs of the action, including, but not limited to,
compensating the opponent for his/her expenses to such extent as they were necessary
for the appropriate prosecution or defence of his or her rights (c.f. section 91 (1)
ZPO). Therefore, in Germany, the English rule that the loser pays applies as well.




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The extent of the final liability of the losing party and the scope of the recovery of
advanced payments are determined by the definition of the term “necessary costs of
the action”.

a)      Costs of the action

Costs of the action include court costs (see section 1.1and 1.2) and extrajudicial costs.

(1) Court costs

Beside of court charges/court fees (c.f. section 1.1) also court expenses (c.f. section 1
GKG and 1.2) must be taken into consideration. Court charges/court fees are a lump-
sum compensation for the services of the court and depend on the value of the di s-
puted subject matter (c.f. section 3 GKG). Court expenses are exp enses for official
acts of the court, e.g. for witness´ and experts‟ summons, for postal deliveries, copies,
etc.

The initial debtor of the court costs is the initiator of the action. In addition to the in i-
tiator of the action the losing party is liable by judicial decision (c.f. section 29 no. 1
GKG). Both are joint and several debtors (c.f. section 31 (1) GKG). The judgment has
no influence on the liability hereafter.

But the winning party is able to recover its advanced court costs according to the
principle in section 91 (1) ZPO.

(2)     Extrajudicial costs

Extrajudicial costs include party costs and lawyers‟ costs.

(i)     Party costs

Party costs include compensation for the loss of time caused by necessary trips or by
attending hearings; the provisions on the compensation of witnesses are applicable
analogously (c.f. section 91 (1) ZPO, see section 2.2.1).

(ii)    Lawyers‟ costs

“Lawyers‟ costs” mean the lawyers‟ costs in the sense of section 91 (2) ZPO (Tho-
mas/Putzo, ZPO, commentary, section 91 no. 19, 28 th edition, 2007,). Hence, lawyers‟
costs comprise all statutory fees and expenses which are chargeable according to the




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RVG, but not negotiated fees exceeding such statutory fees and expenses. The que s-
tion of necessity hereby plays no role. In respect of the negotiated fee in excess of the
provisions of the RVG, it is always the client who is and remains liable without the
possibility of reimbursement.

b)      Necessity of the costs of the action

The costs of the action are considered necessary if they appear objectively essential
and appropriate for the prosecution or the defence of a right. The criterion for esse n-
tiality is whether an economically reasonably thinking party might have considered
the cost activating action at the then time as relevant. The principle of economical
conduct of a case applies (Thomas/Putzo, ZPO, commentary, section 91 no. 9, 28 th
edition, 2007).

(1)     Court costs

Court costs are always necessary costs so that the party who had to pay in advance
can recover the court costs according to section 91 (1) ZPO if he/she wins the case.

(2)     Lawyer‟s costs

(i)     Lawyer‟s fees and expenses

The lawyer‟s statutory fees and expenses are necessary costs (c.f. section 91 (2) ZPO)
and have to be recovered by the loser according to section 91 (1) ZPO.

(ii)    Particularity: Lawyer‟s travel costs

A lawyer‟s costs for travelling to the court hearings and client meeting are necessary
except where they are significantly disproportional in relation to the importance of
the case and except where it is evident that a client meeting is not necessary. The
travel costs of a lawyer seated elsewhere are necessary insofar as the travel costs of a
lawyer seated at the party‟s address would have been necessary (BGH-NJW-RR 04,
855).

(3)     Several lawyers

If a client is represented by several lawyers, only the costs which would arise for one
lawyer are necessary (BGH FamRZ 04, 866) even if the case concerns a special, di f-
ficult legal subject.




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If a correspondence lawyer (see section 1.6.1), however, acts between the party and
the trial lawyer, an exception is made: The correspondence lawyer´s costs are gene r-
ally necessary (BGH NJW 03, 898) – especially if the party has no business experi-
ence at all – if the case is uncommonly difficult and if an immediate contact with the
trial lawyer is impossible or unacceptably difficult for the party. Especially in inte r-
national cases which require a trial lawyer of a foreign country it may be easier for
the client to have a correspondence lawyer in his/her home country who speaks the
same language, to whom he/she has a close business relationship and is closer for
meetings. Decisive are the following parameters: distance, infrastructure, professional
strain, information frequency and interest in avoiding absence (Thomas/Putzo, ZPO,
commentary, section 91 no. 27, 27 th edition, 2005). Concerning the amount of the
foreign correspondence lawyer´s necessary costs, German law - in concreto the RVG
- applies exclusively (BGH NJW 05, 1373). Hence, if the correspondence lawyer is
abroad, the correspondence lawyer´s fees are only necessary insofar as a German
lawyer´s fees would have been necessary (BGH NJW 05, 1373). That means that for a
correspondence lawyer from abroad the amount of the necessary and therefore reco v-
erable costs are governed and limited by the RVG just like for a German lawyer. If,
for example, a British correspondence lawyer´s fees according to the British Act on
Lawyers´ fees or according to an agreement are higher than the fees provided by the
RVG, only the amount of the fees governed by the RVG is necessary and conse-
quently recoverable according to section 91 (1) ZPO.

2.2.1.2. Part success and part failure (section 92 (1) ZPO)

If a party has partly lost a case, two alternative cost decisions are possible. Either
each party bears his own lawyer´s costs and half of the court costs (c.f. section 92 (1)
ZPO). Or the costs are shared between the parties according to the value -ratio of los-
ing and winning (c.f. section 92 (1) 2 ZPO).

The court, however, may also allocate the entire costs of the proceedings to one party
if the excess claim of the other party was proportionately small and caused no special
costs or if the amount claimed by the other party depended on determination in the
discretion of the court, on calculation by an expert or by mutual calculation (c.f. sec-
tion 92 (2) ZPO).

2.2.2.   Exceptions to the “loser pays” rule

2.2.2.1. Immediate acceptance




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In the event that the respondent did not, by his or her conduct, give reason to file the
complaint, the claimant has to bear the costs of the action in the event th at the re-
spondent immediately accepts the claim (c.f. section 93 (1) ZPO).

2.2.2.2. Declaration of settlement

In the event that the parties have declared, in an oral proceeding, in a pleading or a
protocol at the clerk´s office, that the dispute in the principal proceeding has been set-
tled, the court shall decide on the costs, by order, in its equitable discretion, taking
into consideration the state of the facts and of the dispute as of such time (c.f. section
91 a (1) ZPO).

2.2.3.   The claim for reimbursement

The winning partly or the successful party that advanced necessary costs is entitled to
claim reimbursement according to the winning quota (c.f. sections 91 (1) and 92 (1) 2
ZPO).

The possibility for reimbursement of advanced necessary costs is governed by the
sections 103 et seq. ZPO.

The claim for reimbursement of the litigation expenses may only be enforced on the
basis of a title enforceable by execution (c.f. section 103 (1) ZPO). The motion to set
the amount to be reimbursed must be filed with the clerk´s office of the court of the
first instance. The calculation of expenses, a copy thereof for notice to the opposing
party and the documents supporting the individual items have to be attached (c.f. se c-
tion 103 (2) ZPO). The court of the first instance rules on the motion to fix costs (c.f.
section 104 (1) ZPO). According to section 21 no. 1 Rechtspflegergesetz (RPflG –
Law on Registrars), however, the registrar (senior court officer exercising a wide
range of functions) rules on the motion to reimburse the litigatio n costs.


3.       What are the sources of finance for bringing or defending a le-
         gal claim?
What funding is permitted from each of the following sources?

3.1.     Personal funds.




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3.2.     Legal aid.

       In Germany, legal aid is available under certain circumstances to parties in-
       volved in litigation, but also for extra-judicial advice.

3.2.1.   Legal aid for litigation

         The requirements to obtain legal aid for litigation are governed in the se c-
         tions 114 et seq. ZPO.

         Firstly, legal aid may only be obtained by individuals who, on account of
         their personal and economic circumstances, are unable to pay the procedural
         costs.

         The second condition is that the applicant is likely to succeed and that the
         application does not appear to have been made for malicious reasons.

         The decision on the application for legal aid is taken by the court hearing the
         case (c.f. sections 117 (1), 127 (1) ZPO); it is an independent decision in
         every instance (c.f. section 119 s.1 s. 1 ZPO).

         If these requirements are fulfilled, legal aid is granted in the form of an inte r-
         est-free loan. The court fixes monthly instalments to pay back the legal aid
         received (c.f. section 120 (1) ZPO).

         If a certain case falls under the statutory requirement to be represented by a
         lawyer according to section 78 (1) und (2) ZPO – which is the case if a legal
         issue is litigated before the County Court (Landgericht), the Regional Higher
         Court (Oberlandesgericht) or domestic relations court (Familiengericht) –, a
         lawyer will be appointed by the court to represent the individual qualifying
         for legal aid. This will usually be the lawyer who filed the application for le-
         gal aid.

         Legal aid for proceeding costs is funded by the State. A lawyer engaging in
         legal aid work is entitled to receive a refund of his fees at the official RVG
         rate (c.f. section 12 (1) RVG) which amounts to 1.0 of the value in dispute
         (c.f. number 3335 of annex 1 to the RVG). The fees will be refunded in their
         entirety in cases with a value in dispute of up to approximately 3,000 €. In
         case of a higher value in dispute the fee will be lower than the normal RVG




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         rate. From a value in dispute of around 30,000 € upwards the fee does not i n-
         crease (c.f. section 49 RVG).

         The granting of legal aid has no influence on the obligation to pay the oppos-
         ing party´s costs in case of losing the proceeding (c.f. section 123 ZPO).

3.2.2.   Legal aid for extra-judicial advice

         For extra-judicial advice legal aid is available according to section 1 s. 1 Be-
         ratungshilfegesetz (BerHG – Act on legal counselling) under the same condi-
         tions as legal aid is granted for litigation costs. Thus, legal aid is given, if,
         firstly, the applicant cannot bring up the costs for legal advice on his own b e-
         cause of his personal and economic circumstances, secondly, if there are no
         other possibilities for the applicant to get the costs paid, and thirdly, if the
         exercise of his right is not malicious.

         The decision on the application for legal aid for extra-judicial advice is taken
         by the court of the place of domicile of the applicant (c.f. sections 4 (1)
         BerHG, 12, 13 ZPO).

         Legal aid for extra-judicial advice is provided in the form of advice and – to
         the extent necessary – legal representation (c.f. section 2 s. 1 BerHG) by
         lawyers or by advice centres, or, if the applicant can be helped with immedi-
         ate advice (e.g. advice on other possibilities for help), by the Amtsgericht
         (local court) as well (c.f. section 3 (1) und (2) BerHG).

         Legal aid for extra-judicial advice is funded by the State. The lawyer engag-
         ing in legal aid work receives from the State 30 € for providing information
         and 70 € for extra-judicial representation (c.f. section 44 (1) RVG, number
         2601 and 2603 of the annex 1 to the RVG).

3.3.     Legal Expenses Insurance (LEI, i.e. before-the-event), for individuals or
         companies.

         In Germany, a complex system of legal costs insurance exists. Due to the
         freedom to contract, every insurer can formulate its own insurance agre e-
         ments with the policyholder. In the interest of clarity and because of the
         complex structure of the insurance business, the association of the German
         insurance business, however, has developed general conditions for legal cost




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         insurances (Allgemeine Bedingungen für die Rechtsschutzversicherung/GDV-
         Musterbedingungen – GDV). Although these general conditions are non-
         binding, most insurers use theses conditions as standard terms.

         There are different forms of legal cost insurance that cover legal expenses the
         policyholder may incur in employment, personal injury, consumer, contract,
         taxation, traffic, and property disputes as well as for any award of the other
         party´s legal costs (c.f. section 2 lit a-k, 5 (1) lit a-h GDV).

         Normally, if a policyholder claims the payment of legal expenses, any legal
         action for which the expenses are incurred must have a reasonable prospect
         of success. The policyholder is also usually required to accept any reasonable
         offer of settlement.

         When a policyholder puts in a claim under a policy of this type, most insurers
         will assess the dispute in-house or perhaps with the assistance of one of their
         panels of solicitors, and will then determine whether the case is arguable. If
         the insurer concludes that the costs of a litigation are noticeably out of pr o-
         portion compared with the expected success of the claim or that the case has
         little prospect of success, it may simply notify the policyholder that it is not
         prepared to accept the claim (section 18 (1) GDV). If the policyholder does
         not agree with the insurer´s conclusion not to pay the litigation costs, the
         policyholder has two possibilities: He/she can initiate court action gainst the
         insurer (within a period 6 months (c.f. section 19 (1) GDV). Alternatively,
         the policyholder can have the dispute with the insurer decided by an expert
         arbitrator (Schiedsgutachter). The latter option is usually provided for as an
         additional option n the insurance agreement and must be initiated within one
         month from the insurer´s refusal (c.f. section 18 (2) and (3) GDV).

         Where the case appears more complex, or seems to have a good chance of
         succeeding, insurers appoint one of their solicitors to consider the matter
         unless the policyholder has selected a lawyer beforehand (c.f. section 17 (1)
         GDV).

         The insurance will usually pay for the policyholder´s lawyer´s fees and ex-
         penses, costs for experts and witnesses, the court costs and the oppo nent´s
         legal costs. However, it will not cover any compensation the policyholder is
         ordered to pay if he loses the case (c.f. section 5 (1) lit a-h GDV).




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         There may be a limit on the amount of legal expenses that the policy will
         cover. If this amount limit is reached and the case has not finished yet, the
         policyholder has to pay the rest out of his own pocket to bring the case to an
         end. Alternatively, the policyholder may be able to increase the limit by pa y-
         ing an extra premium.

3.4.     After-the-event (ATE) insurance.

         The GDVs do not rule an after-the-event-insurance. The GDVs require that
         the conditions for the claim for payment of legal costs must be fulfilled at the
         point in time in which the insurance protection already exists (c.f. section 4
         (1) GDV). The existence of insurance protection, however, generally requires
         payment of the insurance premiums (c.f. section 7 GDV). If there is no insu r-
         ance contract and hence no premium payments are made, an after-the-event
         insurance does, in general, not exist.

         However, in view of the freedom to contract, there may be insurance con-
         tracts which provide after-the-event insurances.

3.5.     Loans or grants from banks, trade associations, etc.

         A new model of financing proceeding costs has been developed, namely the
         system of financing proceeding costs by proceeding financing corporations:

         Investors take over the financing of proceeding costs for quid pro quo par-
         ticipation in the proceeding proceeds if the case is arguable. That means that
         the investors invest in legal proceedings if the case has sufficient prospect of
         success and if the opposing party has credit solvency. As a consequence the
         investors undertake by contract to pay all costs which arise during legal pr o-
         ceedings independent of the success of the claim and in case of insolvency of
         the opposing party. In return, the party permits the process investor to pa r-
         ticipate in the proceeds if he wins the case.

         Whether a financing corporation will finance litigation depends on an exact
         examination of a case as it will only invest in proceedings costs if the case is
         profitable. The examination of profitability, however, is quite difficult b e-
         cause most litigation is not predictable as in most cases the facts and the l e-
         gal issues are uncertain.




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         To examine the profitability of a case, the investors have either in-house or
         external lawyers giving an expert opinion on the prospects of success of the
         case. They examine the credit solvency of the opposing party, the facts and
         all legal problems.

3.6.     Funding from a lawyer or other third party investor.

3.6.1.   Consumer Organisations

         Consumers have the opportunity to use the services of consumer centres in
         order to resolve their legal queries.

         The Consumer centres in the 16 German federal states offer advice and in-
         formation on issues of consumer protection, help with legal problems and
         represent the consumers´ interests at the municipal and federal state level.
         The umbrella organisation, the Federal Consumer Organisations (Ver-
         braucherzentrale Bundesverband - VZBV), represents the political, economic
         and social interests of consumers at the national level. Providing information
         and advising consumers, however, is exclusively the task of the consumer
         centres in the respective federal state. The federal umbrella body provides
         support for the consumer centres in meeting this important task.

3.6.1.1. Core tasks

         The legal basis for the work of the consumer centres is the Act on Legal A d-
         vice (Rechtsberatungsgesetz, BerHG). According to section 3 (1) BerHG,
         consumer centres are permitted to provide legal advice and extra-judicial aid.
         Their approach mainly involves providing help for self-help, e.g. lawyer´s
         search and part advanced payment of the lawyer´s costs. Only in exceptional
         cases in which the interests of a great number of consumers asking for legal
         advice are concerned will the centre act directly as a party before court, e.g.
         in case of improper competition and unfair and inadmissible terms of busi-
         ness.

3.6.1.2. Legal advice and costs

         The consumer centres give advice in the centres themselves but also on tel e-
         phone or Internet. The consultation focuses on legal questions concerning the
         relationship between businesses and private consumers, e.g. credit law, ban k-




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         ing and investment, insurance, passenger rights, etc. The centres explain to
         consumers what their rights are and how they can enforce them. The con-
         sumer centres are financed by funding from federal state governments and by
         the sale of consumer advice guides. Due to the significant decrease in go v-
         ernment funding in recent years, consumer centres are being forced to charge
         consultation fees. These consultation fees, however, only cover a part of the
         costs of the consumer centres. Each consumer centre can determine the fees
         for its advice itself. The consumer centre of Bavaria for example charges 10
         € for each advice in the centre or by telephone. If the case is complex and
         needs detailed advice, the consultation fees can arise to 50 €. The online ad-
         vice by e-mail costs 15 €. For consultations concerning retirement pensions
         and capital investments amounts of 25 and 50 € are charged.

         These consultation fees cover the advice, but also the (rare) case of prosecu-
         tion of legal infringements by means of legal actions and the representation
         of a great number of consumer interests at federal state level.

         The consumer centres are independent, predominantly state-financed and
         non-profit organisations. Therefore the consumer does not have to recover
         the costs the consumer organisation spent and advanced if he/she wins the
         case for which he/she asked for help.




4.       Further issues

4.1.     How predictable are the amounts involved?

         The amounts involved (i.e. costs incurred in civil litigation) are predi cable.
         The costs incurred for court charges as well as lawyers‟ fees depend on the
         sum in dispute and are fixed by statutes.




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4.2.     What strategies are used by the parties to lower costs (e.g. tactics in
         cases, or procedural options like budgets, cost capping orders, costs pro-
         tection orders)?

         To reduce the sum in dispute, a claim can only be raised for a certain po rtion
         of the full amount (Teilklage).

         With a court settlement, Parties may reduce court costs to one third of the
         costs incurred in case of a court judgement.

         The same reduction of court costs to one third applies in case of an aban-
         donment of action before the end of the last oral hearing. Therefore, if the
         claimant is of the opinion that, according to the development of the proceed-
         ings, he will presumably not succeed with a claim he may lower the costs in
         comparison to an adverse court judgment.

4.3.     How proportionate are the sums involved?

         The court costs and statutory lawyers‟ fees depend on the sum in dispute on a
         diminishing scale. From a sum in dispute of EUR 30,000,000.00, the costs
         and statutory fees remain constant.

4.4.     How long do the procedures take?

         See Exhibit 1.

4.5.     What proportion of cases is settled and how long do they take?

         In 2007, 12.7% of the proceedings terminated before local courts were term i-
         nated by settlement. Before regional courts in the first instance, 23.9% of
         terminated proceedings were terminated by settlement.

         Regarding the length of terminated proceedings see Exhibit 1.




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4.6.     What figures (or estimates) are available on the numbers of civil litig a-
         tion cases started, completed, or settled before judgment, for different
         available procedures, e.g. general courts, small claims, commercial or
         other special courts or tribunals, ombudsmen, special schemes, codes of
         business conduct, etc? Please give figures back to 2000 if available.

         See tables Exhibit 1.

4.7.     What restrictions apply to appeals? Are appeal courts bound by the
         findings of fact at first instance? How do the costs of an appeal compare
         to first instance?

       ● The following restrictions apply to appeals against the final judgement at
         first instance (cf. sect. 511 Code of Civil Procedure):

         The appeal is only admissible if

                1. the value of its subject matter exceeds EUR 600.00, or
                2. the first instance court has, in its judgement, granted leave to appeal.

         The first instance court grants leave to appeal if

                1. the case has fundamental significance or the development of the law
                or the securing of uniform judgements requires a judgement of the ap-
                peal court, and
                2. the party is burdened by the judgement with not more than
                EUR 600.00.

         The appeal court is bound by the grant of leave.

       ● As a general rule the appeal courts are bound by the findings of fact at first
         instance. Pursuant to sect. 529 Code of Civil Procedure, the appeal court
         shall base its hearings and judgement as follows:

                1. the facts found by the court of first instance unless there are concrete
                indications of doubt as to the correctness or completeness of the find-
                ings significant for the decision and that therefore new findings of fact
                are indicated,

                2. new facts to the extent that they may be taken into account.




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      ● The court fees of an appeal against a judgment at first instance are 4.0 of the
        respective fee instead of 3.0 in the first instance (c.f. number 1210 and 1220
        of annex 1 to the GKG). The court costs of an appeal in the third instance are
        5.0 of the respective fee (c.f. number 1230 of annex 1 to the GKG).


Case Studies


Please give figures for the costs of claimant and defendant in the following examples,
identifying when sums are related to a tariff or are open to be freely agreed.

If a case would normally be resolved not by normal court process but by a different
procedure (small claim, no fault compensation scheme, ombudsman, special court or
tribunal, business scheme) please state or estimate the amount that such alternative
procedure would cost.

Please assume the most ordinary fee arrangement would apply for the claimant and
defendant in each case (as most appropriate for the type of case), but please give
some alternatives for when „normal‟ and success/contingency fees might apply. As-
sume each case goes all the way through the court process to a first judgment, and is
not settled.

In each case, state the total sum paid by claimant and defendant if (a) claimant wins
and (b) defendant wins. If appropriate, give a range of costs where the case (a) is
straightforward or (b) turns out to be more complex.

Please give a summary (not exhaustive if details would be complex) that shows the
calculations and assumptions.

The objective is not to give definitive accuracy, but to give estimated „bottom line‟
figures from which general comparisons between different costs systems in different
countries can be made.



Small claim: repayment to a consumer of €200 price paid for product not delivered.

In Germany the amount in dispute is decisive which here is € 200.




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The court charges according to Nr. 1210 of annex 2 to the GKG are a 3.0 calculated
fee which amounts to € 75.



The lawyer‟s fee is 1.3 calculated proceedings fee (€ 32.50), 1.2 calculated fee (€ 30)
for court hearings and lawyer‟s expenses according to Nr. 7002 annex 2 to the RVG
amounting to € 12,50 and 19 % VAT, in total € 89.25. This also applies to the law-
yer‟s fees of the other party. The total cost risk amounts to € 253.50.

The winning party is entitled to recover all the costs from the other party according t o
section 91 of the ZPO.

No appeal is allowed in this case, because the amount in dispute is too low.

Family: divorce between husband on average income (say €50,000 pa), wife with no
income, two children, living in an average home.

The amount in dispute in divorce proceedings is based upon the quarterly salary of
the couple. This amounts in the case at hand to € 12.500.

The court charges according to Nr. 1310 annex 2 to the GKG are a 2.0 calculated fee
which amounts to € 438.

The lawyer‟s fee is 1.3 calculated proceedings fee (€ 683.80), 1.2 calculated fee (€
631.20) for court hearings and lawyer‟s expenses according to Nr. 7002 annex 2 to
the RVG amounting to € 20 and 19 % VAT, in total € 1588.65. This also applies to
the lawyer‟s fees of the other party. The divorce proceedings will cost € 3615.30 in
total.

In divorce proceedings no costs can be recovered from the other party, each party is
paying its own lawyer‟s fees and half of the court charges.

The amount in dispute will rise if the court has to decide on child support, matrimo-
nial maintenance or distribution of the family house.

RTA: road traffic accident collision, in which the rear of the claimant‟s car and the
front of the defendant‟s car are moderately damaged (i.e. rear and front respectivel y
require total replacement panels, but engine is undamaged); cost of repair and r e-
placement car €6,000.




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The amount in dispute is € 6000.

The court charges according to Nr. 1210 of annex 2 to the GKG are a 3.0 calculated
fee which amounts to € 408.

The lawyer‟s fee is 1.3 calculated proceedings fee (€ 439.40), 1.2 calculated fee (€
405.60) for court hearings and lawyer‟s expenses according to Nr. 7002 annex 2 to
the RVG amounting to € 20 and 19 % VAT, in total € 1029.35. This also applies to
the lawyer‟s fees of the other party. The total cost risk in first instance amounts to €
2466.70.

On appeal the court charges according to Nr. 1220 annex 2 to the GKG are a 4.0 ca l-
culated fee which amounts to € 544.

The lawyer‟s fee is 1.6 calculated proceedings fee (€ 540.80), 1.2 calculated fee (€
405.60) for court hearings and lawyer‟s expenses according to Nr. 7002 annex 2 to
the RVG amounting to € 20 and 19 % VAT, in total € 1150.02. This also applies to
the lawyer‟s fees of the other party. The proceedings in second instance will cost €
2844.04 in total.

The winning party is entitled to recover all the costs from the other party according to
section 91 ZPO.

Employment: wrongful loss of employment by a middle-ranging manager (say salary
€50,000 pa).

The amount in dispute is € 12,500 in this case, that is the quarterly salary of the em-
ployee.

The court charges according to Nr. 8210 of annex 2 to the GKG are a 2.0 calculated
fee which amounts to € 438.

The lawyer‟s fee is 1.3 calculated proceedings fee (€ 683.80), 1.2 calculated fee (€
631.20) for court hearings and lawyer‟s expenses according to Nr. 7002 annex 2 to
the RVG amounting to € 20 and 19 % VAT, in total € 1588.65. This also applies to
the lawyer‟s fees of the other party. The total cost risk in first instance amounts to €
3615.30.

On appeal the court charges according to Nr. 8220 annex 2 to the GKG are a 3.2 cal-
culated fee which amounts to € 700.80.




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The lawyer‟s fee is 1.6 calculated proceedings fee (€ 841.60), 1.2 calculated fee (€
631.20) for court hearings and lawyer‟s expenses according to Nr. 7002 annex 2 to
the RVG amounting to € 20 and 19 % VAT, in total € 1776.43. This also applies to
the lawyer‟s fees of the other party. The proceedings in second instance will cost €
4253.66 in total.

In employment proceedings no costs can be recovered in first instance from the other
party. In second instance however section 91 ZPO applies.

Medical negligence: doctor‟s error results in permanent (a) loss of ability to walk (b)
paraplegia, for male claimant aged 25 on salary of €25,000 pa, no current depen dents,
but likelihood of marriage and two children.

The difficulty in this case is to assess the amount in dispute which is decisive for the
court charges and lawyer‟s fees. According to German jurisprudence the usual da m-
ages for pain and suffering in a case in which the plaintiff loses his ability to walk is
at about € 100,000. In a case of paraplegia the damages for pain and suffering which
the court will grant are at about € 200,000.

The court charges according to Nr. 1210 of annex 2 to the GKG are a 3.0 calculated
fee which amounts to € 2568.

The lawyer‟s fee is 1.3 calculated proceedings fee (€ 1760.20), 1.2 calculated fee (€
1624.80) for court hearings and lawyer‟s expenses according to Nr. 7002 annex 2 to
the RVG amounting to € 20 and 19 % VAT, in total € 4086. This also applies to the
lawyer‟s fees of the other party. The total cost risk in first instance amounts to €
10,740.

On appeal the court charges according to Nr. 1220 annex 2 to the GKG are a 4.0 ca l-
culated fee which amounts to € 3424.

The lawyer‟s fee is 1.6 calculated proceedings fee (€ 2166,40), 1.2 ca lculated fee (€
1624.80) for court hearings and lawyer‟s expenses according to Nr. 7002 annex 2 to
the RVG amounting to € 20 and 19 % VAT, in total € 4573.44. This also applies to
the lawyer‟s fees of the other party. The proceedings in second instance wil l cost €
12,570.80 in total.

The winning party is entitled to recover all the costs from the other party according to
section 91 ZPO.




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The costs will be less than the double sum, if the amount in dispute is € 200,000 b e-
cause of the cost degression principle.

SME: small company claim for unpaid debt of € 8,000.

The amount in dispute is in this case € 8000.

The court charges according to Nr. 1210 annex 2 to the GKG are a 3.0 calculated fee
which amounts to € 498.

The lawyer‟s fee is 1.3 calculated proceedings fee (€ 535.60), 1.2 calculated fee (€
494,40) for court hearings and lawyer‟s expenses according to Nr. 7002 annex 2 to
the RVG amounting to € 20 and 19 % VAT, in total € 1249.50. This also applies to
the lawyer‟s fees of the other party. The proceedings in first instance will cost € 2997
in total.

On appeal the court charges according to Nr. 1220 annex 2 to the GKG are a 4.0 ca l-
culated fee which amounts to € 664.

The lawyer‟s fee is 1.6 calculated proceedings fee (€ 659.20), 1.2 calculated fee (€
494.40) for court hearings and lawyer‟s expenses according to Nr. 7002 annex 2 to
the RVG amounting to € 20 and 19 % VAT, in total € 1365.58. This also applies to
the lawyer‟s fees of the other party. The proceedings in second instance will cost €
3457.16 in total.

The winning party is entitled to recover all the costs from the other party according to
section 91 of the ZPO.

Large commercial case: substantial and complex breach of contract claim between
two large companies over supply of defective machinery worth €2 million, with €5
million loss of profit.

The amount in dispute is the whole damage claimed by the plaintiff, in the case at
hand € 7 Millions.

The court charges according to Nr. 1210 annex 2 to the GKG are a 3.0 calculated fee
which amounts to € 67,368.

The lawyer‟s fee is 1.3 calculated proceedings fee (€ 29,244.80), 1.2 calculated fee (€
26,995.20) for court hearings and lawyer‟s expenses according to Nr. 7002 annex 2 to




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the RVG amounting to € 20 and 19 % VAT, in total € 66,949.40. This also a pplies to
the lawyer‟s fees of the other party. The proceedings in first instance will cost €
201,266.80 in total.

On appeal the court charges according to Nr. 1220 annex 2 to the GKG are a 4.0 ca l-
culated fee which amounts to € 89,824.

The lawyer‟s fee is 1.6 calculated proceedings fee (€ 35,993.60), 1.2 calculated fee (€
26,995) for court hearings and lawyer‟s expenses according to Nr. 7002 annex 2 to
the RVG amounting to € 20 and 19 % VAT, in total € 74,980.23. This also applies to
the lawyer‟s fees of the other party. The proceedings in second instance will cost €
239,764.46 in total.

The winning party is entitled to recover all the costs from the other party according to
section 91 ZPO.

Injunction – consumer: against neighbour to stop noise.

No special rules apply to injunctions. The amount in dispute is also in this case deci-
sive for the court charges and lawyer‟s fees.

Injunction – commercial: prevent illegal breach of intellectual property in commercial
information between two substantial companies.

No special rules apply to injunctions. The amount in dispute is also in this case dec i-
sive for the court charges and lawyer‟s fees.




4.8.     Questions for Scholars only

a. Please give the background and historical context to the rules on funding and
   costs. What principles and theory apply? How do the rules on civil procedure or
   substantive law affect the current situation on funding and costs?




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                                                                                  47




b. Please give a critical review of the current position. Please identify general
   trends, unresolved or contentious issues, likely future reforms. Are the amounts
   of money involved predictable and proportionate? If not, how could they position
   be improved? Is settlement between the parties regarded as important, is settl e-
   ment encouraged by the current system, and how might it be further promoted?




Thank you for completing this questionnaire




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