Mon, Jul. 02, 2007

Loser Pays Costs

J.G - Washington.  In Germany, legal fees consist of attorney fees for out of court actions and litigation and of court costs. A lawsuit may extend to three instances--trial court, court of appeals and supreme court. At each level, different attorney fees and court costs arise.

According to German statutes, these fees for litigation depend on the amount in dispute, Streitwert. The statute for attorney fees, RVG, and the statute for court costs, GKG, define the various fees for attorneys and courts measured by the amount in dispute.

In all cases, the amount in dispute needs to be defined. In lawsuits for the payment of certain sums of money the amount in dispute is easily ascertained. For a claim for restitution, the violation of a trademark, and in other cases not concerning the payment of specific sums, that can be difficult. In such matters, the amount in dispute is determined by certain principles--such as the value of the object a defendant may have to return.

Plaintiffs must advance court costs. Unlike the American Rule of Costs, German law generally requires the loser to reimburse the winner for court costs and attorney fees up to the statutory limit. Therefore, the potential exposure of each party to litigation extends beyond its own attorney fees and covers also the fees of the opponent as well as court costs. In a settlement, attorney fees and court costs will be split in proportion to the parties' partial wins and losses.

The statutory fees may differ from fees covered by contract. The recovery in litigation of statutory fees may, therefore, be less than the fee paid to counsel under an engagement letter or retainer agreement.

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