Scale Fees, Scale Costs

In a number of legal systems, for example Germany, lawyers are, in principle, supposed to charge for certain services, particularly litigation and property transactions, based on a fixed fee schedule established under local law or by the local bar associations. Such a fee schedule takes into account the level of court and the monetary amount in controversy or the value of the transaction. Scale fees are frequently charged by arbitration organisations, especially in international arbitration for at least part of the costs of an arbitration or mediation.

There is considerable debate about the benefits of such fee scales. Where the fee scale is set to high, it may be regarded as resulting in overcharging. Where the fee scale is set too low, it may limit the amount of effort that a lawyer is willing to put into a difficult case. There are also at least anecdotal suggestions that where fee scales are set too low, various means are used by clients to circumvent the scale, such as sending the lawyer a number of high fee but simple projects—this may be the case, but public confirmation is, not surprisingly, impossible to find. Moreover, if the system does provide for a winner to recover its costs, all a court will usually award are the scale fees. It is fair to say that lawyers from jurisdictions that have a ‘scale fee’ system support this approach, lawyers from jurisdictions that do not have, or have abolished such a system are very skeptical.

In a number of jurisdictions, such as the UK and Ireland, the use of scale fees, particularly for property sales (i.e., conveyancing fees) have been terminated under relevant competition laws because they were regarded as anticompetitive and arguably price fixing. Similarly, competition and/or antitrust concerns are the main reason why scale fees are not present in many jurisdictions. See Laffey Matrix, Lodestar Amount, Method, Indemnity PrincipleTaxation, Taxable Costs, Taxing Master