The Supreme Court determined the possible procedure for the mutual settlements of lawyers and their customers
The Supreme Court of the Russian Federation allowed the winning party to pay legal services by future legal expenses that the court will recover from the loser of the participant in the dispute. The decision will increase the availability of justice for customers for small disputes, mainly consumer. At the same time, experts warn of risks for the lawyers themselves, since the courts often significantly reduce the amount of legal costs, the opponent may also be insolvent, and the outcome of the lawsuit – unpredictable.
The Supreme Court of the Russian Federation (Sun) spoke about permissible forms of mutual settlements between lawyers and their clients who are not ready to pay immediately. The history of proceedings began in June 2021. Then IP Valery Ivanov entered into an agreement with LLC Equant, according to which the company pledged to accompany the entrepreneur’s dispute to recover funds from the debtor under loan agreements. The agreement admitted the payment of legal services by « assignment of the rights of the requirement to recover court costs. »
Later, « Ecwant » achieved a decision in favor of the client. According to the procedural rules, the winning party to the dispute receives the right to reimburse legal costs (including the costs of paying for the services of a representative) from the loser of the opponent. The IP decided to pay with the « Equant » for the work done just by the assignment of this right. In December 2022, Valery Ivanov entered into a assignment agreement with the Yurfir, losing the right to recover 181 thousand rubles. court costs.
In March 2023, Equant appealed to the Arbitration Court of the Bryansk region and asked to recover these expenses from the defendant, which he was refused. The first instance considered that the plaintiff, in principle, did not bear the costs of paying for the services of a judicial representative, since the entrepreneur did not transfer funds to lawyers. In addition, the court concluded that the assignment of such a right of claim is allowed only after the award of legal costs.
The appeal took the opposite position and recovered funds in favor of the “equation”, although lowering the amount of compensation to the “reasonable limits” – 121 thousand rubles. The Court of Appeal indicated the permissibility of the assignment, since the agreement on it was concluded after the decision to recover the debt from the defendant entered into force. In addition, the decision is noted, legal expenses are designed to compensate for the losses that the person suffered to restore his rights.
However, then the dispute reached the district cassation, which generally made the probability of the assignment of such a right, but considered that the plaintiff-entrepreneur himself had to file a statement on the recovery of court expenses and only after their award it was possible to replace him with a lawnter as a successor. As a result, the equalization of the « Equanta » was rejected. But the company did not reconcile with this approach and filed a complaint with the Armed Forces (see Kommersant on March 12). The case was referred to the economy of the college, which put an end to this issue, supporting the position of the lawyer.
The right to concession
The Armed Forces drew attention to the fact that the Civil Code of the Russian Federation allows to concede, among other things, future claims. In this regard, the assignment of legal costs “is allowed not only after their award”, but also “during the consideration of the case,” the economy of the colleague indicated. If the court’s decision has already been issued in favor of the client, and the issue of distribution of costs has not yet been considered, according to the Armed Forces, a person who has acquired “this right to claim under the assignment agreement”, in this case, “Ekwant” has the right to apply. At the same time, the economy colleague emphasized that the claim for the recovery of court expenses was submitted simultaneously with the statement of procedural succession (replacing the plaintiff with his lawyers regarding the reimbursement of costs) and the “unity of the will” of Mr. Ivanov and the “Equanta” to commit the assignment, so the district cassation did not have grounds for refusal. As a result, the Armed Forces allowed us to recover 121 thousand rubles in favor of the Yurfirm, leaving the appeal decision in force.
Delayed expenses, delayed income
Partner of the Pen & Paper Bar Association, Sergei, explains that such mutual settlements schemes “are used in the low price segment of streaming legal entities in the field of judicial representation”. These, for example, are cases of consumer protection, claims against developers and insurance companies, where representatives are often forced to agree to any forms of rewards for their services, explains Mr. Teacher. The senior lawyer of the Gurichev and Partners Yurchev and Partners, Polina Vizgina, notes that payment through the assignment of law avoids immediate expenses, and therefore is especially attractive to customers. However, according to her observations, “lawns are reluctant to agree to this method of calculations”, but they have to “adapt to a reduction in customer purchasing power and consider alternative ways to pay for services”.
For the lawyers themselves there are minuses in this. “Providing this form of mutual settlements, the lawyers thereby share with the principal both the risk of losing the process and the risk of opponent’s insolvency,” Timur Tajirov emphasizes Forward Legal lawyer. In addition, he clarifies, « lawyers receive payment of their services with a significant deferred. » Another inconvenience is due to the fact that the courts often “significantly reduce the amount of court expenses”, the partner of the Jurfirm “Rustam Kurmayev and partners” Dmitry Kalokochkin cites observations. Thus, “for this method of earnings to be profitable, cases must be simple and predictable”, Timur Tajirov sums up.
At the same time, all the experts surveyed by Kommersant support the decision of the Armed Forces. “If a person has the right and another person according to this right to acquire, there is no reason to intervene in the relations of the parties and prohibit such a concession, because the principle of freedom of the contract is one of the fundamental in domestic civil law,” Dmitry Kalokochkin insists. Timur Tazhirov agrees that « it is possible to give in the right to demand in the process of considering the case, when it is still unclear which of the parties will lose. » But “it is from the moment of victory in the dispute that the right arises to demand reimbursement of its expenses from the loser and this client can transfer this right to the legal firm,” he explains. In general, experts conclude, the determination of the Armed Forces will increase the availability of justice for low -income customers, primarily citizens and representatives of small businesses.
