Are you in litigation with a public authority? You may still have to pay the state's lawyer's fees
Today, "I'll sue" can often seem like a good way of clarifying a relationship and, at the same time, solving a problem. Although most people are already aware of this, it is sometimes not fully appreciated that, invariably, at the end of the litigation, the losing party not only does not recover the costs of the litigation, but also has to pay for the legal costs of the lawyer of his opponent. Thus, it can often be really expensive to deal with the relationship in this way. This is the classic situation of the end of a legal dispute between two private parties, which is determined by the loser pays principle, often referred to in case law.
However, the court is always dealing with the question of the reasonableness of such costs: when a litigant claims tens of thousands of euros in legal costs, the court does not always agree - it is a very case-by-case decision. What about cases involving a public authority that uses its own lawyers? Are costs not always payable if you lose? Dainius Antanaitis, attorney at law at AVOCAD, explains more about this.
It should be understood that when a court finds that costs are unjustified, the unsuccessful party is not obliged to pay them. However, the law does not provide for a list of cases in which costs may be declared unreasonable. The unreasonableness of costs shall be determined on a case-by-case basis. For example, in a case concerning the division of property (which can be practically any other type of case, including business disputes), the costs will usually be calculated in proportion to the amount of the successful claims. I.e. if you are claiming €100,000 from your spouse and the court awards you €70,000, the costs here would be shared in a similar proportion. Here, 70% of the costs would be paid to the court. Your lawyer's costs should be reimbursed by the other party. Of course, this is a very crude example and the situations in practice are usually much more complex, but the basic calculation would be something like this.
The situation is slightly different when a private dispute involves public authorities, which have a relatively large pool of lawyers. If the public authority uses its own lawyers, the losing party does not have to pay for such legal costs. However, each institution has quite clear specificities and, for example, the lawyers of the State Planning and Building Inspectorate will not necessarily be well versed in the specifics of, say, non-pecuniary damage. Thus, in such cases, the institution may decide to hire a lawyer. Of course, this is done at the expense of the institution or, in other words, at the expense of taxpayers.
At the end of September, the Supreme Court of Lithuania issued a ruling which, among other issues, addressed the request of a public authority to pay the costs of the law firm it hired. Here, the Court noted that when deciding on the question of the award of representation costs in favour of an institution, the court must make a comprehensive assessment of whether the use of a lawyer was necessary in the light of the institution's internal administrative capacity and the nature of the case. In determining the nature of the case, account must be taken of the novelty of the legal issue raised in the case, the volume and complexity of the case. The totality of all three criteria is necessarily taken into account. It must be acknowledged that judges may see the same situation quite differently and, therefore, being principled and fair in their perception of justice, they decide on costs on the basis of their own internal conviction, which does not always coincide with that of different judges.
In the opinion of the Supreme Court of Lithuania, it is necessary to assess whether the lawyers of the institution involved in the case do not have sufficient capacity and competence to properly represent the institution in court due to the specificity, complexity or scope of the case. If, in the court's assessment, such capacity is lacking, the services and costs of the lawyer are considered reasonable and, if the institution successfully defends itself in court, the unsuccessful party must pay those costs. However, if the court were to find that the institution was able to pursue the case with the resources at its disposal and that the hiring of a lawyer was an excessive expense, even if the institution were to win the case, the costs would not be reimbursed to the State budget, as the losing party would not have to pay them.