COSTS FOR GERMAN IT / IP LAW FIRM
Even for financially strong clients, the expected costs of an IT / IP lawyer as well as the maximum cost risk in contentious proceedings are extremely important. Legal fees can be divided into the following sections:
The initial contact with the law firm is free of charge. The aim is to find out who the lawyer or client is and what the core of the client’s concern is. Based on this, it is checked whether the client’s concern falls within the competence of the law firm, namely advice and dispute relating to software, data, competition and licensing law. Cases in which consultation and representation appear pointless from the outset are not accepted. This applies, for example, if the expense of the matter is disproportionate to the benefit. Or if it is already obvious without legal examination that there is no chance of success. If it makes sense to work on the case and if the client and the law firm are a good match, the remuneration model and other client bases are regulated. The law firm basically offers three fee models. The client and the law firm first examine whether the respective model is acceptable to both of them in relation to the respective activity:
Invoicing according to the remuneration schedule of the RVG
The fee is calculated on the basis of the remuneration schedule of the German Lawyers’ Remuneration Act (RVG). The amount in dispute as well as the scope and difficulty of the lawyer’s work are essential for this. This method of calculation is advantageous for the client because the costs – despite some variables – are relatively easy to predict. For the lawyer, however, there is a risk of working uneconomically. Especially if the amount in dispute is too low and/or the activity is more extensive or more difficult than it appears at the beginning.
It is billed by time based on a specific hourly rate. The firm records the time in 6-minute units. The fee note then describes each activity. This makes it transparent who did what and when. All this is regulated explicitly and in detail in a remuneration agreement concluded in advance. In the case of court proceedings, however, the fee may not be lower than the remuneration provided for in the RVG fee table.
The law firm charges an hourly rate that is in line with the usual hourly rates for partners and associates of German law firm specialising in IT and IP law. To get an impression of the current range of fees reference is made to a survey by the publication JUVE Patent, which you can find here.
Billing by time appears to be the fairest method: the client pays only for what the lawyer has actually and verifiably performed. And the lawyer does not work uneconomically. Incidentally, the decisive factor for the fee costs is ultimately not the hourly rate, but how much time is billed. It should be understandable that a lawyer who is inexperienced or unfamiliar with a particular area of law will have to spend more time on the case than an experienced and specialized lawyer. Accordingly, in an individual case, the fee bill of a lawyer with a relatively high hourly rate may be significantly lower than the fee bill of a lawyer with a relatively low hourly rate.
When billing on a time basis, clients understandably often want a cost estimate in advance. In most cases, this is possible for a specialized lawyer based on experience. In some cases, however, the lawyer simply cannot reliably predict the costs. For example, because it is unclear how much time it will take to gather the facts of the case or because there are numerous options for the course of proceedings in a court case. In such unclear cases, however, it is possible to agree on upper limits. When these are reached, the law firm will issue an invoice and the client can then decide, depending on the stage of the proceedings, whether he wishes to incur further costs.
Billing according to flat rates
Finally, there is the possibility to agree on flat rates. This can make sense in particular if the client wants cost certainty, but billing according to the remuneration schedule of the RVG would be too low for the lawyer. Especially for out-of-court activities, this can be advantageous for both parties. Ultimately, however, lump sums can only be considered for standardized, predictable activities. This is because it is unlikely that a lump-sum price will exactly match the actual work required.
Reimbursement of costs in the event of a warning
The client must first pay the lawyer the fee. However, in the event of an (out-of-court) warning against the opponent, the client may then have a claim for reimbursement of the lawyer’s costs. The amount of the claim for reimbursement of costs is governed by the RVG. This possibility exists both in the case of a settlement with the lawyer according to the RVG, a settlement according to time spent and a lump-sum settlement. In view of the relatively high amounts in dispute, for example in trademark law or software licensing law, it is generally possible to “recoup” considerable portions of the warning costs or defense costs and/or legal costs calculated on the basis of time. In the best case, the opponent then reimburses the client for the full attorney’s fee.
Reimbursement of costs in case of victory in court
Likewise, in the event of a victory in court, reimbursement of attorney’s fees may be claimed. If the client wins a lawsuit, he is usually entitled to (partial) reimbursement of attorney’s fees. The basis for the reimbursement calculation is again the schedule of fees of the RVG. This applies even if the law firm has not charged according to the RVG schedule.
Possibility to save legal fees
High prices do not necessarily mean good work, even for lawyers. Nevertheless, it will be difficult for clients to get a specialized, experienced and dedicated lawyer “on the cheap” even when it comes to legal advice and representation. And from experience, saving on legal fees at the beginning of a legal matter can end up being very expensive. Especially in the field of intellectual property, a mistake made at the beginning cannot be corrected, or can only be corrected at great expense. Cost savings are possible for clients in two main ways:
- Unimportant, disproportionately expensive and/or unpromising disputes are avoided. For a correct assessment of the chances of success or the cost risk, a specialized and experienced lawyer is again helpful.
- The client does the work that he can do on his own. This means, especially for clients with a legal department, that they essentially only mandate a lawyer for contentious matters.
“Free initial consultation” / “Free initial assessment” ?
A number of law firms nowadays advertise with the offer “free initial assessment” or even “free initial consultation”. This gives the (potential) client the impression of free legal advice. Irrespective of the question of whether this is permissible under professional law at all (and if so, to what extent), it is worthwhile for the client to take a closer look. Does “free initial assessment” mean what is described above under “free initial contact”? That is, the examination of whether a legal involvement with the case makes sense at all? Or is it actually a “free initial consultation” in the sense of a summary legal examination of the case? The latter makes only limited sense. This is because a superficial examination of the facts and the legal situation can lead to completely different results than a complete examination. Unlike in many other areas of life, in the legal field only a 100% examination makes sense: after examining the case 99%, the last percent can turn the result that existed up to that point on its head. Only a small detail of the facts or a regulation or a judgment can completely change the legal assessment, for example, of chances of success. There may be exceptions where it is immediately apparent that the client is on the wrong track (but this then falls under the “free initial contact” category above). Therefore, the firm does not offer such limited free legal reviews. By the way: Does anyone expect to receive a “free initial examination” or “free initial diagnosis” from a doctor before a “proper” examination or diagnosis is then made? Would a patient consider this procedure and this doctor to be reputable? Probably not. Nothing else should apply in the legal profession.