New Rules on Attorneys' Fees in Court Proceedings in Hungary

As of September 2003 new rules were implemented regarding determination of attorneys' fees in court proceedings.

The Decree of the Minister of Justice ("Decree") contains significant changes not only with regard to the recoverable amount of attorneys' fees but also the entire approach of the Decree has significantly been changed from the previous regulations.

The new rules create a wider opportunity for the courts

to award the winning party the legal costs actually paid.

According to the text of the decree the winning party may have a claim for compensation of the actually agreed upon legal fee. However, the court can reduce the amount if it finds that the legal costs claimed are not proportionate to the value or the significance of the case or if the activities of the legal representatives associated with the case do not justify the claimed fee.

The court decides on the attorneys' fees in those cases

when the litigating parties cannot provide the court with

a fee arrangement between the party and its attorney or if the party so requests. In this case the Decree lays down a three-tier system for the courts to consider. Five percent of the case value -but at least HUF10,000- can be awarded as legal fee in cases where the value of the case does not exceed HUF 10 million.

Where the case value is between HUF 10 million and

HUF 100 million, three percent of the case value exceeding HUF 10 million can be added to the previously calculated amount. Finally one percent of the case value exceeding HUF 100 million can be added to the previously calculated legal fee where the amount involved exceeds HUF 100 million.

In cases where the value of the case cannot be stablished (as i.e. in administrative trials), hourly rates shall be determined by the court, based on the Decree.

For further information please contact Dr. Tamás Engel at [email protected] or on +36 1 4834800.