If I win a case in the Netherlands, who will pay my lawyer?
This question is often raised when someone is considering initiating legal proceedings in the Netherlands. Lawyer Onno Hennis explains the situation in the Netherlands with regard to the reimbursement of lawyer’s fees and the so-called order for costs.
Unsuccessful party will pay the legal costs in the Netherlands
In the Netherlands, the court is free to decide whether and how the legal costs will be divided among the parties. The basic principle is that the unsuccessful party will be ordered to reimburse the legal costs of the successful party.
Sometimes each party will pay their own costs
However, the court will sometimes see a reason to set off the legal costs between the parties. In other words, each party will bear their own legal costs. This is often the case in the Netherlands in proceedings pertaining to family law. The idea behind this is that in these types of proceedings, both parties often bear the same level of responsibility. Even if the claimant’s claims have only been partially allowed (and, therefore, the claimant and defendant have each been vindicated to a certain extent), the court will set off the legal costs.
What exactly does the ‘order for costs’ consist of?
Unlike in many other countries (such as the United States), the unsuccessful party will not be ordered to reimburse all the actual cost of proceedings of the successful party. The costs to be paid by the unsuccessful party consist of the cost of proceedings and a fixed reimbursement for lawyer’s fees.
Legal costs in the Netherlands
The legal costs that are eligible for reimbursement consist of court fees, bailiff’s costs and costs of witnesses or experts engaged (at the request of the court). Court fees are the (administrative) costs that have to be paid to the court (both by the claimant and the defendant) to institute proceedings. In the Netherlands, the legal costs will be eligible for full reimbursement in the event of an order for costs.
Lawyer’s fees are capped in the Netherlands
In the Netherlands, the situation is different for lawyer’s fees that have been incurred. As a rule, lawyer’s fees will have been agreed with your lawyer based on an hourly rate. Lawyer’s fees are eligible for reimbursement but are capped. One or sometimes half a point (a so-called liquidation point) will be awarded for every procedural act your lawyer performs (e.g. drawing up and submitting a procedural document or attending a hearing).
Fixed reimbursement does not always cover the costs incurred
Each liquidation point represents a fixed value. This value has in turn been made dependent on the financial interests involved in the proceedings. The higher these interests are, the higher the value attributed to one liquidation point. In complicated proceedings involving many procedural acts concerning significant financial interests, a Dutch order for costs will, therefore, be higher with regard to lawyer’s fees than in relatively simple proceedings where small interests are at stake. Therefore, this fixed amount will not be precisely equal to the lawyer’s fees that you have incurred.
Intellectual property rights proceedings in the Netherlands
In proceedings concerning intellectual property rights, the legal costs in the Netherlands are sometimes eligible for full reimbursement. For this specific topic, please visit a previous blog on our website. Furthermore, in very exceptional circumstances, the court may decide on an actual order for costs. For example, if a claimant has abused the procedural law by starting proceedings about which he knew that they would not have a chance of succeeding.
A Dutch order does not always guarantee payment
In the case of orders in general but also in the case of orders for costs, actual payment by the unsuccessful party will not be guaranteed in the Netherlands. If the other party does not offer any opportunity for recovery, you may still be left empty-handed. It may, therefore, be advisable to investigate in advance the recovery options against the other party or to levy a prejudgment attachment.