Legal proceedings cost time, money and nerves. Our partner Martin Weimar has already discussed the hidden costs of legal proceedings in his blog post dated 19 December 2024.
But what are the actual costs of court proceedings in commercial and distribution law disputes? Such proceedings involve disputes over warranties, commissions, compensation claims and outstanding payments from supply contracts. What costs can plaintiffs expect and what reimbursement can they expect?
Court Costs
Anyone who files a lawsuit must first reckon with court costs. In Germany, these are governed by the Court Costs Act (GKG) and depend on the value in dispute, i.e. the economic interest to be enforced in the proceedings.
A simple example: for a value in dispute of €200,000, court fees of approximately €6,114.00 are incurred for the first instance alone. These must be paid in advance at the beginning of the proceedings, otherwise the lawsuit will not be served at all. Litigation cost calculators, which are available online and show the approximate court costs based on the value in dispute, are helpful here. A simple online search for the keyword ‘legal costs calculator’ will help here.
A small side note: Commercial Court proceedings are about a third more expensive, as they take place in the first instance before the High Courts. Here, too, legal costs calculators can help to give an initial indication.
Legal Fees
Legal fees are often even more significant than court costs. There is no general answer to the question ‘How much will the solicitor cost?’ The Solicitors’ Fees Act (RVG) specifies minimum fees, which are also based on the value of the claim. In our example, the fees for a value in dispute of €200,000 are also approximately €6,000. Here, too, legal cost calculators can provide guidance.
However, it must be taken into account here that in commercial litigation, the legal services market does not usually offer clients specialised law firms at the minimum fees set by the RVG. All larger commercial law firms advise in this area on an hourly basis, which will not be discussed here. The processing of complex cases often requires several man-days of work, and 50 hours or more of work is not uncommon for a complex case in the first instance. In practical terms, this means that the actual legal fees are often far higher than what the RVG reflects. The solicitor and client should communicate openly about this at the beginning of the proceedings.
Other Costs of Court Proceedings
A significant cost factor in commercial litigation proceedings before German courts is the cost of experts, for example when expert opinions on technical issues are required. These costs can quickly amount to several thousand euros.
Reimbursement of Costs
The exciting question: What will the plaintiff be reimbursed if they win? In principle, according to the Code of Civil Procedure, the losing party bears the costs of the proceedings – i.e. the court costs, the costs of the opposing lawyer and their own legal fees.
However, only the fees calculated according to the RVG are reimbursed (unlike in arbitration proceedings). Those who work on an hourly basis therefore often end up in an RVG gap: their own solicitor costs more than what will be reimbursed by the opposing party if they win. Those who lose, on the other hand, only have to bear the statutory fees of the opposing party, which makes the risk of legal costs more bearable.
Appeal and Possible Third Instance
Incidentally, many cases go to the second instance, which roughly doubles the costs, while the considerations regarding reimbursement of costs remain the same. Although revision by the Federal Court of Justice is not regularly provided for by the Code of Civil Procedure, it is certainly possible.
Conclusion
Because commercial litigation proceedings are so costly and often unpredictable, parties should – with the support of legal counsel – make every effort to use all means of out-of-court dispute resolution, in particular by negotiating in a strategically astute and well-planned manner. The parties retain control instead of taking on the risk of a court decision and unpredictable costs. Negotiating at an early stage not only reduces financial burdens, but also preserves business relationships.
