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The lessons from cases about Italian lawyers’ fees

first_imgSilvio Berlusconi thinks he is the most sued man in history. There is another Italian institution which has had its fair share of litigation recently in the EU’s Court of Justice, and that is the Italian legal profession. There was a fresh case reported this week. The cases I shall mention all concern the Italian system of lawyers’ fees. In the UK, fee scales have been abolished for decades, out of the national preference for free market systems. But they exist in other countries, including Italy. The cases below show two things clearly. First, within the EU there are at least two approaches to issues to be tackled, one through competition, and the other through Single Market provisions (Member States should not have systems which block free movement). The attacks on lawyers’ fees have involved both. The second lesson is that nostrums which we hold dear, such as the free market, do not find favour everywhere. The first was the Arduino case (C-35/99), where the question was whether the competition provisions in the Treaty precluded Italy from continuing with a fee-setting procedure where the minimum and maximum to be charged by lawyers was recommended by the Bar and adopted by the government. Essentially, the Court said that there was nothing wrong with it, since the Italian government had leeway whether to agree to the Bar’s recommendations or not. The second was Cipolla (C-94/04 and C-202/04) (actually, two cases combined concerning people whose names translate into English as Mr Onion and Mr Melon, obviously from a country where food is important). There were several questions, but they boiled down to whether the Italian fee system was contrary to competition and single market provisions, since there was generally no derogation from the system, whether for services reserved to lawyers or for out-of-court services provided by others not subject to the scale. The fee scales were not struck down, and on the Single Market aspects the matter was referred back to the national court for decision. Shocking to UK ears, used to the rule of the free market, is the following sentence from the Court to which it asked the national court to pay attention: “Although it is true that a scale imposing minimum fees cannot prevent members of the profession from offering services of mediocre quality, it is conceivable that such a scale does serve to prevent lawyers, in a context such as that of the Italian market which, as indicated in the decision making the reference, is characterised by an extremely large number of lawyers who are enrolled and practising, from being encouraged to compete against each other by possibly offering services at a discount, with the risk of deterioration in the quality of the services provided.” Then there is a new case, out just this week, Commission v Italy (C-565/08). As you can see, the enemies of the Italian fee system do not give up. This time the Commission attacked the maximum fees charged under the Italian scale on the basis that they interfere with the Single Market. The Commission said that the maximum fees subject EU lawyers from outside Italy, who want to provide services in Italy, to additional costs resulting from the application of the Italian system of fees, as well as to a reduction in profit margins and therefore a loss of competitiveness. However, the Court did not think that the Commission had proved its case, and went on to praise the Italian fee system as “characterised by a flexibility which appears to allow proper remuneration for all types of services provided by lawyers. “Thus, in cases which are particularly important, complex or difficult, the fees may be increased by up to twice the maximum tariffs applicable by default, and, for cases which are exceptionally important, by up to four times those limits or even more where there is a clear lack of proportionality, in view of the circumstances of the individual case, between the services of the lawyer and the maximum tariffs. “It is also open to lawyers, in numerous situations, to conclude a special agreement with their clients to fix the amount of the fees.” My point is that we, and particularly UK regulators, should consider having many arrows in our quiver, and not only the one marked Free Market.last_img

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