Hearing terms like flat fee, hourly rate, or lawyer's tariff is enough to make many clients fear they will spend a fortune on legal services. Legal terminology often sounds more complicated than it really is, leading to widespread misconceptions about the actual costs of court proceedings and who ultimately bears them.
What costs can arise in connection with court proceedings, how is their amount determined, and who is ultimately obliged to bear them? You will find the answers below.
Flat Fee: Certainty Upfront
A flat fee is a fixed amount agreed in advance for the provision of legal services. The client knows from the very beginning exactly how much they will pay for the given service and does not have to worry about the price unexpectedly increasing during the cooperation.
This method of remuneration is most often used for legal services with a relatively standardised course that do not require extensive individual preparation. Typical examples include:
- drafting purchase or donation agreements,
- lawyer's escrow agreements,
- petitions for debt relief.
Practical example: If you come to us with a request to draft a standard real estate purchase agreement, we will provide you with a complete service (drafting the agreement, filing the cadastral application, lawyer's escrow and consultations) for a fixed price of CZK 12,000 excl. VAT.
On the other hand, with more complex disputes or extensive business cases, a flat fee is used only exceptionally. In such situations, it is usually more appropriate to agree on an hourly rate.
Hourly Rate
The hourly rate is one of the most common ways of billing legal services. Unlike a flat fee, it is not always possible to determine the final cost of representation in advance. The amount of work performed by the lawyer depends on the circumstances of the case, which may evolve during the dispute.
The lawyer charges remuneration based on the time actually worked. This method of remuneration allows flexible response to the development of the case and reflects the scope of legal services that had to be provided. The client is usually informed at the outset about the hourly rate and an indicative estimate of the scope of work, while the final scope of legal services depends on the course of the matter, the procedural steps of the opposing party, and other circumstances that cannot always be foreseen.
In our law office in Olomouc, the hourly rate is CZK 2,400 excl. VAT. Before starting cooperation, we always carefully assess the nature of the matter in order to choose the method of remuneration that will be most transparent for the client and correspond to the nature of the legal service provided.
Lawyer's Tariff Remuneration
Although the client and the lawyer contractually agree on the remuneration (by flat fee or hourly rate), what is decisive for the court's decision on the reimbursement of costs of proceedings is the so-called lawyer's tariff (Decree No. 177/1996 Coll.).
This is where the most common misunderstanding arises. Many clients believe that if they win in court, the opposing party will reimburse their entire invoice from the lawyer. In reality, however, the court awards reimbursement according to the fixed tables of the lawyer's tariff, not according to the amount actually paid. The difference between the lawyer's actual remuneration and the tariff-based reimbursement from the court is then usually borne by the winning party out of their own pocket.
Before initiating a dispute (especially for lower amounts), it is therefore absolutely crucial to consider not only the chances of success, but also the net economic return of the entire proceedings.
Model Example 1: Full Victory
Imagine you are claiming CZK 50,000 from a former tenant for damage to the apartment's equipment. You agree on an hourly rate (CZK 2,400 excl. VAT). Consultation, pre-litigation demand, and drafting the lawsuit take 5 hours, which means CZK 12,000 excl. VAT. If a court hearing is held, the actual costs can climb to CZK 20,000 excl. VAT (CZK 24,200 incl. VAT). You also have to pay a court fee of 5% of the claimed amount, i.e. CZK 2,500.
If you win the dispute in full, the court will calculate reimbursement according to the lawyer's tariff. This is where the tariff value comes in.
What is the tariff value and how did we arrive at it?
Simply put, it is the monetary expression of what you are suing for in the proceedings. Because in this example we are claiming exactly CZK 50,000 from the tenant, the tariff value is precisely CZK 50,000. The lawyer's remuneration per single act is then derived from this amount according to the tables.
According to the tariff, the value of CZK 50,000 corresponds to a fee of CZK 3,100 for one act. For 4 basic acts (4 × CZK 3,100 = CZK 12,400) plus flat cash expenses (4 × CZK 450 = CZK 1,800) and VAT, the court will award you reimbursement for the lawyer in the amount of CZK 17,182. In addition, reimbursement of the court fee of CZK 2,500 is added. The total awarded reimbursement of costs is CZK 19,682.
| Item | Amount |
|---|---|
| Awarded amount | CZK 50,000 |
| Total initial expenses of the client (lawyer + court) | - CZK 26,700 |
| Awarded reimbursement of costs of proceedings from the court | + CZK 19,682 |
| Total client receives from the opposing party (principal + costs) | CZK 69,682 |
| Net financial result (what the client actually keeps) | CZK 42,982 |
Conclusion: Even though you won the full CZK 50,000, after paying the lawyer and deducting the awarded costs, you actually keep CZK 42,982. The difference of CZK 7,018 is borne by you.
Model Example 2: What If You Only Partially Succeed?
Let us return to our example. In the lawsuit you demand CZK 50,000, but the court only recognises your claim up to CZK 30,000. This means you were 60% successful and lost the remaining 40% of the dispute.
When deciding on costs, the court proceeds from the so-called net success in the case (the difference between success and failure). Your net success is only 20% (60% success − 40% failure). The court will therefore award you only 20% of the total tariff reimbursement (CZK 19,682), which amounts to CZK 3,936.
| Dispute parameters and costs | Value / Amount |
|---|---|
| Claimed amount | CZK 50,000 |
| Awarded amount | CZK 30,000 |
| Percentage success in the dispute (net success) | 60% (net success 20%) |
| Total initial expenses of the client (lawyer + court) | - CZK 26,700 |
| Awarded reimbursement of costs (20% of full reimbursement) | + CZK 3,936 |
| Total client receives from the opposing party (principal + costs) | CZK 33,936 |
| Net financial result (what the client actually keeps) | CZK 7,236 |
Conclusion: This result is rather harsh. Although you mostly won the dispute and the court awarded you CZK 30,000, the high irrecoverable costs of the dispute (almost CZK 23,000) mean that in the end you will only be left with slightly more than CZK 7,000.
Frequently Asked Questions (FAQ) on Costs of Proceedings
Will the opposing party reimburse my entire lawyer's invoice if I win the case?
No, in reality the court does not award reimbursement of costs of proceedings based on the amount actually paid to your lawyer. The reimbursement is calculated according to the fixed tables of the so-called lawyer's tariff (Decree No. 177/1996 Coll.). The difference between your actual invoice and the tariff reimbursement is borne by you.
What exactly does "tariff value" mean?
It is the monetary expression of the amount you are suing for in the court proceedings. The lawyer's remuneration for one act of legal service, which the court awards to you as the winner, is then derived from this value according to the tables.
How are costs calculated when I only partially win in court?
The court proceeds from the so-called net success in the case. This is the difference between your success and your failure. For example, if you succeed 60% and lose 40%, your net success is 20%. The court will then award you only 20% of the total tariff reimbursement of costs of proceedings.
What is the difference between a flat fee and an hourly rate?
A flat fee is a fixed amount agreed in advance (used for standard matters, such as drafting a contract). An hourly rate, on the other hand, is charged according to the time actually worked and is used especially for more complex disputes where it is not possible to determine in advance how the case will develop.
How much does an initial consultation cost at Andree Law Firm?
At our office in Olomouc, we provide an initial assessment of the matter, on the basis of which we will tell you not only the realistic chances of success, but also the economic return of any potential dispute. The hourly rate is CZK 2,400 excl. VAT. Contact us to arrange a meeting.