One of the questions many clients ask when hiring legal services to initiate judicial proceedings, such as filing a claim or responding to one, is whether it is possible to recover all of the expenses, or at least part of the costs, incurred in bringing or appearing in a lawsuit, particularly attorney’s fees, expert witness fees, or the fees of an enforcement officer carrying out attachment proceedings.
In response to that question, the answer is yes: part of that cost may be recovered, although the amount will never be the same as what was actually paid.
The foregoing clarification is necessary because most legal systems choose to establish by statute the maximum amounts that the parties to a dispute may recover for having engaged in litigation. This provides greater legal certainty, even though it does not reflect the actual amount of the disbursements, since the opposing party could simulate a payment that was not in fact made to the attorney, thereby imposing on the counterparty an order to pay an amount that is not the true cost, causing greater legal uncertainty than the law is intended to prevent.
In El Salvador, the Civil and Commercial Procedural Code, in Article 272, provides that the payment of costs at first instance shall be imposed on the party whose claims have all been rejected. In such case, the party ordered to pay shall only be obliged to do so insofar as it corresponds to the judicial proceeding in accordance with the applicable fee schedule.
In that context, the fundamental problem with our current law is that the aforementioned Code refers to the Judicial Fee Schedule Act of 1906, which contains obsolete provisions, since the amounts established for attorney’s fees are outdated. By way of example, Article 24 of that law provides that for an attorney’s appearance in proceedings of indeterminate value, such as an action for nullity of a contract, the attorney shall be entitled to charge 600 colones, which is equivalent to US$68.57, and that amount is what the party initiating the proceedings may recover.
Article 20 of the Judicial Fee Schedule states: “Attorneys and legal representatives shall remain free to agree with their clients on the fees to be earned in the matter or matters entrusted to them.” This legal provision recognizes the freedom of contract and the freedom to set the amount of fees between attorneys and their clients for the matters entrusted to them.
However, that rule contains an exception, namely that such amount may not be charged to the opposing party, who was not a party to the legal services agreement, even if that party has been ordered to pay costs, damages, and losses. For that reason, the provision continues as follows: “but such contract shall not bind the opposing party, even if it has been ordered to pay costs, damages, and losses, when it exceeds the amounts recognized by this fee schedule.”
As may be seen, this provision sets a limit on the prevailing party’s right to recover from the opposing party the fees it has had to pay its attorney. If the prevailing party has proved payment for the professional services rendered by its attorney, it is recognized as having the opportunity to recover the money invested in that legal assistance up to the amount authorized by the fee schedule. Any excess amount paid may be pursued through a claim for damages and losses.
Accordingly, the full amount of attorney-related expenses cannot be recovered directly by way of an award of costs when a judge renders judgment in favor of the party claiming those expenses. In any event, it should be clarified that attorney’s fees must be recovered through the corresponding procedural mechanism, which in our system is through the taxation and approval of the bill of costs. Any excess that may be justified as damages must be pursued through the appropriate procedural channel against the proper opposing party. Therefore, the amount of fees agreed in a professional legal services agreement with an attorney cannot be claimed globally as damages and losses, because otherwise Article 20 of the Judicial Fee Schedule would be violated; rather, recovery must be sought in accordance with the law.
The only exception in this area arises when the dispute concerns trademark infringement, in which case the final paragraph of Article 91 of the Trademark and Other Distinctive Signs Act authorizes the competent court, when awarding costs, to include such attorney’s fees as may be appropriate.
In conclusion, the way to address the current gap concerning clients’ ability to recover an amount closer to, or more reflective of, what they actually pay for legal services in judicial proceedings—given the outdated nature of the Judicial Fee Schedule and its evident disconnect from contemporary reality—is through the enactment of a new law. For that reason, reform of the aforementioned fee schedule is urgent, since that body of law also regulates notarial fees, another important matter in need of regulation within such a complex market.
