The Supreme Court of Cassation (19 October 2017, No. 24682) discerns the respective scope of application of the criteria for the liquidation of compensation to the lawyer in case there was no specific agreement between the parties

The case

The local Court of Santa Maria Capua Vetere rejected an appeal against the decision of the Bankruptcy Judge in the proof of debt phase, who did not admit a claim by a lawyer for assistance to a company, with respect to filing for admission to concordato preventivo.

The local Court ruled that the extra-judicial professional tariff apply, considering that typical judicial activities were at play and in part, although extra-judicial activities were considered, these were strictly related to the filing of the petition for admission to concordato preventivo.

The issue

The assistance to the client in the admission and in the unfolding of the concordato preventivo procedure normally involves legal activities both of a judicial and extra-judicial nature.

In cases where the engagement of the lawyer is not formalized, does not provide for the amount of the compensation or is deemed not to be enforceable in the ensuing bankruptcy liquidation procedure, the compensation to the lawyer must be determined according to the professional tariff approved by law, which indeed does not fully and clearly set forth the criteria applicable to the assistance rendered in the context of a concordato preventivo.

The decision of the Court

The Supreme Court of Cassation stated the following principles:

  • compensation for legal assistance in the context of the filing of a petition for admission to concordato preventivo, having both a judicial nature (such as the drawing up of the petition and the attendance to hearings) and an extra-judicial nature (such as meetings with client and the Judicial Commissioner, correspondence), but strictly related to the former, must be determined according to the judicial tariff;
  • compensation for legal assistance which instead is not inherently linked to judicial activities and relate instead to self-standing activities (such as legal opinions, drawing up of contracts for the lease or sale of a business unit or other assets, etc.), can be determined according to the extra-judicial tariff.

Commentary

The decision of the Court (although referring to the professional tariffs formerly in force, i.e. the Ministerial Decree No. 140/2012 now replaced by Ministerial Decree No. 55/2014) is worth to be noted, because it does confirm an interpretation which was offered previously by the Court with respect to the former legal rules for the determination of lawyers’ fees, having a different structure (see Cass. No. 13770/2007 and No. 14443/2008) and sets forth principles which can be deemed applicable also to the current professional tariff.

Case law (mainly unpublished, as it refers to proof of debt filings before Bankruptcy Judges) is often uncertain as to the criteria to be adopted for the determination of compensation for legal services in the context of concordato preventivo, also due to the dispute with respect to the legal nature of concordato preventivo itself, as a contractual arrangement with creditors or an actual judicial proceeding.