- Legal fees in Beijing subject to government guidelines and market-oriented mechanisms based on nature of services
- Includes allowable rates, fee caps and billing options
- New regulations for contingency fees
- Firms required to attempt resolving fee disputes directly before seeking third party assistance
The Beijing Municipal Commission of Development and Reform and Beijing Municipal Bureau of Justice published the draft “Government Guidelines on Litigation Fees Charged by Law Firms in Beijing (Trial)” and “Measures on Implementing the Administration of Legal Fees Charged by Law Firms in Beijing (Trial)” and opened them for public review through January 22, 2009. These two regulations are the specific implementing rules for the Measures on the Administration of Legal Fees, promulgated on April 13, 2006 by the National Development and Reform Committee and the Ministry of Justice.
The draft Measures are intended to regulate legal fees charged by law firms in Beijing as well as the Beijing branches of law firms established in other provinces and cities. Foreign law firms fall outside the scope of the regulation.
The draft Measures subject legal fees in Beijing to government guidelines and market-oriented mechanisms based on the nature of the legal services rendered. Legal fees for conducting civil litigation cases, administrative procedure cases, requesting state compensation, providing legal advice for criminal suspects, making applications for bail, representing defendants and representing claims are set under guidance from the government. All other legal fees shall be agreed upon between law firms and their clients based on market-oriented pricing mechanisms.
The draft Measures provide detailed rates for legal fees under government guidance and fee caps for each item of legal service rendered, but no limits are set as to the minimum fees that may be charged. They also provide three billing options for law firms: billing on a case-by-case basis (applicable to non-property-related matters), billing on the basis of a proportion of the amount recovered by the legal action (applicable to property-related cases) and billing on the basis of time spent (applicable to all types of matters). The draft Measures also provide that, upon mutual agreement between law firms and their clients, contingency fees can be adopted in property-related civil cases, except for four circumstances (including marriage and inheritance matters). Contingency fees shall not exceed 30% of the total amount involved, which is stipulated in the charging contract.
The draft Measures also require law firms to attempt to resolve any billing disputes through consultation with the client. If consultation fails, they may ask local bar associations, local judicial authorities and local price departments for settlement by mediation, or may apply for arbitration or file a lawsuit. The wording of this provision implies that the firms should pursue resolution with their clients prior to seeking other dispute resolution methods.
Now that public consultation on the two drafts has concluded, release of the final Measures, which is expected soon, should have significant impact on law firms involved primarily in litigation.