Antonio Flores’ Blog

Spanish lawyers assisting investors in the purchase of property have been regularly charging the fairly standardized fee of 1% plus Vat. For many, this is an unnecessary expense that can easily be avoided by getting one of the following to help in the process: a family friend, a local “gestor” or even the real estate agency. Their arguments are varied: lawyers charge too much for what they do, they are bad in communicating with clients and if something goes wrong, they don’t want to know.

To a certain extent, I can sympathize with detractors of legal professionals who represent property buyers; they reckon that because we have Notary Publics and a Land Registry system, investors should be protected and minor legal guidance should suffice. In an ideal world probably, but not elsewhere.  

I naturally advocate using lawyers to buy property, and so does the claimant in civil liability case that was brought against a firm of lawyers based in Marbella and their insurers. For this client, the fee of 1% plus Vat has possibly turned out to be the best investment ever made for he has recovered, from the Law Society insurers (Caser Seguros), €107,000 paid in year 2000 -plus interest since that date- on 2 failed off-plan apartment.

The mistake made by these property conveyance lawyers was not small: when they demanded bank certificates guaranteeing the investments, mandatory under Spanish law, the property developer managed to get away with flogging them fake insurance policies issued a shelf company, Compagnies del Guaranties, run by an Italian fraudster.

There was actually no need to run through the lengthy bogus document which had, I must admit, an air of “officialness”. Just by searching the words “Compagnies Des Guaranties” one would have seen them prominently featuring on a blacklist compiled by the Dirección General de Seguros.

Granted, do you don’t need to pay a lawyer to do this simple job. But honestly, how many investors would have noticed that these were spurious policies? Very few, as it happened, when you realize the nationwide dimension of the con. At least, in a quirk of fate, those who hired a negligent lawyer will get paid!

Antonio Flores Legal Practise, Litigation Insurance lawyers spain, negligence laywers spain, professional indemnity lawyers spain, spanish lawyers

Recent enactment of legislative reforms that requires claimants to pay court filing fees when “making use of the public service of the administration of justice” has forced lawyers, already under severe stress due to the still struggling economy, to downsize their fee aspirations. In fact, even to the point of having to waive the retainer to allow a case -or an appeal- to go forward, on a no-win no-pay basis.

But what happens when one loses a case? And if no agreement was struck with the lawyer?

The following notes should help understand the legal fees’ system:

a)      The Spanish Solicitors’ Code of Practice establishes an absolute freedom to fix legal fees, pursuant to a Supreme Court ruling that nullified the prohibition of conditional fees.

b)      Where no agreement is struck clients needs to be aware that by default, they will fall under the legal fee guidelines approved by the provincial Bar Association, and these can be pretty heft (a case worth €300k will attract €25k in fees, only in the first instance).

c)       Equally, where a case is lost and the Court awards costs i.e. pay the other party’s legal fees, they will too be calculated by reference to the respective Bar Association, in any case.

d)      If scenarios b) and c) happen to coincide, an unsuspecting claimant could find that a case relating to a property worth say €300k could actually cost him €50k!

e)      On property conveyancing, 1% of the purchase price is still pretty standard, in spite of the crisis; the reason for this is perhaps to do with the hefty quantum of a potential claim i.e. up to the value of the property and, notably, the very the lengthy mandatory 15-year liability term to validly bringing a claim against a conveyancing lawyer.

The above conclusions make it very advisable prior to filing a case, and even responding to a claim filed against one, to request from the acting lawyer for an appraisal of the likely legal costs should the case be lost as, very often, these are ignored ab initio. And naturally, have one’s own fees agreed and ratified by signing a letter of engagement or letter of instruction.

Antonio Flores Legal Practise Legal fees Spain, No-Win No Fee Spain, spanish lawyers, Spanish legal practice

It was not until 2008, when the Spanish Supreme Court got its hands on this controversial matter that Spanish lawyers were at liberty to agree on pure conditional fee arrangements, better known as no-win no-fee, or “pactum de quota litis“. Because up until then, it was actually forbidden for lawyers in Spain to work freely in pursuit of a favourable result for their client, upon which they would share the proceeds of the recovery.

This prohibition was removed by the Tribunal for the Defense of Free Competition, who established that any rule preventing a client and a lawyer from freely fixing their fees was a restraint to free competition, declaring any regulation to the contrary null and void, at which point they also fined the Spanish Law Society with €180,000. On appeal, the National Audience revoked this decision but, on further appeal to the Supreme Court, the original ruling was upheld (though the fine removed).

Detractors of this arrangement consider that these types of agreements do not guarantee civil justice and that legal professionals “cherry pick” only the strongest claims, which are most likely to succeed. In sum, that they make lawyers party to the claim (conflict of interest), diverting them their ‘statutory’ functions i.e. serenity of judgment, independence and dignity, collaboration with justice and moral integrity, all of them alien to the concept of “ambulance chaser”, a term that came in handy to shame campaigners of the conditional fee agreement.

Supporters claim that this system allows people with few financial means access to the court which otherwise, could not afford. In this context, no win no fee also provides significant motivation to the lawyer to work diligently on the client’s case whereas, if the fees are fixed, it would makes little economic difference for that lawyer whether the client has a successful outcome to the litigation. Finally, it is also argued that the number of speculative, frivolous or unmeritorious cases may be reduced.

Arguments for and against are equally respectable but, in today’s socio-economic world, it would seem daft to uphold restraints to private agreements between clients and their lawyers, in the context of free competition, even in spite of the semi-prohibition of the Charter of Core Principles of the European Legal-Profession.

Antonio Flores Legal Practise Ambulance Chasers Spain, No-Win No Fee Spain, spanish lawyers, Tribunal for the Defense of Free Competition

Now that money is scarce, legal instructions that could have otherwise been fulfilled, or at least carried out with some diligence to accommodate a more or less agreeable solution, are finding their way to recourse via professional indemnity (PI) obligations and ultimately, the insurance in charge of covering lawyers’ negligence. Redress against negligent lawyers, which is extendable to Notaries, Registrars and Procurators, is not new and there is substantial precedent that gives us an idea of how Courts are viewing the different cases.

Instances of negligence are varied but the following can be identified, some to do with Court action and others, to the incompetence of the lawyer in respect of applicable law or procedures:

• Missing procedural deadlines or time limitations to bring an action (called Diary Oversights). For example, failure to respond to a claim prior to the deadline set by the Civil Procedural Act or, file an action in tort within 1 year from when the incident occurred, thereby losing the opportunity to obtain a Court ruling on the matter. A clear example is one where lawyer fails to advise the family of a person who drowned, of their right to bring an action in tort against the owners of the swimming pool (within 12 months).
• Not filing an appeal, full stop. The lawyer was not late in filing, he simply did not file.
• Not advising a client of the non-feasibility of an action due to expiration of his right to bring a claim: particularly relevant in relation to the award of Court costs, which can be substantial and, obviously avoidable, had the lawyer advised properly on the opportunity not to bring an action.
• Not claiming “lost profit” on a judicial action when it clearly lent itself for bringing such petition: a good example to cite is that of the sole-trader owner of a tractor that was destroyed in an accident caused by the other party. Although the lawyer filed a claim for damages to the tractor he missed the opportunity to claim for non-realized profits as a result of the sole-traders inability to work.
• Inadequate technical approach to a legal matter and continuous string of errors, also technical, that provoked a multiplicity of procedures, making it impossible for the client to obtain legal redress.
• Rather laconic exposé of the alleged responsibilities of the defendant and incorrect display of evidentiary material, showing little understanding of the case itself. The lawyer, it seems, had other things in mind, or nothing at all, when dealing with this case.

 And so, what happened to the lawyers in these cases? Well, in all of them Courts determined that the lawyers’ negligence warranted compensation that was to be calculated by reference to the “loss of opportunity”, which is not easily measured but for reference to conjecture, best known as Absolute Probability Judgment, where the Court is faced with the assessment and quantification of the error, and its impact on a result had the error not occurred: in other words, what would have the chances of a claimant been had he been properly represented? Common Law here is probably far ahead as it resolves these issues under what is deemed a judgment of feasibility of the case, which requires a study into the merits of claimants arguments’. In this jurisdiction, it is known as the Case-Within-a-Case Rule, according to which, a legal-malpractice claimant must show that, but for the lawyer’s negligence, the claimant would have won the case underlying the malpractice action.

And what about time to bring an action? According to all but one Court rulings, legal negligence or, better named, contractual malpractice, arises from contract, and not tort, which would make a huge difference: 15 years vs. 1 year.

Antonio Flores Legal Practise Malpractice, Negligence, Professional Indemnity, professional liability, professional liability insurance, spanish lawyers

The tragic Barajas accident has brought about a singular controversy, never heard before in this part of Europe (or at least Spain). Spanish newspapers started it all off and the Spanish Law Society has now taken an interest in the matter. I am referring to the so called “ambulance chasers“, a funny and graphic term given to lawyers who hurry to disaster sites to solicit business from the injured or the relatives of those who have died.

The Spanish Law Society is now studying whether to take disciplinary actions against Spanish law firms who have hooked up with their American counterparts in a quest to attract as much of the personal injury legal compensation business as possible, almost right at the scene of the accident. Also, the Dean of the Las Palmas Law Society has affirmed that that some Spanish law firms are in clear breach of the Law Society Rules and Statutes in respect of legal business solicitation (articles 7. and 8.) and has equally recommended exemplary disciplinary action.

Aggressive solicitation of legal work  is not uncommon in Spain and temptations arise when those targeted are foreigners caught up in nightmarish legal wrangles, for example when buying property. I suppose it is not always possible to differentiate what is ethical from unscrupulous but the above case seems a clear example of someone wanting to profit from someone else’s misfortune. Too bad for those Spanish firms!

Antonio Flores Uncategorized ambulance chasers, spanair accident, spanish lawyers