OGH: Duty to Provide Legal Fee Info

Dec 1, 2023 Benn-Ibler Rechtsanwälte

Section 5a(1)(3) of the Austrian Consumer Protection Act (Konsumentenschutzgesetz, hereinafter KSchG) obliges traders to inform consumers of the total price of the goods or services ‘in a clear and comprehensible manner’. This obligation to provide information can be fulfilled both verbally and in writing.

In the case at hand, a law firm sued its former client to recover fees paid. The defendant client’s argument was that they had not been informed of the costs of the representation in accordance with Section 5a(1)(3) KSchG and, therefore, were not contractually bound to pay up.

Before filing the action, the plaintiff had informed the defendant that billing would be based on a standard rate. Thus, only services related to the proceedings (complaints, pleadings, negotiations) would be invoiced, not each individual item of legal service.

The defendant was also informed that a higher value in dispute would result in higher court and legal fees. The claimant estimated that the costs, excluding court fees, would be at least EUR 30,000. Following the plaintiff’s statements, the defendant realised that this case could result in significant costs and a lengthy process. Still, she subsequently increased the value of the claim from EUR 500,000 to one million euros.

The defendant refused to pay the legal costs incurred amounting to more than EUR 40.000, taking the view that the plaintiff had breached their duty of information under Section 5a(1) no. 3 KSchG.

Section 5a(1)(3) KSchG also applies to fee agreements between lawyers and consumers. In accordance with OGH case law it is not sufficient for a lawyer merely to refer to the fact that they have a right to an appropriate fee. In Case C-395/21, the ECJ stated as well that it is insufficient for lawyers to simply state their hourly rate.

In the present case, however, the defendant was in possession of all the necessary information and decided on their own to increase the amount in dispute. As a result, there can be no allegation that the plaintiff was in breach of their duty of information.

3 Ob 146/23a (6 September 2023)