Litigation costs in civil cases 

Sarasoja, L. & Carling, C. (2020). Oikeudenkäyntikulut pääkäsittelyssä ratkaistuissa riita-asioissa 2019. EDILEX Edita Publishing Oy.

Link to full article (in Finnish)

The authors have analyzed litigation costs in civil cases resolved in the main hearings in the Finnish district courts in 2019. Litigation costs are compared with the results from previous similar studies in 1995, 2004 and 2008. The report is co-funded by the Ministry of Justice and the Institute of Criminology and Legal Policy. The analysis is based on a recording in the Government Programme which states that the Government will clarify grounds for determining legal costs in order to inter alia reduce the risks of litigation and that a party may incur excessive expenses during judicial proceedings. The focus of the analysis is on legal costs, although the report also looks at civil cases resolved in main hearings in general. The research material consisted of court documents collected from district courts over a four-month period (n = 538), which covered approximately 85 percent of all disputes resolved in the main hearings during that period. The district courts sent the court documents to the Institute of Criminology and Legal Policy, and the information was coded manually.

In Finland, the proceedings for a civil case can be divided into two stages, preparation and main hearing, of which the main hearing is generally considered to be the actual trial. Previous studies have found that the number of disputes resolved in the main hearing has dropped and processing times have increased in the 21st century. Disputes are progressing less and less to the main hearing, and most of them are being resolved in the preparatory phase. In 2019, only about one-fifth of the disputes with detailed application for a summons brought before the district courts were resolved in the main hearings. Another key development has been the increase in the length of proceedings. According to statistics from the Ministry of Justice, it took an average (median) of approximately 13 months to resolve a civil case in the main hearing in 2019, compared to approximately 8 months in the early 2000s.

However, despite the developments described above, the civil cases themselves have remained very similar over the last twenty years. Lawsuits brought by individuals mainly concern common legal issues, such as family, housing and work disputes. Disputes brought by entities, i.e. mainly companies, most often concern matters relating to debts or various contractual relationships. The parties are usually represented by a lawyer, and only few represent themselves without a counsel. By law, the losing party of a dispute is, in principle, ordered to pay the legal costs of the winning party, and this is also usually the case in practice. However, as a clear change, it was found that in 2019 the amount of  witnesses heard in the disputes was lower than in previous years.

The main finding of the study is that the legal costs of civil cases resolved in a main hearing have increased since the 1993 procedural reform in civil matters. In 2019, the median claims for compensation of legal costs were approximately EUR 9 000–10 000. In 2008, comparable legal costs averaged (median) approximately EUR 6 000–7 500. In a decade, the plaintiffs’ claim for compensation of legal costs has increased by about 22 percent and the defendants’ by 61 percent. In the time after 1993 procedural reform, the legal costs have more than doubled. In 2019, in approximately 41 percent of the disputes resolved in a main hearing, the parties’ combined legal costs exceeded the monetary value of the plaintiff’s claim. In this respect, a full-length trial appears as a rather risky way of resolving a dispute.

Legal fees usually mainly consist of a counsel’s fee, which is typically based on hourly billing in Finland. In 2019, the average (median) hourly fee for a counsel was around EUR 200–220. The amount of the hourly rate in euros has increased since 2008, but not so much as to alone explain the observed increase in litigation costs. The cost of individual decisive stages in the process, such as drafting the application for a summons or appearing in the main hearing, had not risen much in a decade. It is possible that the increase in legal costs is partly explained by increased number of measures (like phone calls, meetings, e-mails, etc.) invoiced in counsel’s fees.

Over the last ten years or so, legal costs have increased the most in lawsuits brought by individuals. These results are worrying for the legal protection of ordinary citizen and from the perspective of access to courts. Litigation costs have risen particularly in disputes over real estate and insurance claims, where litigation costs have at least doubled in a decade. In the cases brought by communities, there has been little increase in costs during the same time period.