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Fee reduction for lawyers in eastern Germany no longer constitutional

Press Release No. 6/2003 of 28 January 2003

Judgment of 28 January 2003
1 BvR 487/01

It is no longer consistent with the general principle of equality that the statutory fees of lawyers who have set up offices in the new Länder (states) be decreased by ten per cent. The underlying regulation can continue to be applied until a new regulation which is in conformity with the Basic Law comes into force or at the latest until 31 December 2003. This was decided by the First Senate of the Federal Constitutional Court in its judgment, pronounced today, on the constitutional complaint lodged by a lawyer from Dresden.

The case in hand exclusively deals with the reduced fee which lawyers whose law offices are located in the new Länder have to tolerate. The other regulations concerning fees, however, which take the location of the court or public authority and the domicile of the client as their nexus, are not the subject-matter of the proceedings.

The facts:

The constitutional complaint proceedings concern the reduction of lawyers’ fees applicable in the new federal Länder. The reduction affects lawyers whose law offices are located in the new Länder or who represent a client from the new Länder before a court or public authority in the acceding territory. The legal basis of the reduced fee is the Treaty of 31 August 1990 between the Federal Republic of Germany and the German Democratic Republic on the Establishment of German Unity (Unification Treaty, Vertrag vom 31. August 1990 zwischen der Bundesrepublik Deutschland und der Deutschen Demokratischen Republik über die Herstellung der Einheit Deutschlands, Einigungsvertrag). Originally the reduction amounted to 20 per cent. It was intended to take into account the different economic conditions which prevailed in the former German Democratic Republic. In 1996 the reduction rate was adjusted and decreased to 10 per cent. It remains in force unchanged to this day. However, since 1 March 2002 the rate has ceased to apply for the eastern part of Berlin.

The complainant in the instant case is a lawyer. Her legal practice was originally in Stuttgart; since 1994, she has had a law office in Dresden. She represented a client who was resident in Munich in divorce proceedings before the family division of the Local Court (Amtsgericht – Familiengericht) in Dresden. In addition, a Munich lawyer who acted as the complainant’s agent was involved. In fixing the fees payable to the complainant, the Dresden Family Court took into account the 10 per cent fee reduction applicable to the eastern part of Germany. Appeals to the Local Court and the Higher Regional Court (Oberlandesgericht) were unsuccessful.

The complainant’s constitutional complaint is directed against the order made by the Higher Regional Court and the regulation on the fee reduction applicable to the eastern part of Germany. She alleges a violation of the general principle of equality before the law. She claims that the only reason she is affected by the 10 per cent reduction is because she has her law office in the acceding territory. The lawyer acting as agent in the divorce proceedings was able to charge the complete fee, although she did the same work and has the same qualifications, because her office is in Munich. According to the complainant, the costs for a law office and staff are the same in the East as in the West. As far as she is concerned, the fee reduction applicable to the eastern part of Germany cannot reasonably be upheld against this background.

The Court’s reasoning is as follows:

The general principle of equality before the law, which is the standard of the Federal Constitutional Court’s examination, does not bar the legislature from making any differentiation whatsoever. The fundamental right will, however, be violated if one group of persons is treated differently to another group of persons as the result of a regulation even though the differences between both groups is not of such kind or so weighty as to be able to justify the unequal treatment. The greater the detrimental effect of the unequal treatment on the exercise of fundamental freedoms protected by the Basic Law, such as, for example, the freedom to practise one’s occupation or profession, the more limited the legislature’s discretion will be.

The regulation concerning the decreased fee in the East in relation to lawyers whose offices are in the new Länder no longer meets the aforegoing standard. It uses as its nexus the place where the lawyer’s office is located. As a result, all lawyers who established offices in one of the new Länder are at a disadvantage as compared to lawyers whose offices are in Berlin or one of the old Länder also when they are not representing a client who is from the acceding territory before the courts or public authorities in Brandenburg, Mecklenburg-Western Pomerania, Saxony, Saxony-Anhalt or Thuringia. They can only charge fees for their legal services which are 10 per cent less than those which lawyers who have law offices in Berlin or the old Länder can charge their clients.

Parliament was taking into account social considerations when it decreased the fee in 1990. Its purpose was to take into consideration the different economic positions of lawyers and persons seeking justice who were resident in the former German Democratic Republic. This was a suitable justification for the differentiation for as long as the difference between the professional conditions for legal practice in the acceding territory and the Federal Republic of Germany was such that lawyers in the acceding territory mostly advised clients from the acceding territory and lawyers from the remaining federal territory were for the most part excluded from doing so. At the beginning, this was the case in relation to the most important field of practice, namely civil disputes.

Initially, after the accession by the German Democratic Republic to the Federal Republic of Germany the only lawyers who could appear before Regional Courts (Landgerichte), Family Courts and all higher courts in civil matters in the old federal Länder were those lawyers who were admitted to the bar of the court hearing the case or – in family law matters – the superior Regional Court. In contrast, in the five new Länder – in keeping with the law of the German Democratic Republic which at first continued to apply – every lawyer could appear before every court. In other words, every lawyer was entitled to appear and conduct a case; there was no local admission to a particular court in the sense of a localisation. Fundamentally, this legal situation continued until 31 December 1999. The Act on the Reform of the Professional Rules Governing Lawyers and Patent Attorneys (Gesetz zur Neuordnung des Berufsrechts der Rechtsanwälte und der Patentanwälte) of 2 September 1994 amended the provisions on proceedings in which the parties must be represented by a lawyer. Pursuant to the above-mentioned legislation, the parties can be represented before the Regional Courts and Family Courts by any lawyer admitted to practise before those courts. However, this regulation which abandoned the connection between the right to appear and conduct a case and local professional representation (localisation) in relation to civil litigation before the Regional Courts and Family Courts first took effect in the entire Federal Republic as of l January 2000. Since such time lawyers can appear in legal disputes before the Regional Courts and Family Courts in both the eastern and western parts of the federal territory. The original coexistence of two physically separate areas in which lawyers from the old Länder could not appear in the new Länder and vice versa no longer exists. At the same time, the original justification for the challenged regulation on the decrease of fees has thus disappeared.

The fee regulation concerning the fee reduction in the eastern part of Germany for lawyers whose offices are in the new Länder is unconstitutional as a result of the decision, but not null and void. The legislature is given until the 31 December 2003 as the time limit for the enactment of the new regulation which has become necessary. The current regulation on fees is still applicable during the transitional period. For this reason, the decision by the Higher Regional Court which the complainant was still challenging and which is based on the challenged fee regulation is not constitutionally objectionable. To this extent the constitutional complaint is rejected as unfounded.