Is the insurer refusing to pay the lawyer’s fees or other extrajudicial costs in your personal injury case in full? Then the necessity of the work and the reasonableness of its extent must be assessed. There is no general right to compensation for every hour billed at any rate, but a standard reduction is not automatically adequately substantiated either.
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Written by Onur Arslan, attorney at Arslan Advocaten. Do you have questions about your own situation? Get in touch.
Which costs fall under extrajudicial costs (BGK)?
Extrajudicial costs may relate to establishing the loss and liability, and to obtaining payment outside court proceedings. The framework can be found in, among other provisions, Article 6:96 of the Dutch Civil Code (BW). The nature of the work and the stage of the dispute are important.
The costs of proceedings are not simply all treated as BGK. Separate rules apply to partial dispute proceedings (deelgeschil) and other proceedings. Costs covered by a legal expenses insurance policy must also be distinguished from costs recovered from the liable party.
The double reasonableness test
First, it is assessed whether it was reasonable to engage assistance or have the work carried out. Next, it is examined whether the extent of the costs is reasonable. The complexity, the financial interest, the expertise required and the attitude of the parties may be relevant.
A low amount of damages does not automatically make every higher cost item unreasonable. However, a simple case does not, without explanation, justify an extensive file with repeated work. A good specification shows what was done, why, and how much time it took.
Disputes about the rate or the hours
Ask the insurer which specific items it disputes. Does it concern the hourly rate, duplicated work, administrative time, medical advice, correspondence or a previous representative? A general reference to an internal maximum does not satisfy every reasonableness test.
Also discuss VAT, disbursements and any advance payments towards costs. When a file is transferred, time to familiarise oneself with it may be needed, but its extent must be justified. A dispute about the costs must not leave unclear what amount you owe your representative under your own agreement.
Who bears any portion that is not reimbursed?
The letter of engagement partly determines your payment obligation towards the lawyer or representative. An expectation that the insurer will pay is not the same as an agreement that you will never bear any costs. Before giving instructions, ask what happens if liability is disputed, if the case is terminated or if the compensation is insufficient.
If you have legal expenses insurance, check the cost ceiling and the arrangements for instructing an external lawyer. Recovery from the liable party and payment by your legal expenses insurer must be coordinated. The same costs cannot be compensated twice.
Frequently asked questions
Does the liability insurer have to pay all the lawyer’s fees?
Only costs that qualify for compensation on the correct legal basis. Both the necessity and the extent must be reasonable.
Is an insurer’s rate binding?
An internal rate is not automatically decisive for every case. Agreed rates and the specific reasonableness test may, however, be relevant.
Will I receive an invoice for the difference myself?
That depends on your letter of engagement. Ask about this explicitly and have any unclear arrangements explained.
Can Arslan assess a costs dispute?
We can assess the engagement, the specifications, the insurer’s response and the options for compensation as a whole.
Read more about legal expenses insurance and second opinions and lengthy personal injury claim handling.
Have the refusal to pay extrajudicial costs and your own payment risk assessed.
This page provides general information and is not legal advice about your own situation. No rights can be derived from its content.
