BRAZIL Law and Practice Contributed by: Eduardo Perazza, Glaucia Coelho, Débora Chaves Martines Fernandes and Agnes Domingues, Machado Meyer
Court-Awarded Fees Brazil follows a loser-pays system. The losing party must pay attorneys’ fees to the prevailing party. Under the Civil Procedure Code, these fees are set between 10% and 20% of the claim value, economic benefit or updated cause value. The fees are owed directly to the winning party’s lawyers – not to the client – as a vested right under Brazilian law. 5.2 Third-Party Funding Third-party litigation funding is available and growing in Brazil, though not specifically regulated by statute. 5.3 Contingency Fee Arrangement Contingency fee arrangements are available in Brazil and are regulated by the Brazilian Bar Association’s Code of Ethics and Discipline. These arrangements are particularly common in labour, consumer, personal injury and civil rights cases. Under these arrangements, the lawyer receives a per- centage of the recovery with no upfront payment from the client. The main rules governing contingency fees include: the fee must be agreed in writing; the percent- age cannot be manifestly excessive or disproportion- ate to the work performed; the lawyer cannot acquire rights over the subject matter of the dispute; and the arrangement must not place the client at a disadvan- tage. The Bar Association may review fee arrange- ments that appear abusive or that compromise the client’s interests. In commercial litigation and arbitration, pure contin- gency fees are less common. Instead, hybrid arrange- ments combining reduced retainers with success fees are prevalent, allowing for greater flexibility while maintaining ethical compliance. 5.4 Insurance Insurance coverage is available in Brazil for court liti- gation, arbitration and ADR. Coverage depends pri- marily on the terms agreed in the insurance policy. 5.5 Costs In litigation, the losing party pays court costs and attorneys’ fees (10-20% of the judgment value) to the prevailing party.
used as evidence in court or arbitration, and media- tors cannot be called as witnesses. Court conciliation hearings are also confidential, and settlement discussions are conducted privately. 4.6 Costs For private mediation, costs are typically shared equally between parties unless otherwise agreed. Generally, each party bears its own legal representa- tion costs. If settlement is reached, cost allocation is typically addressed in the settlement agreement, depending on its terms. Court-conducted conciliation and mediation through judicial centres are generally free of charge, making ADR accessible even for lower-value disputes. 4.7 Courts and ADR Brazilian courts strongly support ADR as a means of addressing the country’s significant judicial backlog. Judges actively encourage settlement at the initial procedural hearings, and it is also common for appel- late courts to ask the parties whether they wish to explore a settlement before an appeal is decided. Courts readily homologate settlement agreements, granting them the same enforceability as court judg- ments. Legal fees in Brazil consist of two components: con- tractual fees agreed between client and lawyer, and court-awarded fees payable by the losing party. Contractual Fees Clients and lawyers are free to negotiate fee arrange- ments. Common structures include fixed retainers, hourly rates, success fees or combinations thereof. While fees are freely agreed, they must comply with ethical standards set by the Brazilian Bar Associa- tion (OAB), including reasonableness and transpar- ency. The OAB publishes minimum fee schedules at the state level, which are binding for ethical purposes and aim to prevent underpricing. 5. Costs, Fees and Funding 5.1 Legal Fees
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