Cyprus lawyers forced to abandon minimum fees

10/09/18

The Cyprus Bar Association has been forced to repeal rules which required lawyers to charge a minimum fee for their work rather than competing against each other on price.

Regulations made by the Cyprus Bar Association (“CBA”) required lawyers who provided ‘out-of-court’ services, such as drafting contracts or administering estates, to charge a minimum fee for their work (“the Minimum Fee Regulations”). The fee was calculated according to formulae contained in the regulations, some of which required the lawyer to charge a percentage value of the underlying transaction. In some cases this produced very high fees for minimal amounts of work. Lawyers who failed to charge the minimum fee were subject to disciplinary action including being struck-off.

In February 2016 Fairness in Fees Limited, a company incorporated to represent persons who had instructed Cypriot lawyers in the past, lodged a complaint with the European Commission. The complaint alleged that the Minimum Fee Regulations breached competition law on the ground that they constituted an anti-competitive agreement between an association of undertakings.

Following an investigation by the European Commission which lasted over two years, the CBA, rather than defending the fixed fee regime, repealed its Minimum Fee Regulations on 19 June 2018. The case follows a number of other investigations by national competition authorities where professional regulators have been required to repeal minimum fee regulations.