Why the "debt collection cap" for traffic law services is contrary to the system

This article discusses why a fee cap for traffic law services is out of the question. Since liability insurers, as professional risk carriers, do not require debtor protection and claims for damages from traffic accidents per se do not constitute undisputed claims, a fee reduction in accordance with no. 2300 para. 2 VV RVG is excluded.

I. Introduction

Pursuant to Section 4 RDGEG in conjunction with Section 13d RDG, the remuneration of legal service providers is governed by the German Lawyers' Fees Act (RVG). Pursuant to Section 13e RDG, the pre-litigation costs incurred as a result of engaging a legal service provider are reimbursable as compensation up to the amount that a lawyer would be entitled to for this activity in accordance with the provisions of the RVG. It has been recognised by the highest court for years that the 1.3 threshold fee represents the standard fee for the handling of a typical traffic accident.[1]

In pre-litigation disputes with liability insurers in road accident cases, a standard objection has become established with some insurers: as soon as the injured party instructs a legal service provider to settle the claim, the insurer reflexively refers to the provision of no. 2300 para. 2 VV RVG in the hope of only having to partially reimburse the legal costs incurred. This provision provides for a reduction of the business fee if the object of the activity is a debt collection service relating to an undisputed claim. Then a fee of more than 0.9 can only be demanded if the debt collection service was particularly extensive or particularly difficult.

Recent decisions by the Potsdam Local Court and the Berlin-Mitte Local Court have decisively opposed this practice: The provision of no. 2300 para. 2 VV RVG is generally not applicable to traffic law services.

II. Liability insurer not subject to the protective purpose of the standard

Firstly, it is worth taking a look at how the standard came about. With the Act to improve consumer protection in debt collection law and to amend other provisions[2] should counter the exploitation of debtors' lack of legal knowledge and possible uncertainties about the fact that consumers can be called upon to reimburse collection costs as soon as they are in default of payment.[3]

With the introduction of no. 2300 para. 2 VV RVG, the legislator reacted to a practice in which the 1.3 threshold fee was applied across the board for the mass collection of undisputed claims, which was considered excessive in relation to the services actually to be provided in these cases with regard to consumer protection in the event of late payment.[4]

Applying the provision to a claim for damages against a liability insurer as a professional risk carrier already completely misses the protective purpose of the standard.

The Potsdam Local Court aptly states in this regard:
"These are not the cases that the law refers to in section 2300 para. 2 VV RVG. In addition, there is no need for debtor protection in the case of road accidents. This is because the debtor is always a solvent motor vehicle liability insurer, who does not need to be protected in this respect and should not be protected by section 2300 para. 2 VV RVG. A motor vehicle liability insurer is neither a debtor worthy of protection nor a consumer within the meaning of the law and the explanatory memorandum to the law[5]".

This makes it clear that the protective purpose of the standard - the relief of the consumer in distress - is not transferable to the liability insurer liable after a road accident.

III. scope of application for traffic law services not opened

The scope of application of no. 2300 para. 2 VV RVG does not apply to traffic law services, as work in traffic accident cases does not constitute a debt collection service within the meaning of this provision.

While, for example, the assertion of an unpaid craftsman's invoice as a typical debt collection service falls within the scope of the provision, the same cannot apply to a claim for damages from an accident victim that first has to be examined and quantified. The provision must therefore be reduced teleologically.

The local court of Potsdam:
"A debt collection service is only provided if a claim for payment is asserted that is specified in terms of amount (e.g. by means of an invoice), not if the damage still has to be calculated and documented. This is because the legal costs for the assertion of claims for damages in tort, in particular after road accidents, are already part of the material damage and must be reimbursed by the debtor anyway, regardless of the existence of default. These are not the cases that the law refers to in section 2300 para. 2 VV RVG.[6]"

This distinction makes it clear that the complex determination and quantification of a claim for damages is something completely different from the simple collection of an already fixed fee claim for which the fee cap applies.

IV. Offence in traffic law necessarily never fulfilled

In any case, the elements of No. 2300 Para. 2 VV RVG can never be fulfilled in the case of traffic law services. The prerequisite for this is that the service relates to an undisputed claim.

The legislator deliberately differentiates between disputed and undisputed claims, as the scope of the legal examination and thus the effort required of the lawyer or legal service provider differs significantly depending on whether an undisputed claim is to be recovered or whether, as a result of a dispute by the debtor, the justification of the claim and the prospects of success of its enforcement must also be examined.[7]

The accident victim's claim for damages must first be examined on its merits, the amount calculated and then substantiated, i.e. it cannot be undisputed from the outset like a claim for wages, for example. In this examination and quantification, the effort and expense envisaged by the legislator is realised, which distinguishes the activity of traffic law services from typical debt collection services, which is why only the latter should be subject to No. 2300 Para. 2 VV RVG.

Even in cases in which the tortfeasor has admitted fault to the injured party and liability was clear on the merits, the amount of liability is not undisputed, but must be factually and legally verified and substantiated[8]so that even in this case, no. 2300 para. 2 VV RVG does not apply to traffic law services.[9]

V. Consequence

If this consistent line is followed, there is no need for a detailed discussion as to whether the specific accident was extensive or difficult enough to exceed the threshold value of the 0.9 fee from No. 2300 Para. 2 VV RVG. The fee framework of no. 2300 para. 1 VV RVG remains. It is generally recognised that the threshold fee of 1.3 represents a standard fee for the handling of an average traffic accident.[10]

It is irrelevant whether this handling is carried out by a legal service provider or a lawyer. The differentiation in No. 2300 VV RVG is only made according to the type of specific activity, not according to it, who provides them. The non-application of para. 2 of the provision to the activities of legal service providers in traffic accident cases is consistent, not least against this background, as the law introducing it[11]At the same time, the aim is to counteract the different treatment of lawyers on the one hand and legal service providers on the other, which would not be appropriate when providing the same activity.[12]

VI Conclusion

The current case law from Berlin and Potsdam sends a clear signal to the occasionally lazy liability insurers: The attempt to reduce the claim for reimbursement of the accident victim with regard to the remuneration of the traffic law service provider by making a blanket reference to No. 2300 Para. 2 VV RVG is not tenable. The provision does not apply to the debtor, the nature of the claim or the specific activity. There is no way around the reimbursement of the 1.3 standard fee.