In the context of public contracts related to legal services, the method of compensation based on the obtained results alone is against the law!

The Office of Public Housing (OPH) has announced an open tender for a service contract related to the administrative monitoring of property tax benefits for buildings. SELAS A. presented an offer which was rejected. The contract was awarded to a joint consortium consisting of a consulting company (AC) and a law firm (SG).

SELAS A. appealed this decision before the Strasbourg TA judge, citing OPH's failure to comply with the consultation rules and the law on public procurement.

It requests either the award of the contract or the cancellation of the contract signing procedure.

During the summary process, the judge must review whether the joint group's proposed reimbursement method complies with the provisions of the Public Procurement Code.

First, the judge recalls the applicable legal framework.
According to the conditions of the first paragraph of Article L. 2152-1 of the Civil Code, the public buyer must reject irregular, unacceptable or inappropriate offers.

In addition, the judge recalls Article 10 of the Law of December 31, 1971, according to which:

«The fee for the application, consultation, assistance, advice, personal signature of legal documents and drawing up of petitions is determined by agreement with the client. () Any imposition of fees based solely on legal outcome is prohibited. A contract is legal which, in addition to compensation for services provided, provides for the imposition of additional fees based on the results obtained or the services provided.()».

In this case, the contract includes legal consulting services, which will be provided by a law firm (SG) within the winning group. The group's commitment act stipulates that the price is determined exclusively by the interest applied to the amount of property tax relief on the built-up property, after this amount has been obtained and paid to the Treasury.

The judge considers that this method of remuneration constitutes only a result-based fee determination, which is contrary to Article 10 of the Law of December 31, 1971.

“4. Although it appears from the instructions that the contract includes legal advisory services, which will be provided within the framework of the joint winning group to lawyers SELARL, Schiano Gentiletti, This can be seen from the act of commitment of the group that its price consists only of the interest applied to the amount of property tax relief obtained and paid by the Treasury for the built property. This method of compensation, within the meaning of the provisions of Article 10 of the above-mentioned Law of July 10, 1971, constitutes the imposition of fees based solely on results, without the need to distinguish between judicial and legal activities. .

Secondly, the winning company claimed that, of course, these provisions were not unknown to it, but the co-contracting agreement signed on September 11, 2023 provides that the law firm (SG) will be compensated with a lump sum and an additional fee consisting of: a percentage of the amount of relief obtained.

However, the judge held that this subcontracting agreement was unrelated to the offer submitted to OPH:

“On the other hand, the investigation does not find, nor does it support, that the September 11, 2023 subcontracting agreement would be enforceable against OPH.” The terms set for SELARL attorneys' fees are therefore foreign to the offer the group submitted to OPH. Accordingly, Company A cannot rely in its favor on the regularity of this offer.

Consequently, by accepting this irregular offer, OPH failed to fulfill its obligation of advertising and competitive bidding. The summary judge specifies that he cannot compel OPH to award the contract to the applicant company. Therefore, it orders the cancellation of the procurement procedure, as well as the decision to award the contract to the joint group and reject the offer of the applicant company.

Administrative Court of Strasbourg, April 19, 2024, rec. No. 2402132

*Article written in collaboration with lawyer Lou Prehu

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