Dubai Court Practice Confirms: Percentage-Based Lawyer Fees Are Enforceable (Up to 25%) Under the New UAE Advocacy Law

UAE Lawyer Fees

For years, the UAE prohibited contingency style fee arrangements between clients and UAE law firms and lawyers. That position changed with Federal Decree-Law No. 34 of 2022, which modernised the fee regime and aligned it with international practice, subject to strict consumer protections and a cap widely referenced at 25%. Recent Dubai Court of Cassation practice has now confirmed the enforceability of such agreements when properly drafted and within the cap, bringing welcome clarity for both clients and law firms.

What Changed? From Prohibition to Regulated Permission

• Old rule (repealed): Under Law No. 23 of 1991, lawyers were broadly prohibited from charging a fee based on a share of the recovery.
  
• New rule: Federal Decree-Law No. 34 of 2022 updated the advocacy framework. Under the new regime, success linked fees are permissible if:
  
  • The percentage does not exceed 25% of the amount recovered (by judgment or settlement);
    
  • The agreement is clear, written, and informed;
    
  • The arrangement does not undermine professional independence or violate public policy; and
    
  • General consumer protection and ethical rules are respected.
    

Why the Recent Court Practice Matters

In a reported case, a law firm and its client agreed to a percentage fee tied to the amount recovered. After a negotiated settlement and a partial payment of fees, the client disputed the balance. Lower courts applied the repealed 1991 law and curtailed recovery. On further review, the Dubai Court of Cassation reportedly held that:

• The new law (Decree-Law 34/2022) governs;
  
• Percentage based fees are valid where compliant with the 25% cap and other safeguards;
  
• The matter should be reassessed under the correct legal framework.

This outcome consolidates a modern practice: properly structured percentage based fees are enforceable.

Practical Guidance for Clients & Law Firms

For Clients

• Ask for clarity: Your engagement letter should state exactly how the percentage applies (gross vs net, treatment of VAT, costs, and disbursements).
  
• Confirm the cap: Ensure the total success fee is ≤ 25% of the recovery.
  
• Know what’s included: Does the fee cover execution/enforcement, appeals, or settlements before judgment?
  
• Avoid ambiguity: Vague fee wording causes disputes. Ask for worked examples.
  

For Law Firms

• Use clear drafting: Define triggers (judgment/settlement), calculation bases, timing, and scope.
  
• Respect ethics and independence: Percentage fees must not compromise professional judgment.
  
• Disclose risks: Provide clients with informed consent and keep records.
  
• Mind VAT: Clarify whether the percentage is before or after VAT and how costs are treated.

Common Fee Structures Now Seen in the UAE

• Hybrid fees: A reduced fixed fee plus a success percentage (≤ 25%).
  
• Tiered success fees: Different percentages at milestones (e.g., pre-litigation settlement vs judgment).
  
• Capped hourly + success: For complex matters with cost predictability plus performance alignment.

Frequently Asked Questions

1) Are 100% contingency agreements (no fees unless recovery) allowed?
Only within the legal and ethical boundaries of Decree-Law 34/2022 and never above 25%. Full contingency is not automatically barred, but it must be assessed for independence, informed consent, and public policy concerns. Hybrid models are generally safer.

2) Does the 25% cap include VAT and expenses?
Best practice is to treat VAT and out-of-pocket costs separately from the success fee. Your agreement should spell this out.

3) What if the case settles?
Settlement recoveries can be included in the calculation if the agreement says so, and still within the 25% cap.

4) Can courts reduce an agreed percentage?
Yes. If a fee is unconscionable, unclear, or violates public policy, courts can intervene.

How Al Kabban & Associates Can Help

With over 30 years of practice (est. 1993) and recognition in the Legal 500 for five consecutive years, Al Kabban & Associates drafts clear, enforceable fee agreements that comply with Decree-Law 34/2022, protect client interests, and minimise future disputes. We advise both corporates and individuals on structuring lawful success linked fee arrangements, and we litigate and enforce them where necessary.

For more information or to schedule a consultation, contact us at +971 4 453 9090 or visit www.alkabban.com. 

You can also follow us on social media for more updates on everything law related in the UAE: @Alkabban_Law

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