Attorneys’ fees take priority over tax credit, as ruled by the STF.

In 2025, the Supreme Court (STF) ruled that lawyers’ fees, both contractual and sucumbencials, are prioritized over tax credit in legal processes and court proceedings.

This significant ruling marks a new advancement in recognizing the importance of advocacy and has a direct impact on tax collections, creditor disputes, bankruptcy cases, judicial recovery, and other legal conflicts related to debts owed by debtors.

What ruling was made by the Supreme Court?

The Plenary of the Supreme Court, in the ruling of the Extraordinary Appeal (RE) 1.326.559/SC on Theme 1.220 of broad impact, affirmed the constitutionality of §14 of Article 85 of the Civil Procedure Code (CPC) with a majority vote.

Attorneys’ fees are considered a type of labor credit and are legally prioritized similarly to tax credits under Article 186 of the National Tax Code (CTN).

See EMENT for more information.

The extraordinary appeal regarding the preference of attorney’s fees over tax credits is constitutionally valid, as established in Article 85, § 14, of the Civil Procedure Code and Article 186 of the National Tax Code.

Theme: 1220 addresses the declaration of partial unconstitutionality of a specific section in the CPC/2015, which removes the prioritization of attorneys’ fees over tax credit payments.

Paragraph 14 of Article 85 of the Code of Civil Procedure is constitutionally valid regarding the prioritization of attorneys’ fees over tax credits, including contractual fees, as outlined in Article 186 of the CTN.

Judgment was rendered by the Full Court on 31/03/2025 and published on 22/05/2025 in the case with registration number 1326559 from the state of Santa Catarina, according to Minister Dias Toffoli.

What was the legal dispute examined by the Supreme Court?

The background of the deadlock:

• Tax credit takes precedence over all others, except for credits related to labor laws or workplace accidents, as stated in Article 186 of the CTN.
• Attorneys’ fees are given priority over taxes in labor credits according to Article 85, Section 14 of the Civil Procedure Code.
• Lower courts, like the TRF-4, realized that a regular law (CPC) could not restrict the tax credit privilege outlined in complementary law (CTN) and thus could not deny priority to the fees.
• The Supreme Court’s ruling changed the previous interpretation by acknowledging that fees should be considered as food expenses and treated similarly to labor credits for priority purposes.

The CTN was recognized as the Supplementary Law under the 1988 Constitution (Art. 186, III).

What were the basic principles and real-life impacts of the Supreme Court ruling?

• Honoraries are essential funds for lawyers’ survival and should be protected like labor credits.
• The Supreme Court deemed it suitable and constitutional to enable lawyers, given that they are independent professionals whose pay is connected to protecting rights and ensuring access to justice.
• Labor credits and attorneys’ fees prevalence over taxes.
• Lawyers’ fees should be prioritized over taxes in cases involving creditors, executions, bankruptcy, or judicial recovery.
• The regulation applies to inheritance taxes, fees determined through arbitration, or fees agreed upon in a contract, as long as they are officially acknowledged in a court decision or by an approving authority.
• Magistrates who disrupt the system violate established rules and make significant mistakes.

Examples that demonstrate the new interpretation of the Supreme Court.

• The attorney can ask to set aside and receive the amounts owed to them before paying off other creditors, including the government, in a judicial execution process.
• Lawyers can ask for preferential treatment in receiving their fees if values are kept in reserve by pawning “in the face of the selfs.”

What modifications will be made to attorneys and the Public Farm?

• Lawyers now have their right to payment clearly acknowledged, giving them greater assurance of receiving fees for significant cases.
• Public finance must prioritize the essential purpose of fees and cannot withhold them until the tax debt is fully settled.
• Judges and courts must adhere to the preference explicitly, or face nullity and go against the Supreme Court’s binding decision.

STF ensures that attorneys’ fees are given priority.

The Supreme Court’s decision is a step forward in valuing legal representation in Brazil, acknowledging the essential nature of lawyers’ fees and ensuring their priority in receiving payments in legal cases, including from the Public Treasury.

This new mandatory guideline removes uncertainties about the hierarchy of values, providing increased predictability and legal assurance for legal professionals and judges who rely on competent and easily understandable guidance.

The Supreme Court’s emphasis on attorney’s fees underscores the crucial role of advocacy in ensuring access to justice and highlights the significance of legal work in defending fundamental rights.

Lawyers, judges, creditors, and Public Finance need to modify their approaches and tactics in cases with conflicting debts to adhere to the new payment hierarchy established by the Supreme Court.

STF approves out-of-court asset recovery by default.

What was the primary ruling of the Supreme Court regarding lawyer fees in 2025?

Attorneys’ fees, such as those agreed upon in contracts or determined through arbitration, take priority over tax credits in legal proceedings, as per the Supreme Court’s decision in the trial of RE 1.326.559/SC (Theme 1.220).

The Court confirmed the constitutionality of §14 of Article 85 of the CPC, acknowledging that the fees are considered essential and equivalent to labor credits for priority purposes.

What is the updated sequence for settling debts following the Supreme Court ruling?

The newly established hierarchy is:

1) Food credits include labor costs and legal fees. 2) Tax credits. 3) Excessive number of credits.

Attorneys’ fees should be settled first using tax credits rather than labor credits in cases involving creditors, executions, bankruptcy, or judicial recovery.

What was the legal dispute that prompted this Supreme Court ruling?

Article 186 of the CTN gives priority to tax credit over any other except for labor credits. Nevertheless, §14 of Art. 85 of the CPC considers attorney’s fees equivalent to labor credits, leading to a conflict.

Lower courts, like the TRF-4, recognized that a regular law (CPC) could not restrict the tax credit privilege outlined in the supplementary law (CTN) and thus could not deny priority to the fees.

What kinds of lawyers’ fees are considered in this ruling?

The ruling applies to various kinds of legal fees, including those specified in contracts, arbitration, and court decisions, as long as they are formally acknowledged.

These various fees are all prioritized ahead of tax credits.

What are the real-world implications for attorneys?

Lawyers now have increased legal assurance when receiving their fees, no longer remaining in the shadows before tax authorities.

They can ask for the booking and payment of fees before receiving the tax credits, even if it involves pledging “on the face of the autos,” guaranteeing precedence in collecting the fees already acknowledged.

How will this choice impact the Public Treasury?

The Public Treasury is required to acknowledge that attorneys’ fees have a food nature and cannot withhold them until the tax debt is fully paid.

Tax credits are given less importance compared to legal fees during court cases.

What are the consequences for judges and courts that overturn this ruling?

Magistrates who disregard the newly established preference order set by the Supreme Court are in breach of binding precedent and risk having their rulings invalidated due to significant material errors.

Judges and courts must prioritize attorneys’ fees over tax credits, or else face nullity and disrespect the Supreme Court’s decision.