The criteria for free legal aid have changed across all branches of the Judiciary, opening the way for companies to challenge the benefit.
The Supremo Tribunal Federal (STF, Brazil’s Federal Supreme Court) has concluded the judgment of ADC No. 80 (Declaratory Action of Constitutionality) and redefined the criteria applicable to those who apply for free legal aid. The Court set aside the parameter laid down in the CLT (Consolidation of Labour Laws) and created provisional rules, which will apply until the matter is addressed by statute. In practice, those earning up to BRL 5,000.00 will benefit from a presumption that they lack sufficient resources, while those earning above that amount must prove their need.
The criteria for those earning up to BRL 5,000.00
Up to that amount, the judge presumes insufficiency of resources. The party does not need to assemble a dossier in order to obtain the benefit.
The presumption, however, is not absolute. The judge may set it aside where there are assets or household income incompatible with the claim of poverty. For that reason, examination of the particular case remains relevant.
The threshold will not remain static. It will track the Income Tax exemption bracket and, if there is no annual adjustment, it will be restated by the IPCA (Brazil’s official consumer price index).
Above the threshold, the party must prove need
Those earning more than BRL 5,000.00 must demonstrate in concrete terms that they are unable to pay court costs. The judge may request supporting documents. A mere declaration of insufficiency of means is therefore no longer sufficient in itself.
As a result, the consolidated case-law of the TST (Superior Labour Court), which accepted a natural person’s declaration as sufficient evidence, loses force. The controversy arose in the labour sphere, but the criteria are expected to apply across all branches of the Judiciary.
What changes for companies facing claims
Companies gain stronger grounds to challenge free legal aid where there are objective indications of the other party’s economic capacity. For example, documents evidencing income or assets may support such a challenge. It is therefore advisable to keep such material from the outset of the dispute.
The decision applies only to proceedings filed as from publication of the record of judgment. Earlier actions remain subject to the previous rules.
In our view, the change is likely to make the debate on court costs more document-based, which calls for careful organisation of evidence. The next step is to review the full judgment and the date of the record in order to determine whether each pending action falls under the new rule.
Read further legal news commented on by the firm and the articles by Moraes de Freitas Advogados.