If a lawyer who actually carried out an instruction but who is not the contracting party of his client, is personally held liable on the basis of an unlawful act, the successful reliance on this does not require that he or she can be personally seriously blamed.
Introduction
‘This case has been one of the most difficult in over seventeen years in which I was allowed to produce an opinion,’
so says Advocate General Spier in his opinion in the judgement of the Supreme Court of 18 September 2015.
The judgement is very relevant for practice as further clarification is given of the criterion for personal liability of a lawyer.
In the present dilemma, the Supreme Court did not follow Advocate General Spier in his opinion. Contrary to the ruling of the Supreme Court, the Advocate General is of the view that personal liability of a lawyer (for example, an employee of the client or a director of a private limited company who is a partner in a partnership that has accepted the instruction) on the basis of an unlawful act pursuant to Article 6:162 of the Dutch Civil Code requires ‘additional circumstances’. ‘Additional’ appears to be: more than the mere observance that the contractor himself has fallen short in their performance. A ‘sloppy performance’ could be such a circumstance.
The Advocate General warns against unrestrained personal liability of those who, in the employment of another, carry out work in respect of the instruction accepted by that other party. In principle, caution should be observed with such personal claims against an employee who in the context of acting on files seems to cause loss. But the Supreme Court is averse to any ‘raised liability threshold’.
The problem here transcended – as is often the case – this issue. It concerns the formulation of general rules, in this case relating to personal liability of a lawyer in the event of a professional error, in those situations where such general rules possibly do not do justice to the specific circumstances of the case.
Where is this line drawn and what is the criterion for answering the liability question? The Advocate General justly states:
‘The panacea for such problems is the well-known platitude that the answer in a specific case depends on the circumstances of the case.’
Background and professional error
What was the case here?
Former client (A) had granted a loan of EUR 1 million to Alasco Vastgoed, for which he acquired several sureties and a mortgage interest on a plot of land as security. Not only did Alasco Vastgoed go bankrupt, so did the sureties. Then Murphy’s law struck again when the parcel of land appeared to be worth less than was anticipated.
As regards the loan, A was advised by both a partner of the law partnership and by a lawyer employed at that firm. The instruction for advice was granted to the partnership.
Both the partner and the employed lawyer were held personally liable by A on the basis of attributable failure and unlawful act. Without success. The District Court and the Court of Appeal ruled that the instruction was granted to the partnership and not to the relevant lawyers personally. No facts had been alleged that could constitute a personal serious blame or an unlawful act personally carried out by them. The assertion that they had not advised properly or even seriously failed in their service provision as a lawyer is insufficient for such a conclusion, so ruled the Court of Appeal.
On appeal to the Supreme Court, A complained that the Court had failed to recognise that a lawyer who makes a professional error acts unlawfully towards his client, irrespective of whether or not he is contractually to be regarded as the contractor. The criterion of ‘personal serious blame’ as set by the Court of Appeal, would not be required for that.
The Supreme Court: personal serious blame is not a requirement
The Supreme Court overturned the judgement of the Court of Appeal, referring the case to a different Court of Appeal for further hearing and ruling. It included some very relevant legal grounds with respect to the above assessment framework.
The Supreme Court first referred to the principle from its judgement of 29 May 2015 (in a different case) that:
‘[…] as a professional, a lawyer must exercise the care that may be expected from a reasonably competent and reasonably acting professional colleague. This duty of care means inter alia that a lawyer who advises a client in the context of a decision to be taken by the client on a particular issue enables the client to make a well-informed decision.’
Liability pursuant to an unlawful act by the lawyer who has actually carried out the instruction but who is not the contractual party, can, according to the Supreme Court, only be assumed with observance of the requirements set to this end in Article 6:162 of the Dutch Civil Code. This is the case for example, if an instruction is granted to a law partnership and the instruction is actually carried out by an employee or by a lawyer who factually participates in the partnership through his personal partnership.
In such case, in the assessment of the liability issue, the above cited criterion is partly decisive. It is not required that the ‘raised liability threshold’ of personal serious blame can be made in respect of (advice) work.
The criterion of ‘personal serious blame’ previously applied by the Court of Appeal in this case, originates from directors’ liability issues. A director of a company can only be liable toward third parties in addition to the company on the basis of an unlawful act if the director – stated briefly – can be attributed sufficiently serious personal blame, so stated the Supreme Court in its judgement of 8 December 2006 (Ontvanger/Roelofsen). In the current case, although the partner of the partnership of a lawyer was held liable – which partnership was a member of the law partnership – but there is only room to accept the aforementioned criterion where it relates to acts of the relevant party in the performance of his duty as a partner of a partnership that caused loss through an attributable failure or through an unlawful act.
However, in this case it concerned a professional error by an employed lawyer. If a lawyer is held liable by his client for an unlawful act based on a professional error, this relates to his liability as a professional and not to his liability as partner of a partnership.
This has made it clear that a different assessment criterion applies to a partner than to a professional such as a lawyer.
In view of this judgement, it is even more relevant for law firms to exonerate liability of and for the actual performer of the instructed work (both for the office and its employees). An exoneration clause – in principle – also has effect in the event of liability on the basis of an unlawful act. In particular in the event of the bankruptcy of the contractor, an employed lawyer for example who is not also the contractor could then be personally liable for an error made by him.
As we have been able to observe above, the Supreme Court has not set the bar extra high for this: it does not even require a sloppy performance.
By Daan Baas