Attorney and tax consultant liability

Attorney and tax consultant liability

 

The core competencies of our trial lawyers include disputes between lawyers and tax consultants and their former clients. In this respect, we have advised and represented law and tax consulting firms in the defence against such claims, as well as former clients in the enforcement of such claims. During his time at Arnold & Porter Kaye Scholer LLP, Alexander Druckenbrodt was involved in highly publicised proceedings in Dr. Michael Weigel’s team for many years.

Attorney and tax advisor liability in Germany is shaped by the case law of the IXth Civil Senate of the Federal Court of Justice, which seems never tired of defining ever new obligations that an attorney or tax advisor can violate from the mandate contract with his client. In his ten years as a lecturer in the field of lawyers’ and tax advisors’ liability, Alexander Druckenbrodt has always told the participants in his lectures that as a lawyer or tax advisor they will certainly commit a breach of duty relevant to liability at least once a week, but that this will only rarely lead to damages that are eligible for compensation. Even if members of the Senate reject this far from themselves in a personal conversation, we are firmly convinced that one of the main reasons for the wide range of obligations for lawyers and tax advisors is the existing insurance obligation for financial losses resulting from professional breaches of duty.

This overflowing jurisdiction is both a curse and a blessing for lawyers and tax advisors as well as for former clients. On the one hand, it is hardly possible for lawyers and tax advisors to avoid liability relevant breaches of duty in the processing of mandates. On the other hand, they can already limit their liability risk in terms of content and scope by drafting their mandate contracts. Furthermore, even in the case of advice in breach of duty, the question arises whether this advice has led to any damage at all and, if so, whether this damage could have been limited by advice in accordance with duty. For former clients, on the other hand, it is primarily a matter of checking whether they have been comprehensively informed by their lawyer or tax advisor about the opportunities and risks of the path proposed by the advisor. 

Liability of the former consultant is also conceivable if he has not chosen the safest solution among several options (Gebot des sichersten Weges) open to the client. In favour of the client, it applies in principle that he would have relied on a dutiful result of the consultation and followed the advice based on this.

We advise and represent both lawyers and tax advisors who are called upon by former clients and, thanks to our many years of expertise, we can help you to convince your insurer, who basically has the right of direction and also the regulatory authority, to let us represent you.

Even though lawyers and tax advisors are obliged according to established case law to inform their clients about their own breaches of duty, experience shows that such information is almost never given in practice. Especially if you are not satisfied with the results of your legal representation or tax advice, we are at your disposal to check the advice given to you for breaches of duty by lawyers or tax advisors and to enforce any existing claims for you.

Auditors are also liable for their own culpable breaches of duty and for those of their assistants and legal representatives assisting in the audit for damages in accordance with § 323 (1) HGB, even if their liability for negligent breaches of duty is limited by law to certain amounts. Recently, judgments have been rendered according to which the unrestricted certification of annual financial statements, which were prepared even if the company was legally bound to file for insolvency, also constitutes a breach of duty by the auditor and is therefore liable for damages.

During his time at Arnold & Porter LLP in Frankfurt am Main, Alexander Druckenbrodt also worked in a responsible position in large-volume litigation in which we represented international business law firms in defending alleged breaches of duty by lawyers or tax advisors. I have also advised and represented clients in such disputes who accused their former lawyers or tax advisors of breaches of such duties.</span

Please feel free to call us without obligation. We will support you both in defending and enforcing claims arising from attorney and tax consultant liability.