Prohibition of remuneration and activity in the case of a lawyer’s second profession, in particular professional guardianship

In the practice of the guardianship, insolvency, execution and probate courts, a professional lawyer is often selected and appointed by the court, especially in more difficult cases as guardian, insolvency administrator, sequestrator or guardian of the estate (second professional).

The aim of the court is thus to appoint a person who is suitable and not overburdened. It is not uncommon for the court to expect that the professional lawyer then, not only as a second professional, for example, but at the same time as a lawyer, also handles the so-called lawyerly matters or activities in his own person. For lawyers, such tasks are naturally welcome, as they allow them to attempt to increase their average remuneration through partial billing in accordance with the BRAGO or the RVG.

But these ideas of counsel and the court are regularly not free from legal error.

 

I. First and second professional activity prohibition

The legislator distinguishes between the first profession (lawyer) and the second profession (guardian, executor, sequester, pp.), § 45 BRAO. 1. second profession decision of the BVerfG and incompatibility according to BGH The Federal Constitutional Court has clarified by its decision of 4.11.1992 that a lawyer may not be admitted to the bar in particular only if a conflict of interests due to the temporary profession is obvious.

This is the case, for example, if the lawyer is active in a secondary profession as a real estate agent or broker of capital investments, because these secondary professions, as commercial activities, offer the possibility of using information that originates from the legal advisory activity (or vice versa). The jurisdiction of the Federal Constitutional Court is on the line “in dubio pro libertate “, so that recently also the strict prohibition of commercial activities of the tax adviser according to § 57 StBerG is on the verge.

Secondary occupations are not, as a rule, a constitutional obstacle for lawyers: the situation is different, however, when the two professions may be in contact with each other.

 

II. prohibition of activities according to § 45 BRAO

Two years after the decision of the Federal Constitutional Court, the legislature has restricted the possibilities for the legal profession to practice both in a second profession (e.g. guardian) and in a first profession (lawyer). With the amendment of the BRAO in 1994, the legislator ensured that the second profession may not essentially be “misused” to promote the first profession (lawyer). The reverse case, where the first profession (lawyer) is used to “generate” future assignments in a second profession (e.g. executor) has also been severely restricted.

 

(a) previous and continuous activity in the primary profession (lawyer)

A typical case in practice is that an attorney writes to the guardianship court, indicates his representation (as an attorney), and represents an affected person in proceedings concerning the order or scope of guardianship.

At the same time or later, he then submits a “general power of attorney” and/or a “guardianship order” in his favour to the court and/or requests that the current attorney be appointed as guardian. According to the clear wording of the law, the legislator has forbidden that the lawyer (as long as he is subject to the professional code of conduct, i.e. admitted as a lawyer) first works as a lawyer and later carries out an activity “in the same matter” in a second profession, § 45 BRAO. This has the consequence that the lawyer can certainly advise a client when it is a question of a patient’s will, a guardian’s will, a power of attorney for health care, an estate or a testament: However, the simultaneous or subsequent activity in a second profession is prohibited, § 45 para. 2 No. 1 BRAO. This applies, incidentally, quite independently of whether a “conflict of interest” actually exists.

 

b) Previous and/or ongoing activity in a second profession (e.g. carer)

In practice, in the appointment of guardians, the court sometimes orders “representation in divorce proceedings”, “verification of the validity of gifts”, “conduct of insolvency proceedings”, and the like, as the scope of activity. The guardian may take this as an indication of what, from the court’s point of view, he has to pay particular attention to as a task, but nothing more.

For according to the absolutely prevailing opinion in commentary literature and the practice of the professional courts for lawyers, it is forbidden for the (lawyer’s) second profession to be active as a lawyer as long as his second profession (e.g. also landlord, property manager, asset manager, writer, pp.) is concerned with “the same matter “, § 45 BRAO. The consequence of this is that the (legal) professional guardian may not represent the interests of the person being cared for as a “divorce lawyer” or “procedural representative” in the appeal proceedings. This applies “as long as the secondary professional activity ” continues, § 45 para. 2 No.2 BRAO .

Therefore, the second professional lawyer can only give legal advice or represent the holder of the estate or his heirs (not the predecessor of the estate) after the termination of his office. In practice, this means that a lawyer working in a second profession, as a landlord (of his own property), is not allowed to assert his rent claim (temporally, as long as he has not yet given up renting as a profession) himself as a lawyer. Moreover, the second professional could not even “mandate” himself, because this is excluded from the outset by §§ 181, 1795 BGB (no effective mandate, no self-contracting).

However, the prohibition of activity does not only include the inadmissibility of litigation by the second professional in the interest of the administered assets, but also the (lawyer’s) judicial enforcement of own claims from the second profession, in particular own fees or own remuneration. This applies as long as the secondary professional activity has not been completely terminated. As a practical matter, it follows that a secondary practitioner may not personally (without the intervention of a fellow attorney) appeal a court order ” not solely for his or her compensation ” in his or her own person as an attorney so long as his or her office in the secondary profession is continuing.

 

c) Separation requirement

The separation between the first and second professions is intended to prevent conflicts of interest from the outset; it serves to ensure the proper functioning of the administration of justice . The lawyer may not act if he is involved in a matter outside his legal activity (in his second profession): This applies temporally as long as the (second) professional involvement continues, § 45 para. 1 No.4 BRAO . In the opposite case, i.e. in the case of prior referral of a matter as a lawyer, the second professional activity is valid for a (lawyer’s professional) lifetime, because as long as the lawyer is subject to § 45 para. 2 No.2 BRAO. II. Prohibition of remuneration and duty to delegate According to the absolutely prevailing opinion, § 45 BRAO means a prohibition of activity with the consequence that in consequence of the (prohibited) lawyer’s activity no remuneration according to the BRAGO (from 1.7.2004: RVG) accrues.

This becomes all the more clear since § 45 BRAO is treated as a so-called abstract endangering offence or a sub-case of the conflict of interests in professional law and doctrine . The violation of the prohibition of activities of §§ 45 f. BRAO leads to the nullity of the mandate agreement according to § 134 BGB . Consequently, claims from GoA or according to § 812 BGB are excluded from the outset, § 817 BGB. It is common practice for secondary professionals to recover their expenses, including those under sections 670, 1835 para. 1, 3 BGB from the assets administered by them: In such cases the accounting officer, auditor or judicial officer shall, when checking the accounts, verify whether the remuneration has in fact validly accrued. This can be the case, for example, if a party in kind would have called in a professional, but the activity in question was carried out in a second profession (e.g. a guardian of an estate prepares a tax return in a second profession).

This requires judicial review because, as a rule, it is only in the case of an activity specific to the first profession that the application of the fee schedule of the first profession opens up. Therefore, it can only be recommended to the lawyer working as a second professional to mandate a colleague in case of the necessity of legal work. It is remarkable, however, that the courts sometimes acknowledge this by reducing the remuneration to the minimum rate because of the delegation.

This may be justified in individual cases, namely if, for example, the guardian has not carried out a legal examination. However, if the guardian, for example, has done all the legal preparatory work, he can at most agree on a fee-sharing arrangement with the colleague to be instructed, taking into account § 49 b BRAO. How this would be assessed against the background of § 45 BRAO is currently open. For without legal examination it is difficult to judge whether claims of the assets to be administered should be asserted at all or what the factual and/or legal circumstances are, after the examination of which (fact-finding, often time-consuming research) the possible steps to be taken are to be assessed.

Here it is difficult to distinguish between legal and asset management activities. It is up to the person affected by the ban on activities in the primary profession to make a clean break here. According to the prevailing opinion, the determination of the actual state of affairs without advice and/or representation does not yet constitute legal advice and therefore does not constitute a lawyer’s activity, in particular under the RBerG. Therefore, it remains the task of the second-profession lawyer to research the facts of the case, to examine the actual situation from a legal point of view, to decide where a first-profession lawyer must become active, to select and inform him, to monitor him on an ongoing basis, and to personally make the necessary decisions (e.g. in the case of a settlement agreement).

This also applies with regard to the commissioning of other third parties, such as experts, tax consultants, financial planners, auditors, auxiliary and nursing staff. This leads to the fact that the second professional must have the necessity or necessity of each individual measure explained to him, as well as to critically examine the activities of the third party at least for plausibility, and in doing so requires the necessary information from the third party in written or oral form.

 

III Supervision of the Court of First Instance

The prohibitions of activity of § 45 BRAO are not at the disposition of the parties . In particular, no partner or associate may accept a mandate from a second professional, § 45 Para. 3 BRAO: The partner can only be remunerated if he does not know the secondary profession of the legal representative, which should rarely occur in practice.

Consequently, in such constellations, the judicially appointed second professional is regularly obliged to delegate, because it would, according to the HM also a claim according to § 823 para. 2 BGB arise . expenses of the second professional, the latter may claim reimbursement according to the HM without judicial authorisation from the assets administered by him: Therefore, the accounting officer, auditor or judicial officer will be required to check whether, in doing so, any BRAGO or RVG remunerations have been taken contrary to § 45 BRAO. i.V.m. The second professional has taken the same rights as the first professional in accordance with § 134 of the German Civil Code (BGB) for his own legal work.

Remuneration for the work of the second professional is regularly determined by the judicial officer, and it is not uncommon for the withdrawal of expenses to be approved as an order. The judicial officer will already in his own interest and for the protection against a reproach according to §§ 266, 336, 11 Abs. 1 No.2 a StGB also have to take into account § 45 BRAO, because he exercises judicial activity in the area of remuneration. There is also an obligation to this effect because the intentional violation of regulations subject to criminal prosecution renders the insurance cover in the service or property damage liability insurance, including that of the second professional, null and void.

In the event of a claim, the liability insurer may refuse cover if there is a knowing breach of duty: The lawyer must also be familiar with the BRAO. Adequate insurance cover is therefore a criterion for the suitability of the second professional. Knowledge and implementation of the activity ban can be seen as an expression of reliability. The court has to consider the dismissal of the second professional in case of continued violation of § 45 BRAO, because according to the case law, an important reason for dismissal exists, for example, in the case of a guardian, – if his suitability to take care of the affairs of the administered property is not guaranteed, as other important reasons for a dismissal from the office of the second professional are mentioned: – conflict of interests in concrete property matters, respectively a concrete collision of interests which cannot be ruled out, which is already to be feared because § 45 BRAO is a sub-case of the lawyer’s collision regulations in professional law and, in addition, the lawyer has no insurance cover available in the event of damage. – unreliability . – Doubts about the honesty are derived from § 134 BGB, because the lawyer’s activity presents itself as a violation of the law; this also comes into question before the occurrence of damage .

Since the provision of § 45 BRAO has been in force for 10 years, but in practice few lawyers are aware of it, it is not surprising that many a guardianship, insolvency, execution or probate court all too carelessly does not pay attention to delegation by the second professional in accordance with his duties. In view of the liability of the second professional, for example in the case of the guardian under § 1833 BGB, in the case of delegation under § 831 BGB or §§ 276, 278 BGB , the degree of responsibility and the difficulty of holding office in the person of the second professional will rarely be diminished in practice.

 

IV. Summary

A lawyer practising in a secondary profession is prohibited from carrying out legal activities in the same matter. In case of doubt, he is then acting without insurance coverage: There may be a dismissal of the second professional from his office, for example, in the case of the guardian under § 1908 b para. 1 BGB, can be considered for good cause . Nor may he take or receive any compensation “earned” in violation of the law. Delegation in accordance with his duties does not normally reduce the time spent by the second professional, as he also has supervisory duties towards the lawyer with the first professional mandate. The remuneration level of the second professional will seldom be reduced by this, because by delegating he has not relieved himself of any responsibility.

 

by RA Dr. Johannes Fiala and RA Andreas Müller

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About the author

Dr. Johannes Fiala Dr. Johannes Fiala

Dr. Johannes Fiala has been working for more than 25 years as a lawyer and attorney with his own law firm in Munich. He is intensively involved in real estate, financial law, tax and insurance law. The numerous stages of his professional career enable him to provide his clients with comprehensive advice and to act as a lawyer in the event of disputes.
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