The liability of legal advisers, especially lawyers, in Germany has been expanded significantly in recent years. Professional liability primarily follows the rules that German civil law recognises for contractual and tort liability.

Professional law reviews have highlighted that while there exist several codes containing specific rules for different professions, the German Civil Code (BGB) provides the core legal framework from a liability perspective.

It contains the applicable rules regarding both liability on the merits in contractual and tort law and the material rules for calculating the amount of damages. The BGB generally requires negligent conduct by a contracting party or a tortfeasor in liability claims.

German civil law acknowledges a strict segregation between liability from contracts and from tort. While it is possible that the facts of the case establish liability on the basis of both legal doctrines at the same time, the legal requirements of the two regimes are quite different. The most striking differences between the contract and tort regimes are:

1. the law assumes fault by a contracting party whereas, in contrast, the plaintiff has to positively show and prove the tortfeasor's fault; and

2. in cases of contractual liability, damage consisting of pure financial loss is recognised, while for tort liability this is only the case to a very limited extent.

German liability recognises strict liability but not in terms of professional liability – mainly in areas such as product liability pursuant to the EU product liability directive, or motor liability.

Claims under German civil law are subject to limitation. There are several different limitation periods, but practitioners have seen an effort over the past few years to align those different periods to a similar standard to make the statute of limitations more predictable.

The multitude of limitation periods include six months in certain claims arising from rental contracts, one year in certain commercial contracts, two years in warranty claims pursuant to sales contracts or even 30 years pertaining to rights in rem. The standard limitation period for liability claims is three years.

Key liability areas include;

Medical

German medical practitioners must obtain and maintain 'sufficient' insurance cover. The fact that the duty to obtain and maintain sufficient liability insurance is enacted in acts promulgated by the state chambers is sufficient to qualify the insurance as compulsory pursuant to Section 113 VVG, as the states have empowered the chambers to impose the obligation.

Some state laws provide a requirement for compulsory insurance, but there does not exist a federal law in this respect. ADR plays a relevant role in medical liability cases.

Banking and finance

In Germany it is common that banking products (e.g., funds, company shares, derivative instruments or bonds) are sold by banks (through their employees) themselves, thus professional liability of banking and finance professionals is usually litigated against the bank itself. Any breaches of duty by those professionals are attributed to their employers, usually a bank. Section 34f/34h/34i GewO requires liability insurance for finance brokers, making coverage of this kind compulsory pursuant to Section 113 et seq. VVG. There are no notable peculiarities regarding professional liability of computer and information technology professionals.

Real estate, property and construction

Real estate agents, loan brokers, property developers, construction supervisors and residential property managers require permission to engage in their commercial activities and this permission is not granted if the residential property manager cannot provide proof of professional liability insurance. The doctrine of secondary liability is still applicable in the liability law of construction professionals.

Accountants and auditors

All tax accountants and auditors offering their services in Germany must obtain and maintain compulsory insurance pursuant to Section 67 et seq. of the German Tax Accountants Act and Section 54 of the German Auditors Act.

Insurance professionals

Insurance agents and insurance brokers require liability under Section 34d GewO making such insurance compulsory pursuant to Section 113 et seq. VVG. The extent of the minimum coverage is regulated by Section 8 et seq. of the German Regulation on Insurance Mediation.

If you wish to discuss any insurance questions or have any queries, please visit www.wdenis.eu or contact Vida Jarašiūnaitė Vida.Jarasiunaite@wdenis.eu