Professional Liability of Lawyers in Netherlands (Part II)
This article on professional liability law for lawyers in the Netherlands in 2025 elaborates on some risks that lawyers face and discusses ways these risks can be mitigated. An important way risks can be mitigated is linked to the mandatory professional liability insurance that lawyers practising under Dutch law must take out.
"The insured lawyer”: mandatory professional liability insurance
The Legal Profession Byelaw states that a lawyer practicing under Dutch law must be adequately insured for the risk of professional liability. The rationale behind this insurance requirement is to provide security to the public that each lawyer will have sufficient recourse in the event of damages for professional errors. The Legal Profession Byelaw also sets the minimum requirements that the lawyer’s professional liability insurance must meet: the minimum sum for which insurance must provide coverage is EUR 500,000 per claim and at least twice that amount per policy year. Big law firms, however, usually have multiple this amount insured.
A lawyer who has fulfilled this ''insurance obligation'' may, in line with the rationale behind this insurance obligation, agree in writing with the client that the professional liability, separate from the amount of the deductible, will be limited to the amount of payment of the insurance policy. It is not possible for lawyers to exclude their entire liability in advance because this is not consistent with the purpose of the insurance requirement that every lawyer provide sufficient recourse to cover the consequences of professional liability.
Disclaimers
Dutch lawyers are required to issue an engagement letter or confirm the essentials of the engagement in writing. It is common to include a disclaimer in the engagement letter or in the general terms and conditions applicable to the engagement letter.
As mentioned above, lawyers are restricted in their ability to limit liability. Disclaimers usually state that the law firm’s liability is limited to the amount paid by professional liability insurers, and any deductible is born by the law firm.
Engagements are often provided exclusively to the law firm and carried out under the responsibility of the law firm. This means that the law firm (and not the lawyer as natural person) should be considered as the contractor in relation to the client. In this regard, the effect of articles 7:404 and 7:407 sub 2 of the Dutch Civil Code (DCC) are excluded. As a result, the consequence should be that only the law firm and not the lawyer is liable if the lawyer fails to perform the assignment. To make sure that the respective lawyer may rely on this clause, it is often explicitly stated in the conditions that this provision can also be relied on by the lawyer involved (i.e. a "third-party clause”).
Professional liability policies often cover the insured’s liability for auxiliary persons engaged. For professional liability insurers, it is relevant that these engaged auxiliary persons may also rely on the contractual provisions, which contain a limitation of liability. Therefore, it is often stated explicitly in the conditions of the engagement (again in the form of a third-party clause) that these contractual provisions are stipulated for the benefit of and may be invoked by natural and legal persons affiliated with the law firm or other third parties who are or have been directly or indirectly involved in the provision of services.
A client’s "obligation to complain”
Another aspect that should be taken into account when assessing a potential lawyer's liability claim, is the time that has lapsed between the alleged defective performance and the moment a complaint arises. Apart from the fact that a client’s claim against a lawyer may be time barred, a client’s claim against a lawyer may be dismissed without getting to the substantive assessment of the claim because of the legal "obligation to complain” under article 6:89 DCC. Article 6:89 DCC states that a client may no longer rely on a defective performance if the client has not complained within a reasonable time after the client has discovered or should have discovered the defect. If this period expires, the client will lose its legal claims and defences regarding performance, suspension, damages for breach of contract, tort, error, fraud, but also the right to rescission. In other words, a client has an "obligation to complain” towards its lawyer or the law firm under penalty of forfeiture of rights based on article 6:89 DCC.
In order for the "obligation to complain” to be met, all the circumstances of the case must be taken into account, including the nature and content of the legal relationship, the performance and the alleged professional error. It is also important whether the lawyer suffers prejudice because of the lateness of the client's complaint. The time elapsed between the time when awareness of the alleged deficiency existed or reasonably should have existed and that of the protest is an important factor, but it is not decisive (ECLI:NL:HR:2013:BY4600, paragraph 4.2.6.).
A lawyer may specify the way in which this ''obligation to complain'' should be fulfilled (e.g. in the contract or the applicable general terms and conditions), such as the period, after discovery of a professional error, when a complaint must be made, the manner this must be done and the supporting documents that must be submitted. It should be noted, however, that a lawyer who acts on behalf of a consumer is subject to restrictions. For example, a provision that shortens statutory limitation or expiration periods to less than one year is unreasonably onerous and therefore voidable and a provision that stipulates if a consumer fails to complain his rights lapse, is presumed to be unreasonably onerous, unless this sanction can be justified. Also, under certain circumstances, reliance on a breach of the obligation to complain may be deemed unacceptable by the standards of reasonableness and fairness if, for example, a complaint was made after the stipulated term, but the contractor's interests were not reasonably prejudiced as a result (ECLI:NL:HR:2013:BY4600). In making this ruling, a judge should exercise restraint, especially if both parties are considered professionals (ECLI:NL:HR:2004:AP1664, paragraph 3.5).
A judgement of the Dutch Supreme Court in 2021 states that the scope of the client’s "obligation to complain” is not unlimited. If a lawyer did not perform services at all, the obligation to complain does not apply. In this specific matter leading to the Dutch Supreme Court judgement, the lawyer had, after sending one initial letter on behalf of his client, effectively ceased to represent his client's interests and omitted any performance. The lawyer attempted to avoid liability by relying on a breach of the obligation to complain but was unsuccessful. This was because the purpose of the obligation to complain is to protect the debtor who has rendered a service. The latter must be certain the creditor will investigate whether the service is in accordance with the obligation and, if it is not, the creditor will be notified. This issue, however, does not arise in the case of no performance at all (ECLI:NL:HR:2021:1536, paragraph 3.3).
Duty of the insured to report to professional liability insurers
According to the previous paragraph, if a client takes the view that its lawyer made a professional error, the client should complain about this alleged professional error within a reasonable time (based on article 6:89 DCC) and within applicable contractual time limits. If the client fails to do so, the lawyer in principle cannot be held liable.
According to Dutch insurance law (article 7:941 paragraph 4 DCC), a similar duty rests on an insured lawyer who has a duty to inform his professional liability insurers in a timely manner of circumstances that may lead to a claim under professional liability insurance. If the lawyer fails to do so, an insurer may refuse to pay benefits, limited to the extent that the insurers interests have been damaged by being deprived of the opportunity to assess the feasibility of the case.
Conclusion
This article, which explored ways in which a lawyer can limit liability risks, can also be useful and beneficial for professional liability insurers. In practice, however, liability cannot always be avoided. Therefore, the next article in this series will examine how damages must be determined if a lawyer is liable.
For more information on liability issues for lawyers in the Netherlands, contact your CMS client partner or the CMS experts who wrote this article.