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Legal expenses insurance: BGH ends 40 years of discussion

In its ruling of February 13, 2020, the Federal Court of Justice (file no. IX ZR 90/19) confirmed a ruling of the Berlin Regional Court (file no. 5 S 22/18), which PASCHEN Rechtsanwälte had won. According to this ruling, the legal protection insurer is entitled to its own claim for information against the attorney of its policyholder as a result of the costs incurred by the insurer.

The legal protection insurer represented by PASCHEN in the proceedings had received a payment from the lawyers of its policyholder. However, they initially refused to explain what the payment referred to, citing their obligation of secrecy. Furthermore, they argued that their duty of confidentiality prevented them from informing whether their client’s opponent had been ordered to pay the costs and whether further payments due to the insurance company could therefore be expected.

This means that a question that has been controversially discussed for several decades has finally been decided by the highest court, fortunately in the spirit of pragmatic practice.

The insurer is allowed to address its questions directly to the lawyer and does not need to burden the legally inexperienced policyholder with the burden. The lawyer, for his part, need not fear the accusation of a breach of his duty of confidentiality if he – entirely in the interests of his client – directly provides the insurer with the requested information.

The BGH decided in favour of a legal justification based on the transfer of rights to the insurer in accordance with § 86 of the German Insurance Contract Law (VVG), which is linked to the advance payment of costs. The obligation of lawyers to maintain secrecy does not conflict with the insurer’s right to information, since the policyholder had tacitly given his consent to the provision of information with the request to obtain a confirmation of cover.

You will find more detailed information in our top topic “Information obligations of lawyers: Federal Court of Justice ends decades of discussion about direct claims of legal expenses insurance”.