Contractor hired external advisor without permission?

Contractor hired external advisor without permission?

Contractors often hire external experts to provide specific recommendations and advice. Consider environmental reports with a construction contract, for example, or tax advice during an acquisition. In a recent case in the Netherlands, a law firm hired an external lawyer for advice concerning an appeal to the Supreme Court. However, the client refused to bear the costs of this. According the client, he had given no permission whatsoever for this assignmentDutch debt collection lawyer Hidde Reitsma explains the issue.

 

Law firm recommends external appeals consultancy to client

A client had hired a law firm for support in a dispute. The client lost his case in the Dutch courts. The law office then advised the client to request a recommendation from an external appeals lawyer about the feasibility of an appeal to the Supreme Court. When the client asked what the costs of the appeals recommendation would be, he was told that another case had cost approximately €5000. “I can still handle that” was the client’s answer.

Appeals lawyer’s cost summary sent by e-mail

The law firm was to request a cost summary from the appeals lawyer X. A few weeks later, appeals lawyer X e-mailed the law office that a cassation recommendation would cost between €4500-€5800. The law firm agreed to this. This exchange of e-mails was then forwarded to the client with the accompanying text: “FYI”. The recommendation was drawn up.

Did the client give permission for this assignment or not?

When the client was later given the invoice, he was “not amused”: he had not issued the assignment and, furthermore, had already requested a cassation recommendation elsewhere. He refused to pay the costs. In debt collection proceedings, both the Dutch District Court and the Supreme Court found against the law firm. The simple fact that the appeals lawyer’s quote was roughly the same amount as the amount mentioned previously to the client, and about which the client had said that he “could still handle that” at that time, constituted insufficient grounds for presuming that client had approved the issuance of the assignment to the appeals lawyer.

“FYI” e-mail sent is insufficient permission

The law firm position that client could be presumed to have tacitly approved the assignment by not protesting to the e-mail exchange with the appeals lawyer also made no difference. The e-mail exchange was forwarded with the text “FYI” as its only explanation. Nothing showed that the client’s permission was asked. Furthermore, the client was abroad at that time and had only limited access to Internet. In the event of a superficial reading of e-mails, it was logical that he would skim over this. Therefore, the law firm should have requested explicit permission. Since this hadn’t been done, the law firm was liable for the costs.

AMS specialised in international debt collection disputes

So contractors should be prudent when hiring external advisers and should request explicit permission from the client and confirm this in writing before issuing the external assignment. When incurring other costs that have not been contractually agreed, written recording of the approval is also to be recommended. This prevents disputes such as this one.

Hidde Reitsma - Advocatenkantoor AMS Advocaten
Hidde Reitsma Hidde has a varied consultancy and litigation practice, focusing on corporate law and insolvency law. He frequently acts in proceedings before the Enterprise Chamber of the Court of Appeal in Amsterdam and in cases on directors’ liability. Hidde also advises on drawing up and negotiating contracts, mergers and acquisitions and joint ventures. Follow Hidde also on Google or LinkedIn. Hidde is available via e-mail and +31 (0)20-3080315.
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