Forensic Accountant for Business Litigation in Germany

You need to understand German company accounts?

In order to win a business or corporate law suit, understanding the numbers is often equally important as knowing the legal aspects of the case. The same is true if you plan to acquire a German business. Thus, the German-British litigation lawyers as well as the M&A experts at Graf & Partners (www.grafegal.com) regularly team up with German forensic accountant Hermann Werle.

Hermann obtained his degree in business administration from Regensburg UAS in 1982. Throughout his 25 year career he then worked as inhouse accountant, head of controlling, CFO and company director / CEO for renowned German and international companies and was involved in a number of mergers including Mallinckrodt, Sherwood Davis & Geck and U.S.-Surgical. Thus, Hermann gained a wealth of professional experience in various industrial sectors. While his core competence is finance, he also has practical experience in HR, IT, purchasing, warehousing and distribution.

In 2014, Hermann set up his own financial consultancy firm and provides professional advice to German and international firms, often in collaboration with the German and British litigation lawyers of Graf & Partners. His main focus is on the areas:

  • forensic accounting in cross-border litigation cases and
  • German-British and German-American merger & acquisition deals (financial due diligence)

We have worked with Hermann Werle on dozens of business litigation cases as well as international mergers. Our German as well as our international clients have always been extremely impressed by his skills, in particular his ability to break down and explain the most complex situations to non-accountants, i.e. to litigation lawyers and judges.

More information on litigation and legal fees in Germany is available in these posts:

For more on German business and corporate law see these posts:

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Experts on German-British and German-American Legal Matters

Since 2003, the German business and corporate law firm Graf Partners LLP specialises in British-German and US-German legal cases. Our German business and corporate lawyers are native speaker level fluent in English, have many years of practical experience with clients from Britiain and the USA and are part of a well established network of law, tax and accounting firms.

Managing partner Bernhard Schmeilzl was admitted as German Rechtsanwalt (attorney at law) to the Munich Bar in 2001 and specialises in international cases ever since, with a focus on German-American and German-English commercial, corporate and also probate cases. In addition to obtaining his German legal exams with distinction, he also graduated from the English University of Leicester where he obtained his Master of Laws degree in EU Commercial Law in 2003.

In 2014, Graf Partners LLP has set up the international litigation department GP Chambers which focuses on providing professional litigation services to British and US-American clients, both on a commercial and a private client level. The Graf Partners litigation lawyers regularly appear before German law Courts throughout the country and provide specialist legal advice, support and advocacy services in all commercial and civil law matters, ranging from contract disputes, corporate litigation and employment, to damage claims, divorces and contentious probate. If you wish us to advise or represent you in a German or cross border case, or if you need an expert report on German law, please call +49 941 463 7070.

Pursuing Legal Action in Germany?

You found the German law firm perfectly equipped to address your legal needs in Germany

Since 2003, German law firm Graf & Partners specialises in providing legal advice and litigation services to British and American clients. The majority of our clients come from Britain, the USA or other English speaking countries and are in need of pursuing a legal matter in Germany. If you need a competent and trustworthy attorney anywhere in Germany, our experienced contract lawyers and bilingual litigators will be happy to assist.

The firm’s managing partner Bernhard Schmeilzl and several other lawyers in our litigation team have studied and worked in the USA and/or Britain. As a result, Graft & Partners have established a unique and impressive international legal practice, which focuses specifically on British-German and German-American legal cases and issues. Our Anglo-German lawyer team is headed by British and Canadian citizen Elissa Jelowicki, a qualified English solicitor, and Registered European Lawyer, admitted to the Munich Bar Association. Therefore, foreign clients and instructing lawyers from the UK and America are able to discuss their specific case with a native English speaker, who also knows the English legal system.

Our German and British litigation lawyers appear before German law Courts throughout the country and are also experienced in (Commercial) Arbitration and Alternative Dispute Resolution. We provide specialist legal advice, support and forensic services in all commercial and civil law matters, ranging from contract disputes, corporate litigation and employment, to damage claims and contentious probate. In addition, our family law experts deal with international divorces and child custody matters. In relation to other legal areas, e.g. criminal law or tax, we will be happy to recommend qualified German lawyers from other chambers, who are also fluent in English.

On a regular basis, we speak on German-American and British-German legal issues at lawyer conventions and at in-house events of international companies and law firms. See here for some of the topics we have spoken on recently:

More information on litigation and legal fees in Germany is available in these posts:

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Call the experts on German-British and German-American legal matters

Since 2003, the German law firm Graf Partners LLP with its headquarters in Munich specialises in British-German and US-German legal cases. Our German lawyers are fluent in English, have many years of practical experience with clients from Britiain and the USA and are part of a well established network of law, tax and accounting firms.

Bernhard Schmeilzl_crop1Managing partner Bernhard Schmeilzl was admitted as German Rechtsanwalt (attorney at law) to the Munich Bar in 2001 and specialises in international cases ever since, especially German-American and German-English commercial and probate cases. In addition to obtaining his German legal exams with distinction, he also graduated from the English University of Leicester where he obtained his Master of Laws degree in EU Commercial Law in 2003. 

In 2014, Graf Partners LLP has set up the international litigation department GP Chambers which focuses on providing professional litigation services to British and US-American clients, both on a commercial and a private client level. The Graf Partners litigation lawyers regularly appear before German law Courts throughout the country and provide specialist legal advice, support and advocacy services in all commercial and civil law matters, ranging from contract disputes, corporate litigation and employment, to damage claims, divorces and contentious probate. If you wish us to advise or represent you in a German or cross border case, or if you need an expert report on German law, please call +49 941 463 7070.

Pitfalls of German Law (Part 2)

Be careful when suing a German Kommanditgesellschaft (KG), an Offene Handelsgesellschaft (OHG) or a Gesellschaft bürgerlichen Rechts (GBR)

The single most common mistake foreign claimants and their non-German litigation lawyers make when taking a German business to court is that they only sue the partnership itself and not the personally liable partners (persönlich haftende Gesellschafter).

To avoid any misunderstanding: This post deals with German partnerships (Personengesellschaften) as debtors, not with German limited liability companies (GmbH) or German corporations (Aktiengesellschaft). If the debtor is a German company, then – normally – only the company itself can be sued, not the company’s shareholders. There may be special circumstances when a director of even a shareholder may be personally liable for a company debt (piercing the company veil, in German: Durchgriffshaftung), but this is the exception to the rule.

The situation is entirely different with German partnerships, which come in four different shapes and forms:

  • Kommanditgesellschaft (KG), mostly in the form of a GmbH & Co KG
  • Offene Handelsgesellschaft (OHG)
  • Gesellschaft bürgerlichen Rechts (GbR), also called BGB-Gesellschaft
  • Partnerschaftsgesellschaft (PartG)

What these German partnerships have in common is that there is at least one partner who is liable for all business debts with his entire personal property (Privatvermögen). The relevant statute is section 128 German Commercial Code (§ 128 Handelsgesetzbuch). With regard to the OHG and the GbR all partners are fully liable. With regard to the Kommanditgesellschaft (KG) there are two kinds of partners: fully liable partners (Komplementäre) and limited partners (Kommanditisten), who are only liable up to the amount they have invested.

Now, if you (or your client) have a claim against such a German KG, OHG, GbR or PartG, the biggest mistake you can make is to sue only the partnership itself. This is because with a court order against the partnership you can only enforce your claim against the partnership, i.e. the business assets of said partnership. In many cases, however, it is likely that there are no longer any business assets to go after as the partnership is doing poorly or has even folded.

In these circumstances, you will naturally want to go after the personally liable partners of the partnership. And, you can. But only if you have listed them as joint and several co-debtors (Gesamtschuldner) in your lawsuit against the partnership.

If you (or your litigation lawyer) have not done this, then the court order cannot be enforced against the partners. You will have to start a new lawsuit all over again. In some cases, you may of course face limitation problems by then (German limitation periods are explained here).

Thus, whether you sue the German partnership in Germany or abroad, you must ensure that you do not only list the partnership itself as a defendant but also every personally liable partner which you may want to enforce the court order against at a later stage. Psychologically, this puts much more presure on the defendants and thus increases the chances of payment or a favourable settlement agreement. By the way: the lawsuit costs are not increased by co-suing the partners. So there is no reason whatsoever not to include them in your court claim.

See here for other “Pitfalls of German Law“.

More information on litigation and legal fees in Germany is available in these posts:

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The law firm Graf & Partners was established in 2003 and has many years of experience with British-German and US-German legal matters.The Anglo-German litigation lawyer team of GP Chambers is well equipped to advise and represent clients from the UK, the USA and other English speaking countries. If you wish us to advise or represent you in a German or cross border case, or if you need an expert report on German law, please call +49 941 463 7070 in order to contact German lawyer Bernhard Schmeilzl, LL.M. (Leicester), managing partner and head of the litigation department. Bernhard is also frequently asked by British and US Courts and Tribunals or by legal counsels to provide expert reports and legal opinions on German law.

Dodging Debts by Moving to the UK?

Has your German Debtor moved to the UK and declared himself or herself bankrupt under the UK / British Insolvency Rules?

Since we specialise in British-German legal matters, our firm very often gets enquiries from German individuals, companies or banks regarding a situation whereby a German individual has moved to the United Kingdom and declared bankruptcy in order to avoid paying their debts and liabilities back in Germany. Even further, it is quite common that civil proceedings will have been commenced in Germany, but particular the individual pleads that they do not need to repay the debt in Germany in light of their bankruptcy back in the UK.

The way individuals are able to declare bankruptcy in the UK is now much much easier than before (yes, a bit shocking considering it was not that difficult before). Previously, one would have to petition to the Court, however, as of 6 April 2016, the individual debtor no longer has to. Instead, they must make an online application to an adjudicator (not a judge anymore). If a debtor’s application provides all the prescribed information, and is considered appropriate, the adjudicator will automatically (this is indeed what makes the new system scary) make a bankruptcy order pursuant to its statutory jurisdiction under the Insolvency Act 1986 (IA 1986). The adjudicator is an official appointed by the Secretary of State for the Department for Business, Energy and Industrial Strategy (again – this adjudicator no longer has to be legally qualified).

The adjudicator has no inherent discretion over whether to make an order (again this probably concerns you if you believe that the individual is not telling the truth). If the statutory requirements for an order are met, the adjudicator must make it; if they are not met, the adjudicator cannot make the order.

The statutory requirements are:

  • The adjudicator had jurisdiction under section 263Iof the IA 1986 to determine the application on the date the application was made.
  • The debtor is unable to pay his or her debts at the date of the determination.
  • No bankruptcy petition is pending in relation to the debtor at the date of the determination.
  • No bankruptcy order has been made in respect of any of the debts which are the subject of the application at the date of the determination.

The adjudicator must make a bankruptcy order against the debtor, or refuse to make such an order, before the end of 28 days from the date of the bankruptcy application, unless the adjudicator requests further information from the debtor. If the adjudicator requests further information the adjudicator has 42 days from the date of the application to make an order. If the adjudicator does not respond to the debtor before the end of this period, the application is deemed refused.

What do you do in such a situation? Well, the process is not easy, but it is possible to overturn such a bankruptcy order, referred to a lot of time as a „sham bankruptcy in order to avoid paying debts“. The courts have retained their general jurisdiction over all bankruptcy proceedings commenced following the adjudicator’s bankruptcy order (including a rescission or annulment application), and will also hear any appeal from the adjudicator’s decision to refuse to make a bankruptcy order.  Moreover, it is an offence if the individual knowingly or recklessly to make any false representation or omission in making a bankruptcy application to the adjudicator or providing any information to the adjudicator in connection with a bankruptcy application.

It is also an offence knowingly or recklessly to fail to notify the adjudicator of a matter in accordance with a requirement imposed by the legislation. It does not matter whether or not a bankruptcy order is made as a result of the relevant application, and it will be no defence that any part of the offence was committed outside England and Wales.

So, if you are owed money in Germany and believe that your German debtor has run to the UK to declare themselves bankrupt, and in fact, it is a sham, you should contact the local bankruptcy department as soon as possible so that it can be overturned.

For more information about German law, in particular civil litigation and debt collection in Germany see these posts:

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The law firm Graf & Partners was established in 2003 and has many years of experience with British-German and US-German legal matters.The Anglo-German litigation lawyer team of GP Chambers is well equipped to advise and represent clients from the UK and other English speaking countries. If you wish us to advise or represent you in a German or cross border case, or if you need an expert report on German law, please call +49 941 463 7070. To contact English solicitor Elissa Jelowicki in Munich please write an e-mail to elissa(AT)grafpartner.com.

Putting Someone on Speaker Phone without telling them?

In their piece about Speakerphone Etiquette, The Huffington Post recommends:

“Always ask the person on the other end of the line if he or she minds being put on the speakerphone. Some people find them annoying and invasive.”

This is excellent advice, especially if you speak to Germans on the phone. Why so? Because a German might not only be annoyed to find out that somehas has secretly listened in on the phone conversation. Instead, he or she might even press criminal charges, because under German law, putting someone on speaker phone (without telling them first and getting their consent) may consitute a criminal offence. Section 201 German Criminal Code protects the privacy of the non-publicly spoken word. Taping a phone call without the other party’s consent (which can easily be done with any modern smart phone nowadays) is even worse.

But even if such eavesdropping is not found to be a crime under certain circumstances, both putting someone on speakerphone without telling them first and listening in on such a phone conversation does constitute a violation of German civil laws (tort) and data protection regulations. As a consequence, someone who has secretly listened in on a phone conversation, is not allowed to appear as a witness on what he or she has heard in a German court of law. civil lawsuit. Thus, the (bad) habit of having a co-worker or one’s spouse covertly listen in on a phoen call to “have a witness for what the other party has said” is not only rude, but also dangerous and useless in regards to creating evidence. Furthermore, you can end up with a costly cease and desist order.

There are exceptional circumstances when putting someone on speaker without disclosing this fact to the other party is allowed under German law, for example when there is reason to believe that the other party may insult or threaten the caller, speak about a crime etc. Or when the other party knows from previous calls that speaker phones are typically used and the caller has never objected to this in the past.

For more information about German law, in particular civil litigation in Germany see these posts:

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The law firm Graf & Partners was established in 2003 and has many years of experience with British-German and US-German legal matters.The Anglo-German litigation lawyer team of GP Chambers is well equipped to advise and represent clients from the UK and other English speaking countries. If you wish us to advise or represent you in a German or cross border case, or if you need an expert report on German law, please call +49 941 463 7070 in order to contact German lawyer Bernhard Schmeilzl, LL.M. (Leicester), managing partner and head of the litigation department. Bernhard is also frequently asked by British and US Courts and Tribunals or by legal counsels to provide expert reports and legal opinions on German law.

Chasing Debts in Germany

Some Practical Tips from German Litigation Experts GP Chambers LLP

If you are being owed money by a German debtor and this debtor refuses to pay even after having been served a dunning letter from a German lawyer, you will have to obtain a payment order which can then be enforced by a German bailiff (Gerichtsvollzieher) or by the German Court of Execution (Vollstreckungsgericht). Such a payment order is called “Vollstreckungstitel”, or just “Titel”.

To obtain this German “Titel” you can choose between applying for a simple payment order (Mahnbescheid and Vollstreckungsbescheid) which, at least in theory, is quicker and cheaper, but only works if the defendant accepts the claim or remains passive, i.e. does not react to the Mahnbescheid at all. In most cases, therefore, the application for a simple payment order will not be successful and you will only end up losing time and warning the debtor. In the majority of cases, the better approach is to initiate regular court proceedings right away, i.e. to commence a civil law suit before a German District Court, called Amtsgericht (for claims up to EUR 5,000) or a German High Court, called Landgericht, for claims in excess of EUR 5,000.

Solicitor_SchmeilzlSince German Civil Procedure Rules do not stipulate pre-action protocols to be followed, a German civil lawsuit can (and should) be initiated immediately. In fact, you should sue the debtor, before he or she sees the lawsuit coming, because many debtors try to dodge being served official court papers by removing their name from the letter box or even by moving. If, however, you have managed to properly serve the initial statement of claim (Klageschrift) to the defendant, then the defendant is officially notified of the German court action and is an official party to the proceedings. If the defendant then disappears without leaving a forwarding address, the court will issue a default judgement (Versäumnisurteil) against the debtor, which can – like any other German civil court order – be enforced against the debtor for 30 years.

The costs of a German civil law suit are significantly lower compared to the UK, mostly because the German legal system does not have the distinction between solicitors and barristers. Instead, like in the USA, a German lawyer will handle the entire case, in and out of court, and the lawyer will also enforce the payment order.

For more information about civil litigation in Germany see these posts:

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The law firm Graf & Partners was established in 2003 and has many years of experience with British-German and US-German legal matters.The Anglo-German litigation lawyer team of GP Chambers is well equipped to advise and represent clients from the UK and other English speaking countries. If you wish us to advise or represent you in a German or cross border case, or if you need an expert report on German law, please call +49 941 463 7070 in order to contact German lawyer Bernhard Schmeilzl, LL.M. (Leicester), managing partner and head of the litigation department. Bernhard is also frequently asked by British and US Courts and Tribunals or by legal counsels to provide expert reports and legal opinions on German law.

No Win No Fee Agreements are Void in Germany

No win no fee agreements (contingency fees) between a client and lawyer are prohibited under German law. This has always been the tradition of German law (more here). The reasoning behind this rule is that German lawyers shall not undercut each other, because this would lead to poorly financed law offices providing very poor services to their clients. Also, German lawyers shall not be under the influence of undue incentives, i.e. trying to win a case no matter what including tampering with evidence, influencing witnesses etc. Continue reading

Expert Reports on German Law

As a full service German and English law firm, established in 2003, we are often asked to provide English Law Firms with an expert report based on issues of German Law.

Solicitor_SchmeilzlBernhard Schmeilzl, a bilingual Lawyer who qualified in 2001 (admitted to the Munich Bar) and is able to provide expert reports to be used in English litigation and arbitration cases based on various issues of German law, whether it be Civil, Commercial or Criminal law, including procedural aspects . Not only does he have a very good grasp of the English Civil Procedure Rules on expert reports, but he also has a vast experience of working closely with Solicitors and Barristers within England. Bernhard has prepared reports for all types of law firms in England, from Magic Circle firms to regional firms, including the following areas:

  • Corporate and commercial law disputes between British and German businesses;
  • Contentious probate matters around the validity of German wills;
  • Accidents involving British citizens in Germany (personal injury, tort); and
  • Medical malpractice cases involving German GP’s and hospitals

In case you need an expert report from a German Solicitor please do not hesitate to call us on +49 (0) 463 7070. More information on litigation and legal fees in Germany is available in these posts:

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The law firm Graf & Partners and its German-English litigation department GP Chambers was established in 2003 and has many years of experience with British-German and US-German business and corporate matters, including the representation of clients in M&A transactions. If you wish us to advise or represent you please call German business and litigation lawyer Bernhard Schmeilzl, LL.M. (Leicester) or Munich based English solicitor Elissa Jelowicki on +49 941 463 7070.

Compensation for a wrecked Car under the German Law of Torts

Car Accidents: How are Damages calculated under German Law?

Each year, German police registers 2.2 million traffic accidents (for official 2016 stats see here). German insurers, lawyers and Courts are thus constantly faced with the question how to calculate damage claims after a car accident has occured.

If the car can still be repaired, the matter is fairly simple. The Defendant must pay for the costs for a state of the art repair plus the so called “merkantilen Minderwert”, i.e. the reduction in market value due to the fact that the car has been involved in an accident, even if the car has been repaired.

What if the car is beyond repair or the costs would be unreasonably high?

The general principle under German law is that in case of a “write off” (Totalschaden, i.e. if economically it makes no sense to repair the car), then the Claimant is entitled to the so called “Wiederbeschaffungswert”, i.e. the amount necessary to purchase a substitute car with identical value of the damaged car, minus what the Claimant may have received as scrap value payment for the damaged car (if anything). Mostly, experts and lawyers refer to the so called “Schwacke Liste“, a German company which since 1957 publishes lists with the current market value of virtually every car out there. This being used as a first point of reference. The individual condition of the car before it was damaged is then taken into account.

In addition to that “Wiederbeschaffungswert” (replacement purchase value), the Claimant can (only) demand interim car hire costs for a reasonable period, i.e. for the time which the Claimant needs to look for a suitable replacement car and purchase it.

More on civil litigation and evidence rules in German Courts of law and before German arbitration tribunals:

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The law firm Graf & Partners was established in 2003 and has many years of experience with British-German and US-German legal matters.The Anglo-German litigation lawyer team of GP Chambers is well equipped to advise and represent clients from the UK and other English speaking countries. If you wish us to advise or represent you in a German or cross border case, or if you need an expert report on German law, please contact German lawyer Bernhard Schmeilzl, LL.M. (Leicester), managing partner and head of the litigation department. Bernhard is also frequently asked by British and US Courts and Tribunals or by legal counsels to provide expert reports and legal opinions on German law.

German Law of Torts: Are Accident Victims entitled to a New House?

Can a disabled injured person claim for the predicted cost of accommodation or only the actual costs after they have been incurred?

Under German law, a person who is impaired by an accident is entitled to adequate housing. The extent and amount necessary for adequate housing depends on what an impaired person would reasonably require. This can be determined by an expert, who will be appointed by a German court.

However, a difficult and strongly debated question under German law of torts is whether the injured person may only claim compensation for costs he or she has actually incurred (reimbursement approach) or whether the injured person is entitled to request a lump sum payment for necessary measures, even if actual costs have not (yet) been incurred, based on sec. 843 (3) German Civil Code (for details see German Supreme Court ruling of 19 May 1981, published in NJW 1982, p. 575; also see Münchner Kommentar zum BGB, Band 5, Auflage 6, § 842, Rd. 66 and Rd. 77).

Those in favour of the “lump sum approach” argue that German law does accept the concept of so called “fiktive Pflegekosten” (fictitious costs for home help), i.e. the market value of such home help (usually between EUR 7 and EUR 10 per hour, depending on the cost of living in the area where the Claimant lives) must be paid by the injurer regardless of whether the injured person actually hires paid help or whether a relative or friend provides such help without remuneration. Thus, costs which are objectively necessary for modifying an existing or buying another house must also be compensated by the wrongdoer, regardless of whether and when the impaired person actually incurs these costs.

The mainstream opinion amongst German litigation lawyers seems to be, however, that under German law, notional costs cannot be claimed. Consequently, a Claimant can only request reimbursement of the amounts he or she has actually spent on housing (repair, modification, new purchase etc). This view is supported by legal literature (e.g. Gerhard Küppersbusch “Ersatzansprüche bei Personenschaden” [“Claims in the case of personal injury”] 10th edition 2010) as well as by case law (Higher Regional Court Hamm, ruling published in VersR 2003, 780).

So, what actual costs can an impaired person claim under German law of torts? Here are some examples:

  • If a new apartment is rented, which better suits the individual’s needs, then the additional rental costs must be reimbursed. It may get difficult, however, if this new apartment has additional advantages (e.g. more rooms for other family members). Then, there may be a reduction.
  • In case an existing house is remodelled to meet the special requirements of an impaired person, the reasonable and adequate remodelling costs must be reimbursed. The above re-additional advantages does apply here as well: modification of a house or flat usually leads to an increased value of the same, which then again must be set off (this was also discussed in the Supreme Court ruling of 1981)
  • In case a new house is built or another house is bought, a German court would verify whether the impaired person has obeyed his duty to keep the damage at a minimum (obligation to mitigate losses), i.e. if it would have been less cost-intensive to rent an adequate house, especially since leasing an apartment or even a house is much more common in Germany than it is in the UK. However, even if the Court is convinced that buying or building another house was necessary, then it is very difficult to calculate the exact amount which must be compensated by the injurer, because this new house will often have a higher value. This extra value of the new house compared to the previous house is not recoverable and must be deducted from the claim. Thus, one must differentiate between the increase of value and the necessary and reasonable costs caused by the accident. These are difficult issues which usually involve a number of experts.

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The law firm Graf & Partners was established in 2003 and has many years of experience with British-German and US-German legal matters.The Anglo-German litigation lawyer team of GP Chambers is well equipped to advise and represent clients from the UK and other English speaking countries. If you wish us to advise or represent you in a German or cross border case, or if you need an expert report on German law, please contact German lawyer Bernhard Schmeilzl, LL.M. (Leicester), managing partner and head of the litigation department. Bernhard is also frequently asked by British and US Courts and Tribunals or by legal counsels to provide expert reports and legal opinions on German law.