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.

Since 2008, the newly introduced section 4a Rechtsanwaltsvergütungsgesetz (German Act on Lawyer’s Fees) does provide for such a contingency fee agreement (Erfolgshonorarvereinbarung),  it therefore appears as if the situation has changed in Germany. However, such a no win/no fee agreement remains a rare exception for only the most unusual circumstances. The requirements are so high that in practice contingency fees still do not play a significant role in German civil litigation. The lawyer must prove that such a fee agreement is permissible as it is an exceptional case, because the client would have had no other way to finance the lawsuit. If this cannot be established, the no win/no fee arrangement will be void and the client will have to pay for the legal fees under German statutory law. Thus, contingency fees (“Erfolgshonorar”) are, in principle, still illegal under German law.

Furthermore, highly qualified German lawyers will not be willing to enter into such a contingency fee agreement, even if special circumstances might make this possible. Do not be surprised if a German lawyer refuses to even discuss the matter of contingency fees.

More information on litigation and legal fees in Germany:

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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 lawyer Bernhard Schmeilzl, LL.M. (Leicester) or Munich based English solicitor Elissa Jelowicki on +49 941 463 7070.