Law Firm and Insurance Company Acquitted in Liability Case

Case Background 

The former client had purchased an apartment at Aker Brygge in 2016, primarily financed through a loan from a bank. Originally, the apartment was intended to be purchased together with a business partner, but this changed when the purchase was to be executed. However, the loan and guarantee documents were not corrected accordingly. 

A dispute first arose with the bank, which believed that the former client was fully responsible for everything the bank had disbursed. This dispute was resolved through a settlement agreement in the spring of 2021. Subsequently, the former client was sued by the former business partner who claimed to have an ownership interest in the apartment. The law firm assisted the client in the district court until a judgment was issued in the summer of 2022. The client then chose a new lawyer and subsequently settled the second dispute as well. Compensation was then demanded from the original law firm, justified by the claim that satisfactory assistance had not been provided in the two disputes. For the same reason, the fee claim for assistance in the second dispute was not paid. 

No Basis for Attorney Liability 

In the Court of Appeals, both the law firm and the insurance company were assisted by Hjort lawyer Alex Borch. In the judgment, both the law firm and the insurance company were acquitted of the compensation claim made. There had been no fault in the assistance provided. In this regard, it was noted that there would generally not be liability for advice related to settlements and assessment of litigation risk unless the lawyers’s advice ‘clearly must be considered as irresponsible’. Furthermore, the law firm could ‘rightly’ have higher expectations of how a client behaves if the client is professional. In this case, the client was a lawyer themselves, with experience in disputes concerning real estate. Thus, there was no basis for any claim for compensation. 

Since there was no fault in the assistance provided, there was also no basis for failing to pay for the assistance given. Even though a formal engagement confirmation for assistance in the second dispute had not been sent, the Court of Appeals found it undisputed that it had been agreed that the law firm would also assist in this matter. In this context, it was also noted that the lack of an engagement confirmation does not mean that a client is exempt from paying for services rendered. The law firm thus also fully prevailed in its claim for payment of unpaid fees. 

Legal costs were also awarded, but the fee claim was somewhat reduced. Furthermore, legal costs were only awarded to a limited extent to cover compensation for work performed by the responsible lawyer in connection with the lawsuit. 

Read the judgment here.