OGH: Lawyers’ Liability for Corporate Administrative Fines

Jun 7, 2024 Benn-Ibler Rechtsanwälte

The Austrian Supreme Court (Oberster Gerichtshof, hereinafter OGH) has indicated that, in certain circumstances, a client may be entitled to seek reimbursement from their lawyer for a fine imposed on the client if they were given incorrect advice.

In 2018, a corporate administrative fine had been imposed on the plaintiff (its legal predecessor) under the Austrian Corporate Criminal Liability Act on the grounds that the board of directors had been guilty of embezzlement and aggravated fraud through the issue of false invoices.

The plaintiff is seeking (pro rata) compensation from the defendant law firm for the corporate administrative fine on the grounds, inter alia, of faulty advice. On the one hand, a lawyer of the defendant firm had certified the innocuousness of the fictitious invoices. On the other hand, the defendant firm had not advised the plaintiff to demonstrate active remorse (Section 167 of the Austrian Criminal Code, StGB) and to take advantage of the leniency programme (Section 209a of the Austrian Code of Criminal Procedure, StPO). If advised to do so, the plaintiff would have availed themself of these options in order to avoid a criminal conviction.

The court of appeal upheld the dismissal of part of the claim relating to the administrative fine on the grounds that court-imposed fines are not recoverable.

The OGH came to a different conclusion in part of the case:

According to current case law, the right of the State to claim damages does not constitute a civil claim for damages that can be passed on by an offender by way of recourse, since the offender alone is responsible for their criminal conduct.

This is contrary to the claim for damages to the extent that it is based on the incorrect advice given in the course of issuing the false invoices. This does not alter the fact that the plaintiff’s board of directors independently committed a criminal offence and that a penalty was imposed that was proportionate to the wrongdoing.

Nevertheless, compensation may be claimed for failure to advise on the grounds for cancellation of the sentence through active remorse and taking advantage of the leniency programme. The argument that an offender must feel the pain of the sentence themself does not apply here. Lawmakers have expressly provided for the option of depriving the State of its right to impose a sentence in certain cases, offering the possibility of eliminating the consequences of the offence after the event. In such a case there is no justification for denying a claim for compensation. 

OGH 1 Ob 200/23b (8 April 2024)