Professional indemnity insurance (BAV) for a legal consultancy
In legal advisory work the fatal mistake is usually a date. A deadline that has passed cannot be repaired and the detriment can be expressed in money straight away.
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In brief
A legal consultancy works without the compulsory professional insurance that applies to the Bar, but with comparable risks. The largest category is missing a deadline. A six-week objection period under Article 6:7 of the Dutch General Administrative Law Act (Awb), a limitation period in employment law or a limitation that has not been interrupted in time: once the deadline has passed, your client's claim is lost and your mistake is the cause. The loss is then the full value of the case, not your fee.
The second category is drafting. A termination clause that works out differently from what was intended, a non-competition clause that does not stand up, a settlement agreement in which the wording endangers entitlement to a benefit, or general terms you drew up but which the user does not hand over, so that the clause is voidable under Article 6:233(b) of the Dutch Civil Code. Here too the loss is pure financial loss, and that is exactly what the public and employers' liability insurance not.
Pay close attention to the limits of your professional capacity. Representation in proceedings is reserved to lawyers in many cases, and work outside your stated field falls outside the cover. If you also do debt collection, have that named separately. It is a different risk from advice. For self-employed professionals working with you, professional liability for legal advisers is the starting point, and for firms registered with the Bar professional liability for law firms.
This page deals with one situation. The full overview is on Compare professional indemnity insurance (BAV).
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Professional indemnity insurance (BAV)
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We cancel your old policy and align the start date, so you are never a day without cover.
Help with claims
We report the claim and monitor how it is handled. In urgent cases you can reach us on the emergency line.
What to look out for
Four subjects that make the difference in legal advisory work between cover and discussion.
Deadline monitoring with a double check
A missed deadline is the most common and the most easily proved professional error in this profession. Record for each file when you accepted the engagement, which deadlines are running and who monitors them. State in your engagement confirmation from what moment you are responsible. The difference between the day of the meeting and the day of the confirmation often determines who carries the mistake.
Advising on an area of law your policy does not cover
An employment law firm that answers a tax or company law question in passing steps outside the stated business activity. An insurer tests that when a claim arises. Refer the matter on or have your professional capacity extended, and state in your advice which aspects you expressly did not assess.
The outcome of proceedings is not the yardstick
A case lost is not a professional error. The test is Article 7:401 of the Dutch Civil Code: did you act as a reasonably competent and reasonably acting professional would. What does count is whether you pointed out to the client the prospects of success, the risk of an order for costs and the alternatives. Confirm that in writing. When a claim arises, that letter is your most important document.
Exclusions in the policy conditions
Excluded are, among others fines, penalty payments and orders for costs imposed on you personally, redoing your own work and refunding your fee, and liability under guarantees about the outcome of a case. Work outside the professional capacity and acts reserved to lawyers fall outside. Deliberately incorrect advice or a deadline deliberately withheld falls under the exclusion in Article 7:952 of the Dutch Civil Code.
What does your premium depend on?
- The agency's annual turnover: the usual basis for advisory work
- Areas of law: company law and tax law weigh more heavily than employment law
- Number of lawyers: including hired-in lawyers working in your name
- Interest per case: determines the amount you need per claim
- Secondary activities: debt collection, mediation or interim work call for separate assessment
- Retroactive period: for advice and contracts from earlier years
Insurers weigh these details differently. That is where your saving is.
What is covered
| Situation | AVB | BAV |
|---|---|---|
| An objection period expires because the file was left untouched during a holiday | No | Yes |
| A non-competition clause you drew up does not stand up and your client sees staff leave with clients | No | Yes |
| An opposing party holds you liable for a letter of demand containing facts that were wrong | No | Yes |
| A client trips over a threshold in your meeting room and breaks a wrist | Yes | No |
| A lawyer emails the complete file to the opposing party by mistake | No | Provided that |
| The client demands his fee back because the advice had to be given again | No | No |
Where a file is sent to the wrong person, the question is whether your policy includes the consequences of a data breach or refers you to cyber cover.
Frequently asked questions
This is what people ask us most.
We are not a law firm. Is insurance compulsory for us?
There is no professional body prescribing it for you, as there is for the Bar. That does not make the risk smaller. More and more clients, and certainly government bodies and larger companies, require professional indemnity insurance with a minimum amount in their purchasing terms before they award an engagement.
A client accuses us of missing an objection deadline. What is the loss?
The loss is the loss of the chance the client had. The court assesses how the case would have ended if the objection had been lodged in time, and sets the compensation on the basis of that chance. Report such a matter to your insurer at once, even if you still think it can be put right; Article 7:941 of the Dutch Civil Code requires prompt notification.
How long do we remain liable for a contract we have drawn up?
A mistake in a contract often only comes to light in a dispute, sometimes years later. Your client's claim is subject to the limitation periods in Article 3:310 of the Dutch Civil Code. For your cover something else counts: a claims-made policy covers claims that come in during the policy period. So arrange sufficient retroactive cover at inception and run-off cover on termination.
We also do debt collection work. Does that fall under the same policy?
Only if it is expressly included in the professional capacity. Debt collection has its own risks, such as an unjustified demand or an attachment that turns out to be unfounded. The latter is liability in tort under Article 6:162 of the Dutch Civil Code, towards someone who is not your client. Have that activity assessed separately when you apply.
Every situation is different. For these situations we have a separate page.
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