Forum Selection in Attorney-Client Agreements Anita Schläpfer

Forum Selection in Attorney-Client Agreements March 2015 Page 2/9 Table of contents 1.Introduction 2.Cross-border consumer matters 3.Engagement letter as cross-border consumer contract? 4.Conclusions and discussion points

Forum Selection in Attorney-Client Agreements March 2015 Page 3/9 1. Introduction >Written engagement letters normally contain a choice of law and a choice of forum >Law of the country of residence/domicile of the attorney/law firm >Courts at the residence/domicile of the attorney/law firm >Relevant forum in the absence of a (written) engagement letter: >Rule: courts at the residence/domicile of the defendant >Exception: forum for certain specific types of transactions/parties as per applicable laws, including international treaties

Forum Selection in Attorney-Client Agreements March 2015 Page 4/9 1. Introduction >Relevant international treaties in Europe: >Convention on jurisdiction and recognition and enforcement of judgments in civil and commercial matters of October 30, 2007 (“Lugano Convention“) which is – for all countries of the European Union (“EU”) as well as Switzerland, Norway and Iceland – the parallel agreement to: >EU Council Regulation (EC) 44/2001 on the jurisdiction and the recognition and enforcement of judgments in civil and commercial matters of December 22, 2000 (“Brussels I Regulation“) >Mandatory statutory forum provisions, including those of the Lugano Convention/Brussels I Regulation, prevail over forum selection agreed prior to instigation of proceedings

Forum Selection in Attorney-Client Agreements March 2015 Page 5/9 2. Cross-border consumer matters >A cross-border consumer contract pursuant to the Lugano Convention/Brussels I Regulation is a contract between: >a consumer, i.e., private individual acting for a purpose other than his trade or profession; and >a counterparty that either (a) pursues commercial or professional activities in the state of the consumer’s domicile or (b) ”by any means directs such activities to the state in which the consumer is domiciled.” Note: The previous versions of the treaties qualified a contract as a consumer contract only if the counterparty, at the consumer's domicile: (a) expressly offered its products/services to the consumer and (b) concluded the contract with the consumer.

Forum Selection in Attorney-Client Agreements March 2015 Page 6/9 2. Cross-border consumer matters >Legal consequences: >Consumer can sue counterparty either in the courts of the counterparty‘s domicile or in the courts of the consumer‘s domicile >Counterparty can only sue consumer in the courts of the consumer‘s domicile >Consumer cannot waive his/her right before the instigation of the dispute, i.e., previous agreements to the contrary have no legal effect

Forum Selection in Attorney-Client Agreements March 2015 Page 7/9 3. Engagement letter as cross-border consumer contract? >Decision of Zurich Court of First Instance of July 8, 2013 (final, i.e., no longer subject to appeal; ZR 112/2013, pp 179 et seq.; the ”Zurich Decision“) dealt with this question >Relevant facts: >German private person held accounts with Swiss bank and lost substantial funds after the collapse of Lehman Brothers >Client engaged a Swiss law firm upon recommendation of his German lawyer >Engagement letter between client and Swiss law firm contained a forum choice in favor of Zurich courts >Upon client not paying legal fees, law firm brought action against client in Zurich

Forum Selection in Attorney-Client Agreements March 2015 Page 8/9 3. Engagement letter as cross-border consumer contract? >Consideration of the Zurich Decision: >Services offered by law firms to private individuals domiciled abroad may qualify as consumer matters that is cross-border if: >Law firm pursues activities in the state in which the consumer is domiciled (in the present matter: not relevant) or >Law firm directs activities to the state in which the consumer is domiciled: >No actual physical presence necessary >Maintaining a website accessible to clients abroad is not decisive per se (see also decisions of the Court of Justice of the EU referenced in the Zurich Decision)

Forum Selection in Attorney-Client Agreements March 2015 Page 9/9 3. Engagement letter as cross-border consumer contract? >Law firm directs activities to the state in which the consumer is domiciled (continued): >Relevant is whether the service provider expressed intention/made particular efforts to win clients abroad before signing the engagement letter. Question to be answered on a case by case basis with a view to the indicators at hand, namely, the form and content of a website and the international character of the services provided >No direct causal link between the efforts to find clients abroad and the conclusion of an engagement letter required

Forum Selection in Attorney-Client Agreements March 2015 Page 10/9 3. Engagement letter as cross-border consumer contract? >Finding of the Zurich Decision: >Services offered by the Swiss law firm to German individual qualified as consumer matter because the client retained the law firm in connection with his private accounts held with the Swiss bank >Law firm was considered to have directed its activities to Germany based on the following: >Website in English and German >Website stressed that firm represented clients from Switzerland and abroad >Website emphasized international/cross-border practice >Website and letterhead mentioned cooperation with German law firm (in the present matter: a different firm than the client’s) >Law firm maintained bank account/accepted payments in Euro

Forum Selection in Attorney-Client Agreements March 2015 Page 11/9 3. Conclusion and discussion points >Within the scope of applicability of the Lugano Convention/Brussels I Regulation, forum choice clauses in engagement letters with individuals may not be upheld (in the Zurich Decision, the court concluded that it had no jurisdiction to review the merits of the case) if: >Individual is a consumer from abroad >Law firm generally directs activities abroad (which is most likely the case if law firm, on a multilingual website, holds itself out as international firm and references cooperation with firms abroad) >Potential discussion points: >Meaning of “acting for a purpose other than trade or profession”? >Legal entities as consumers? >Others?

Forum Selection in Attorney-Client Agreements March 2015 Page 12/9 Anita Schläpfer Schellenberg Wittmer Ltd / Attorneys at Law Löwenstrasse 19 PO Box Zurich / Switzerland T F