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Prohibition of professional partnership of lawyers with physicians and pharmacists is unconstitutional
Press Release No. 6/2016 of 02 February 2016
Order of 12 January 2016
1 BvL 6/13
§ 59a sec. 1 sentence 1 of the Federal Lawyers’ Act (Bundesrechtsanwaltsordnung) is unconstitutional and void to the extent that it prohibits lawyers to establish a professional partnership with physicians and pharmacists for the joint practicing of their professions. Such was the decision by the First Senate of the Federal Constitutional Court in an order published today in specific judicial review proceedings conducted upon referral by the Federal Court of Justice (Bundesgerichtshof). The prohibition to establish a partnership (Sozietätsverbot) disproportionately interferes with the freedom to practice an occupation (Art. 12 sec. 1 of the Basic Law, Grundgesetz – GG). The legislature permits the association of lawyers with other professional groups – in particular with patent attorneys, tax consultants and auditors – in a professional partnership. Compared to such partnerships, an inter-professional cooperation of lawyers with physicians and pharmacists does not hold such considerable additional risks regarding compliance with a lawyer’s professional duties as to justify a different treatment.
Facts of the Case and Procedural History:
The two petitioners in the initial proceedings are a lawyer and a physician and pharmacist. They established a professional partnership and applied for its entry into the partnership register. A Local Court (Amtsgericht) and a Higher Regional Court (Oberlandesgericht) denied the registration arguing that such a partnership conflicts with the exhaustive regulation of § 59a sec. 1 sentence 1 of the Federal Lawyers’ Act (Bundesrechtsanwaltsordnung - BRAO), which does not list the professions of physician and pharmacist. The Federal Court of Justice suspended the proceedings and referred it to the Federal Constitutional Court for review.
Key Considerations of the Senate:
1. The question referred to the Court must be limited to the part of the reviewed § 59a sec.1 sentence 1 BRAO that is essential for the decision of the regular courts. With regard to the concerned professions it must be limited to the cooperation of lawyers with physicians and pharmacists; regarding the form of cooperation it must be limited to the professional partnership.
2. § 59a sec. 1 sentence 1 BRAO is incompatible with Art. 12 sec. 1 GG in so far as the provision precludes an association between lawyers and physicians as well as pharmacists for joint practicing of their professions within a professional partnership.
a) It is true that the legislature pursues a legitimate purpose when interfering with the freedom to practice an occupation by limiting the professions permitted to combine in a professional partnership. The purpose of the provision is to ensure that the essential basic obligations of a lawyer stipulated in § 43a BRAO are complied with. These also include professional confidentiality, the prohibition to represent conflicting interests, as well as the duty to refrain from entering into professional relationships that compromise a lawyer’s professional independence.
b) It follows from the principle of proportionality that a law restricting fundamental rights must be suitable, necessary and appropriate to achieve the purpose pursued by the legislature. Accordingly, a law is necessary if the legislature could not have chosen another equally effective means with no or less restrictive impact on fundamental rights to achieve this purpose. A law is appropriate if an overall balancing of the weight of the interference, the significance and the priority of the reasons justifying it does not exceed the limits of reasonableness.
aa) To a large extent, the prohibition of a partnership with physicians and pharmacists is not necessary to ensure lawyers’ professional confidentiality; apart from that it is not appropriate.
(1) Violation of a lawyer’s obligation to maintain confidentiality under § 43a sec. 2 BRAO is subject to punishment according to § 203 sec. 1 no. 3 of the Criminal Code (Strafgesetzbuch – StGB). In principle, the legislature may bar those professions from joining a professional partnership for which a sufficient degree of confidentiality does not appear to be guaranteed. Following this approach, the legislature ruled out such deficits only for those professions mentioned in § 59a sec. 1 BRAO and hence permitted them to establish professional partnerships with lawyers.
(2) The legislative decision to thus exclude physicians and pharmacists from the group of professions permitted to establish a partnership is, however, generally already not necessary in order to safeguard the clients’ interest in confidentiality. When hiring an inter-professional partnership it is generally expected that client-related information is shared with the non-legal partners; sharing client-related information therefore does not constitute a breach of confidentiality. At least to a large extent, the prohibition of such a partnership is not necessary for protecting a lawyer`s confidentiality vis-à-vis third parties. Like lawyers, both physicians as well as pharmacists are obliged to maintain professional confidentiality. This obligation fully applies to all facts not generally known and which are confided to a professional in his or her professional capacity as physician or pharmacist or which he or she becomes aware of; a violation is subject to punishment under § 203 sec. 1 no. 1 StGB.
(3) In so far as the facts have not been confided or made known to the physician or pharmacist in this professional capacity, the non-legal partner is not obliged to maintain confidentiality. However, the requirement of proportionality stricto sensu is no longer met if the prohibition to establish a partnership is based solely on the fact that the non-legal partner is not obliged to maintain confidentiality in these cases. In order to provide competent legal advice and to be economically successful it may be essential for a law firm to offer legal assistance in specialised fields and establish to that end a permanent partnership with members of suitable professions. The resulting increased endangerment of confidentiality is small and does not justify the substantial interference with the freedom to practice an occupation. Notably, the legislature did not assume such additional risks in the case of those professions mentioned in § 59a sec. 1 BRAO and hence permitted them to establish partnerships with lawyers. But even in cooperation with professions allowed to establish a professional partnership under the above provision, situations might occur in which the non-legal partner becomes aware of circumstances that are subject to the lawyer’s confidentiality but not to his own professional obligation to maintain confidentiality. Furthermore, pursuant to § 30 sentence 1 and § 33 of the Federal Lawyers’ Rules of Professional Practice (Berufsordnung für Rechtsanwälte – BORA) it must be ensured that also the non-legal partners and the professional partnership observe the lawyers’ rules of professional practice.
(4)Prohibiting professional partnerships of lawyers with physicians and pharmacists is, to a large extent, not necessary or at least not appropriate for safeguarding the lawyer’s rights to refuse to testify. According to the relevant rules of procedure, physicians and pharmacists can claim their own right to refuse to testify. If, in individual cases, there should be situations in which the non-legal person’s right to refuse to testify falls behind the lawyer’s right to refuse to testify, the risk resulting from the reduced degree of protection of confidentiality is low and does not differ from the risk the legislature accepts in the context of those professions it has already granted the permission to establish a professional partnership.
(5) Nor does safeguarding the rights to protection against seizure under criminal procedural law, which also serves to protect the lawyer-client relationship, make it necessary to prohibit a professional partnership with physicians and pharmacists. The protection of these professional groups against seizure does not fall behind the protection lawyers can claim. Rather, § 97 of the Code of Criminal Procedure (Strafprozeßordnung – StPO) links the protection against consfiscation to the right to refuse to testify under § 53 sec. 1 sentence 1 nos. 1 to 3b StPO and is therefore applicable to lawyers as well as physicians and pharmacists.
(6) Investigation measures in the repressive area of law enforcement, measures of protection against risks of public safety as well as measures for the prevention of criminal offenses are subject to different protection levels, which may affect the clients’ interest in confidentiality. Pursuant to § 160a sec. 1 StPO, the prohibition to take or use evidence applies in favour of lawyers is an absolute prohibition while the prohibition that applies in favour of physicians and pharmacists is relative pursuant to § 160a sec. 2 in conjunction with § 53 sec. 1 no. 3 StPO. However, also the professions mentioned in § 59a sec. 1 BRAO and that are thus permitted to establish a professional partnership are only subject to such a relative protection; in this respect, the legislature accepts a limited weakening of the clients’ interest in confidentiality in favour of the freedom to practice an occupation.
bb) A prohibition of partnerships between lawyers and physicians or pharmacists might still be necessary to protect a lawyer’s independence. However, also in that regard the prohibition is at least not appropriate.
(1) When several professions work in a partnership, impairments of the professional independence of individual partners – be it because the other partners’ interests are considered in order to avoid or solve conflicts of interest or due to prevailing power structures – can never be ruled out completely. The legislature’s assumption that it is necessary to meet risks to the professional independence is therefore plausible and not objectionable.
(2) Compared to the combinations of professions permitted to establish a partnership according to § 59a BRAO, the inter-professional cooperation of lawyers with physicians and pharmacists does not entail an increased potential endangerment of the lawyers’ independence so that its prohibition does not prove to be appropriate. Although, unlike the professions permitted to establish a partnership, an inter-professional cooperation between lawyers, physicians and pharmacists does not offer advice on business or commercial law issues in the broadest sense, this does not constitute a plausible reason for an increased need of protection in favour of the lawyer’s independence. To the contrary, the completely different field of professional activity of physicians and pharmacists rather confirms that the latter will show more respect for the independence of their legal partner alone because of their professional distance to legal issues.
The form of organisation at issue here does not increasingly jeopardise the independence either. Practicing a profession in a professional partnership does not exempt the respective professional from his or her legal obligations regarding their profession (cf. § 6 sec. 1 of the Act on Partnership Corporations Partnerschaftsgesellschaftsgesetz – PartGG). Furthermore, the managerial authority of the individual partner cannot be restricted with regard to the practicing of his or her profession (cf. § 6 sec. 2 PartGG). In addition, the protection mechanisms in the already mentioned Federal Lawyers’ Rules of Professional Practice apply irrespective of the corporate structure.
cc) The objective to avoid conflicts of interests does not justify a prohibition of professional partnerships between lawyers and physicians or pharmacists either.
(1) In accordance with § 43a sec. 4 BRAO and the more detailed provisions of § 3 BORA, lawyers are prohibited to represent conflicting interests. Essential parts of this prohibition are secured under criminal law by § 356 StGB pursuant to which a violation of the lawyer-client relationship is punishable. The professional codes of conduct for physicians and pharmacists do not have corresponding provisions; furthermore, physicians and pharmacists cannot be offenders under § 356 StGB. To forgo comparable provisions appears reasonable since physicians and pharmacists normally do not enter into an adversary relationship with third parties when acting in the interest of their patients. However, not all professions listed in § 59a BRAO are required to represent the interests of one party only as stipulated in § 43a sec. 4 BRAO, § 3 BORA. Only patent lawyers and, within the very limited scope of § 392 of the Fiscal Code (Abgabenordnung – AO), also tax consultants, tax representatives, auditors and certified accountants may become criminally liable for violating the lawyer-client relationship. Generally, the legal partner must therefore be compelled, in accordance with § 30 sentence 1 BORA, to contractually commit the non-legal partners to comply with the lawyers’ rules of professional practice. In accordance with § 33 sec. 2 BORA, a lawyer must furthermore prevent, by measures that take effect throughout the partnership, that the prohibition to represent conflicting interests is disregarded.
(2) Within this narrow scope, when permitting professional partnerships under § 59a sec. 1 BRAO, also the legislature accepted that in inter-professional cooperations risks to the lawyer’s integrity cannot be ruled out completely. A partnership with physicians and pharmacists in comparison to one with professions permitted for partnership does not entail a specifically increased endangerment of the lawyer’s integrity. Thus, also against that background the specific prohibition to establish a partnership constitutes an inappropriate interference with their freedom to practice an occupation.