## Facts

- F., a Berlin hotel operator, leased a large hotel and became unable to meet rent obligations during an economic downturn.
- F. retained G., a Berlin attorney, to negotiate and litigate for a reduction of rent and related relief.
- G. and F. executed a written fee agreement under which G. would receive a percentage of any rent “savings” achieved (initially 10%, later reduced to 5% of the difference between the contractual rent and the reduced rent).
- The agreement also gave G. a role in, or required his consent to, settlement decisions concerning the rent dispute.
- The lessor sued F. for unpaid rent; G., representing F., asserted claims aimed at reducing rent obligations under changed circumstances.
- The dispute ended in a settlement that substantially reduced rent going forward, and G.’s work materially contributed to that result.
- After settlement, F. refused to pay G. the contractual percentage; G. sued for the agreed fee plus interest.

## Issues

1. Whether an attorney-client agreement awarding the attorney a percentage of the client’s litigation or settlement “success” constitutes an impermissible share-in-the-dispute fee and is void as contrary to good morals under § 138 BGB.
2. Whether such a fee arrangement, given the lawyer’s professional duties and required independence, is enforceable in civil litigation.

## Decision

- The Reichsgericht dismissed G.’s appeal and left standing the judgment denying enforcement of the contingency fee agreement.
- The court treated the agreement as an attorney’s prohibited share-in-the-dispute fee and held it invalid and unenforceable.
- Because the contract was void under § 138 BGB as contrary to good morals and professional standards, G. could not recover the agreed percentage fee.

## Legal Principles

- A lawyer’s contingency fee that grants the lawyer a percentage share in the client’s success or the disputed economic benefit is void under § 138 BGB when it conflicts with core professional duties.
- The lawyer’s role as an officer of the justice system requires independence and the ability to advise objectively, including on settlement; a direct financial stake in the outcome is incompatible with that role.
- Serious violations of attorney professional standards may render a private fee contract unenforceable, not merely disciplinarily sanctionable.
- Success-based remuneration that may be acceptable in ordinary commercial relationships can be impermissible for attorneys due to heightened professional constraints.

## Conclusion

The Reichsgericht refused to enforce an attorney’s percentage-based contingency fee tied to rent “savings,” holding the arrangement void under § 138 BGB because it compromised the lawyer’s required independence and amounted to a serious breach of professional standards.


G. v. F., RGZ 142, 70 (Reichsgericht 1933)