THE BOTTOM LINE
- Contracts Endure Inaction: “No cure, no pay” agreements can remain legally active even after long periods of inactivity. A client cannot unilaterally assume the contract has lapsed just because time has passed.
- Side-Deals Don’t Void Fees: A client who circumvents their legal representative to settle a claim directly with the opposing party is likely still liable for the success fee, provided the settlement meets the criteria defined in the original agreement.
- Formalities Matter: If a client is dissatisfied with the pace of a case, they must formally communicate this, demand action, or issue a notice of default. Simply waiting and then acting independently is not a valid defense against a fee claim.
THE DETAILS
This case centered on an agreement between a legal services firm, Leaseproces B.V., and a client involved in the mass tort claims against Dexia Bank in the Netherlands. In 2006, the client engaged Leaseproces on a “no cure, no pay” basis. The firm’s fee was contingent on securing a financial benefit for the client that was better than the standard national settlement (the “Duisenberg Agreement”). Leaseproces performed initial work, including officially opting the client out of this collective settlement to preserve her right to a better outcome.
Years later, in 2013, the client became impatient with the progress of the mass claim. Without informing Leaseproces, she entered into her own settlement negotiations directly with Dexia Bank, securing a favorable outcome. When Leaseproces discovered this, it invoiced the client for its success fee as stipulated in their 2006 agreement. The client refused to pay, arguing that Leaseproces had failed to fulfill its obligation by not initiating a formal court procedure and that the long delay justified her actions.
The Limburg District Court sided decisively with Leaseproces. The judge ruled that the original “no cure, no pay” agreement was still valid and in full effect at the time of the client’s private settlement. The court noted that while the client may have been frustrated with the timeline, she never formally notified Leaseproces of her dissatisfaction, demanded specific action, or put the firm in default. As the agreement was still active, and the client had successfully achieved a financial benefit (the trigger for payment), the contractual obligation to pay the success fee remained. The client’s independent action did not nullify the contract.
SOURCE
Source: Limburg District Court
