NOvA Launches Information Campaign to Raise Awareness of Payment Regulations

NOvA Launches Information Campaign to Raise Awareness of Payment Regulations

The Dutch Bar Association (NOvA), in collaboration with the Taskforce on Protection Against Undermining from Erasmus University Rotterdam, has conducted research on payments to lawyers. The study reveals that regulations regarding cash payments by lawyers are often found unclear. To increase awareness of payment regulations, NOvA is launching an information campaign.

Cash Payments

Current Payment Regulations Under the current regulations for lawyers (Article 6.27 of the Regulation on the Legal Profession), lawyers are required to receive payments only via bank transfer. Cash payments are generally not allowed, with exceptions made only under ‘facts or circumstances’ that justify them. If a lawyer makes or accepts cash payments totaling €5,000 or more for the same client within a single case or over a year, prior consultation with the dean is required.

Findings from Erasmus University Rotterdam Study

The researchers conclude that lawyers recognize the risks of cash payments concerning integrity, independence, and money laundering. Interviews with stakeholders indicate that the rule on cash payments is considered unclear.

The researchers recommend several measures to bridge the gap between regulation and practice, including increased awareness, education, and adjustments in oversight.

Disciplinary Court Rulings

Recent rulings by the disciplinary court, following objections by deans against lawyers who accepted cash payments, demonstrate ongoing confusion within the legal profession regarding Article 6.27 of the Regulation on the Legal Profession and the facts and circumstances that might justify accepting cash payments from clients.

• ECLI:NL:TADRAMS:2024:119 Amsterdam Disciplinary Board 24-181/A/A/D
• ECLI:NL:TADRAMS:2024:120 Amsterdam Disciplinary Board 24-182/A/A/D
• ECLI:NL:TADRSHE:2024:5 ‘s-Hertogenbosch Disciplinary Board 23-538/DB/OB/D

Information Campaign and Risk-Based Supervision

NOvA’s information campaign aims to reinforce the ‘no cash, unless’ rule among the legal profession. Payment issues have long been a focus for local deans as supervisors and remain part of risk-based supervision.

The researchers also recommend enhanced communication about the results of supervision. NOvA and the deans aim for the information campaign, along with ongoing supervision of cash payments to lawyers, to lead to a better understanding and application—followed by enforcement where necessary—of Article 6.27 of the Regulation on the Legal Profession.

Further Exploration of the Need for Regulatory Adjustments

In the upcoming period, NOvA will conduct further exploration to determine if the current payment regulations need adjustments. This will include consultations with local deans as supervisors. One of the recommendations from the Erasmus University Rotterdam report is to lower the cash amount that lawyers may accept in exceptional cases. Further attention will also be given to (the origin of) bank transfers and the use of ‘new’ payment methods, such as cryptocurrency.

In addition to the Erasmus University Rotterdam study, NOvA has also commissioned research from Leiden University on the crown witness regulation and the use of extra-secure and identity-masking communication tools. The aim of all three studies is to map out risks for lawyers and to consider if the findings and recommendations from the reports necessitate regulatory adjustments.

The Leiden University studies were previously published by NOvA:

• The Impact of the Crown Witness Regulation on Lawyer Safety and Practice – Leiden University 2023
• The Use of Extra-Secure Communication Tools by Lawyers – Leiden University 2023