Paradigms of Business Consulting Agreements

1.1 Status Quo and Guiding Ideas of Business Consulting

Business consulting is one of the most rapidly growing economic sectors in Europe;^[1] there are more than 120,000 business consultants working in Germany alone. Yet, the105 jurisprudential^[2] analysis of business consulting is rudimentary at best, in contrast to special types of financial consulting, or legal and tax consulting.^[3] This gap must be closed.

In the following, it will be shown that business consulting contracts, despite a great deal of actual heterogeneity, tend to centre around a single main contractual obligation: the consultant is expected to provide a methodologically and analytically sound recommendation for action for a specific business problem. For the legal evaluation of business consulting contracts it is central to consider the superior knowledge of business consultants vis-à-vis their client concerning their consulting performance. In this respect, business consultants are commissioned precisely as ‘suppliers of knowledge and know-how’. In view of this asymmetry in knowledge and know-how, consultants may well be obliged to deliver a tangible result. This seems even more plausible because, in contrast to other goods of trust such as legal, tax or even medical advice, quality assurance in business consulting is not based on public law: the customer’s need for protection justifies measuring the performance owed by business consultants against reasonable expectations as determined by an independent third party (Section 2).

Thus far, conflicts of interest in business consulting have been completely underestimated. It goes without saying that there is a general duty to disclose conflicts (Section 3.1). In addition, the information asymmetry between the parties106 involved must also be taken into account. Business consultants fulfil the economic function of information intermediaries. Knowledge insourcing by consultants is a functional and legal substitute for information exchange between competitors that would be scrutinized critically under antitrust law. What is more, mandating business consultants for the solution of a specific problem can involve lower costs than respective knowledge generation within the company. The economic interest in passing on good corporate expertise in the market must be considered, especially when applying and construing intellectual property rights (Section 3.2). In the case of business consulting by auditors, consulting engagements following complacency certificates must, to an extent, be regarded as null and void in order to comply with the European auditor regulation (Section 3.3). So far, the potential for abuse of consultancy agreements has been underestimated (Section 4). The role of corporate advisors as knowledge intermediaries must also be considered in liability issues, specifically regarding the question of whether or not management can invoke the business judgment rule after consulting advisors (Section 5.3).

1.2 Subject Matter and (Lack of) Regulation of Business Consulting

The profession of business consulting is often viewed with a certain feeling of unease,^[4] which is largely due to the lack of any state certification and, primarily, the elusiveness of the activity. A current market definition comprises the following: ‘Business consulting is a professional activity for the external and independent analysis and evaluation of problems of the client, the development of individual solutions as well as project-related support of the implementation, with the aim of creating values as well as promoting necessary changes at the client. It is based on a contractual basis between the client and the consulting company’.^[5] According to this, the scope of business consulting is conceivably broad. Consultants consider themselves as ‘knowledge workers’ who can bring in short term specialised know-how for solving business problems in organisations.^[6] Since particular emphasis is placed on the theoretical and analytical aspect of the107 performance, especially on the application of certain methods such as the ‘systemic approach’^[7] or the ‘McKinsey method’,^[8] knowledge transfer by virtue of superior specialised knowledge or methodology needs to be added as core element of business consulting.

The range of activities of business consultants is quite heterogeneous, which is probably also the reason for the lack of professional regulation.^[9] Consultants do not have a uniform education; the profession is on the contrary interdisciplinary – in principle, anyone can be a consultant as formal market entry barriers do not exist.^[10] Business consultancies can be found in all shapes and sizes, from independent freelance consultants who also offer their services on digital consultancy platforms,^[11] to regionally established medium-sized companies, to global players such as the strategy consultancies McKinsey and the Boston Consulting Group.

In terms of content, however, business consulting can be considered to exclude the areas of legal and tax consulting as well as auditing, which are subject to licensing by the respective chambers^[12] under state supervision.^[13] Outside of these regulated108 areas, consulting is provided on practically any business management problem,^[14] including for engineering and technical issues (‘consulting engineering’).^[15] One focus of consulting services is in the IT area, since the introduction and maintenance of software often represents a strategic challenge for companies.^[16] Restructuring is also a traditional field for consulting.^[17] At present, the issues of digitalisation and sustainability in particular are booming. Consulting on the organisational implementation of Corporate Social Responsibility (CSR) standards is also in great demand.^[18] In Germany, much attention is being paid to the current implementation of a supply chain law (Lieferkettensorfgfaltspflichtengesetz),^[19] which is inspired by the French Loi de vigilance of 2017. In the UK, the Modern Slavery Act of 2015 necessitates horizontal implementation in companies. This shows that regulatory requirements are a major driver of business consulting activities.

Thus, the development of business consulting is indeed essentially shaped by competition regulation, albeit in an indirect way.^[20] For example, the rise of business consulting in the US started with banking regulation. The Glass-Steagall Act of 1933, best known for effectively separating investment and commercial banking,^[21] prohibited banks from advising their clients on business issues as well, which had previously been common mainly in the area of restructuring and under the concept109 of ‘universal banking’.^[22] At the same time, the Securities Act of 1933 stipulated that any type of financing needed to be preceded by due diligence, which was generally understood as an obligation to use business consultants.^[23] In addition, the separation of the professional practice of lawyers, auditors, and engineers from business consulting was ordered,^[24] and later also the separation of IT production and IT consulting.^[25] This paved the way for the growth of business consultancies. Most of these measures were reversed in the 1990s, but since then only IBM in IT consulting has regained its profile as a business consultancy to a considerable extent, but neither banks nor insurers.

1.3 Business Consulting and Business Organisation

The last decades have seen a sweeping tertialisation of national economies.^[26] Outsourcing, which follows the basic premise of ‘make or buy’, has been central to this trend.^[27] It affects all areas of a company, and recently even activities of companies’ core businesses have been outsourced.^[28] In contrast to the traditional concept of large companies with their economies of scale, smaller and more agile units now seem to have advantages (especially startups), despite being dependent on the insourcing of core competencies.^[29] Not only are production and administrative departments of companies affected, but also management, which is particularly knowledge-intensive. Internal staff positions for management are replaced or supplemented by external service providers in order to save on fixed costs and to be able to react faster to a volatile market environment. The use of external personnel also110 makes it possible to circumvent collective bargaining agreements, although it is a recognised organizational instrument.^[30] This trend of comprehensive and consistent out-sourcing of innovation work (‘in-house outsourcing’) is seen particularly in the automotive sector,^[31] which has established a ratio of 80 % permanent employees to 20 % external consultants.^[32] This is where business consulting as intellectual subcontracting matters. The use of consultants leads to a hybrid situation between market and company – and ideally represents an efficient transaction form, since the costs for permanent insourcing are higher than those for merely selective insourcing.^[33] Business consultants reduce information and innovation costs,^[34] a finding that cannot be ignored for the legal evaluation below. This also raises the question of ‘emptying the company’, which will be examined in more detail here in connection with the liability of the management bodies when business consultants are used (E III 3 below).^[35]

1.4 No Legal Issues in Business Consulting?

The relative silence of the business law discourse surrounding business consulting leads to the question: Are there simply no legal problems in this legal relationship, to the extent that this is even a prime case of functioning ‘law of the economy’^[36] in which market forces have spontaneously arranged themselves into a ‘Pareto-optimal111 state’?^[37] While several factors seem to suggest this, upon closer examination, they cannot eliminate the jurisprudential relevance of business consulting.

A special propensity for trust between the parties of management consulting contracts could prevent opportunistic behaviour and breach of law. Reputation mechanisms have long been recognised as an extra-legal ordering factor that also have an effect in the market for business consulting.^[38] Especially in markets for credence goods, reputation is a central institution;^[39] it is a sign of competence and can discipline consultants by preventing them from exploiting their information advantages. Admittedly, the market for business consulting is too heterogeneous to recognise a uniform effect of trust systems across the board. After all, large business consultancies could perceive themselves as too big to fail, while small and mobile consultants throughout Europe offer their services almost anonymously. In addition, there is little focus on a single client, which usually creates dependencies and contributes to discipline in traditional subcontracting relationships.^[40]

The self-regulation of the business consulting industry does not rule out legal problems. Even the BDU,^[41] the largest umbrella organisation in the industry in Germany, is far from uniting all business consultants and is not representative of all112 industry participants.^[42] Therefore, the BDU’s quite concise consulting standards, which can be enforced by an association court up to the point of exclusion from the association,^[43] do not have a broad effect in the market. It is neither evident that membership in an industry association is as value-enhancing as a protected designation of origin,^[44] nor does the ISO standard for business consulting pose as an effective market reference.^[45] Rather, the larger consultancies establish their own codes of ethics in the spirit of good corporate citizenship – which, of course, are only ever tightened after ‘scandals’, as McKinsey’s involvement in the opioid crisis in the US shows.^[46]

Furthermore, indirect regulation of business consulting by public procurement law^[47] is generally not evident, even though large companies use the classifications of business consulting services that follow from the public sector and the EU procurement regulations when awarding contracts, thus bringing about a standardisation of bids.^[48] Admittedly, this has just as little effect in absolute breadth as industry standards, and does not ensure compliance by itself.

However, the widespread use of arbitration clauses,^[49] which typically assign ‘all disputes of any kind between the parties arising from this contract or in connection with its performance to the exclusion of the state courts’ to arbitration, is likely to be113 significant.^[50] Arbitration tribunals do not decide in public, which makes it more difficult to become aware of typical problems and to improve the legal framework.^[51] This lack of publicity of proceedings, however, in no way implies a lack of conflict in business consulting. In view of the complexity of their activities, as emphasised by business consultants, and the astronomical conculting fees,^[52] the lack of corporate law involvement in business consulting must be surprising. A closer look at business consulting contracts reveals fundamental problems, concerning in particular asymmetries of information (B), conflicts of interest (C), abuse by the parties (D), and liability issues (E) which will all be addressed in turn.

2.1 Information Deficits of the Client

Business consulting is a credence good par excellence,^[54] because there are information problems regarding the service itself and its value. Business consulting114 contracts pose classic agency problems,^[55] which have so far only been partially overcome in legal practice: the client in principle has poorer knowledge, especially with regard to the qualification of the consultant, which is neither ensured by a professional licensing regime nor by supervision by a trade association. The lack of abstract quality assurance is aggravated during the actual performance of the service: during the execution of the contract, the customer cannot evaluate the value and quality of the services.^[56] This applies in principle unless an individual case is based on a consultant’s special reputation, or the customer has already prior experience with the contracted consultant. Thus, institutions of contract governance^[57] become necessary which can contain the dangers for the customer as principal resulting from the information deficit.

2.2 Remuneration

‘Good advice is expensive’ – but when is advice too expensive?^[58] It is particularly difficult to determine the value of consulting services, as they are intangible goods. Recently, ‘rip-offs’ with high consulting fees have become widespread in Germany, especially in crisis industries and regions, and particularly in the eastern German states.^[59] Similar patterns can be observed across Europe.

Expert opinions and comparisons with average fees for similar services in the respective industry can help to close the information gap regarding adequate consulting remuneration. Special characteristics of the business consultant (such as outstanding qualifications, representative business premises, or a research115 department) can then shift this average value of the consultancy service upwards in favour of the consultant.

However, the problem of comparability for specific individual customer needs and projects remains. The burden of substantiation for ‘what is customary’ lies with the business consultant, in accordance with the idea provided for in of Article 22 Para 3 a) of the Services Directive, which stipulates an obligation for the service provider to provide evidence of the basis of their price calculation upon request by the client.^[60] There is a direct bridge leading from the duty to provide evidence on the basis of the price calculation straight to specifying the customary nature of the price, as the purpose of this provision is precisely to enable the customer to match the provider’s superior knowledge. In addition, an implicit duty of the business consultant to provide information on the usual level of remuneration with reference to comparative industry values seems compelling. In bigger projects, a precise duty to document billable periods and personnel expenses can also plausibly be identified as an implicit duty.^[61] It is advisable in any case to include so-called ‘fee caps’ in the consulting contract, the substantial exceeding of which (by approx 10 %) requires the client’s consent to continue the consulting activity.^[62]

2.3 Quality of Service

‘Good advice is expensive’ – but what is good advice? The question of the quality of the service is relevant for the rights and defences of the customer. Quality deficits can affect both the service provision itself and the person providing the service.

The quality of consulting services would be very difficult to measure because of its great heterogeneity, if one were to believe the industry’s self-assessment.^[63] However, it should be noted that in larger companies the purchasing of services is quite professionalised, and tenders are held which require consultants to provide116 factual information under standardised tender categories.^[64] Such procedures are clearly based on tendering procedures under public procurement law.

Where the establishment of standardised purchasing is not possible, legal guidelines are required, as are found in European legal systems. The EU Services Directive requires the service provider in Article 22 Para 3 lit b) and d) to inform the recipient of the services about the professional and ethical rules applicable to the provider; a requirement that only serves a purpose if the provider has an obligation to perform in this respect. As a generalizable legal concept, what a consultant owes is a proper, technically-correct activity that meets the contractual purposes; the degree of professional skills and qualifications required corresponds to the normative expectations of a customer. Of course, the consulting service must also be legal.^[65]

The standards for conduct, methods, and professionalism formulated by industry associations are decisive for the more detailed specification of the generally applicable performance standards. The main German Consulting Association, for example, has established ‘professional principles’;^[66] accordingprinciples.^[67] According to Section 2 of these principles, the consultant must both have and exercise the ‘necessary care and competence’. Further specification of the methods and formats of business consulting would be desirable.^[68] The Services Directive even calls directly on the EU Member States to, in turn, call on industry associations to ‘legislate for themselves’.^[69] However, it is generally accepted that such industry standards should117 only be understood as minimum standards, and they are always supplemented by activity-specific obligations of due diligence.^[70]

The consultant is also subject to appropriate transparency obligations with regard to the quality of his or her services. For example, if a consultant employs their own people to carry out the order, they must account for their qualifications; if their own qualifications are lacking in areas where competence is normally expected, they must provide information about this.^[71] This proposition can be derived from the Services Directive regarding the main characteristics of the service, Article 22 Para 1 j). The broadly-applied threat of punishment for billing fraud must also not be neglected in this context.^[72]

In other respects, the burden of proof for quality deficits lies with the customer in accordance with general principles, particularly regarding errors in instruction and clarification.^[73] With regard to the internal circumstances of the consultant, the principles on the secondary burden of proof come into consideration only in exceptional cases.^[74]

2.4 Remedy of the Customer’s Information Deficit Through Warranty Rights

A customer’s lack of information can be compensated for by the inclusion of warranties. While some legal orders, such as France, can classify business consulting as a service agreement with adequate protection against quality deficits,^[75] the solution is more complicated in jurisdictions like Germany, for example, which keep an outdated distinction between contractual agreements aimed at a success or at simple activity.^[76] Prioritising the customer’s interests seems to be necessary simply because the customer wants to benefit from the superior knowledge of the business consultant. The customer, however, cannot know the precise scope of the consultant’s knowledge resulting in a tilted balance of information - in other words, in a market118 failure.^[77] In this situation, the activation of the law of warranties offers an adequate answer to the agency problems resulting from information asymmetry,^[78] which is only aggravated by the lack of statutory regulation concerning access to the profession and practice of business consulting. In cases where the consultant’s service is of lesser quality than the objective average, the law of warranties would permit price reduction and, in extreme cases, would even enable the termination of a contract and its rescission.^[79] For example, where a business strategy for the topics of sustainability and digitalization is owed by the consultant, and the consultant is not familiar with the inherent requirements of either of these dynamic and highly-regulated fields, the advice can objectively only have insufficient quality and the customer is entitled to reduce the remuneration accordingly, or indeed entirely, if the advised business strategy was of no use at all. The question of whether, and which, warranties are available for services is not harmonized in Europe and requires specific analysis under national law. However, it should be possible to argue for such rights even in jurisdictions that do not cover service agreements explicitly, such as in Germany, and now also in France.^[80]

It is an international tendency, on the one hand, to consider the concrete need for protection also in the B2B sector,^[81] while on the other hand, to rely decisively on the superior corrective capabilities of one of the parties.^[82] 119

This solution fits in with the global tendency of service agreements to take strong account of the social and economic situation of the contracting parties, which is illustrated by the example of the employment relationship. In the case of business consulting contracts, however, the need for protection is quite different from employment relationships: since business consultants face their clients with superior knowledge and skills – they can assess their performance and the risk of success much better than their clients. The element of ‘exercising power over people’ under private law^[83] which characterises employment law, is typically absent in business consulting by confident and well-trained consultants. If claims for remuneration of business consultants are made curtailable based on warranty law, then, unlike in labour law, social peace is not at stake.

3.1 Covert Sales Representation

Covert sales representation^[84] is a widespread phenomenon, albeit a historical one, especially in IT consulting. For example, IBM’s practice of advising potential customers on its own product range prompted US authorities to take action and ultimately led to the cessation of IBM’s consulting activities for an extended period.^[85] Even today, hidden commissions from IT providers to consultants are common; in this case, the consultant has a duty of disclosure. The duty to safeguard interests and independence are general rules of contract law,^[86] and in Germany, consulting industry principles also prohibit third-party commissions without the client’s consent. At EU level, the same follows from Section 22 Subsection 3 c) of the Services Directive, which requires service providers to disclose ‘information about their multidisciplinary activities and partnerships directly related to the service in question and about the measures they have taken to avoid conflicts of interest’.^[87]

3.2 Consulting for Competitors

3.3 Business Consulting by Auditors

3.4 Interim Summary

Three categories of conflicts of interests are predominant in business consulting, and while it is a matter of course that transparency is owed with regards to sales representations within the scope of the consulting mandate, consulting for competitors is a more complex matter. Simultaneous counselling is not admissible unless there are solid “Chinese walls” in the consultant’s organisation, shielding any leakage of specific business knowledge. However, such shields do not apply to general business and market knowledge, the proliferation of which is the major reason for the existence of business consultants. Consequently, the provisions of intellectual property and trade secret law must be construed in a way that takes account of this consideration. Finally, conflicts of interests arise where consulting is offered by an entity affiliated to an auditor; here, with the crucial rationale of capital market stability in mind, a strict approach is required.

4.1 Money Laundering and Embezzlement

The United Nations Office on Drugs and Crime estimates the annual amount of money laundered^[115] worldwide to be 2–5 % of annual global GDP – approximately $800 billion to $2 trillion in current US-Dollars. The actual value could be many times127 higher.^[116] The process of money laundering is typically divided in three stages: placement, layering, and integration.^[117] During the placement stage, the illegal funds are introduced to the financial system. In the second stage, the layering stage, the funds’ trail is disguised to hinder pursuit. In the final stage of integration the launderers spend or invest the seemingly-legitimate proceeds and make them available for themselves. The specific ways in which money laundering takes place are varied, ranging from the establishment of front companies to the exploitation of business contacts with genuine (and sometimes quite reputable) consulting firms. Consulting agreements are particularly interesting for the last two stages of money laundering, as high consulting fees are not uncommon. Even though the criteria laid out here under Sections 2.2 and 2.3 may be helpful, there is no easy way to verify the content of the service provided by the consultant.^[118] The spectrum of business areas and associated decisions and questions is vast, which in turn leads to an equally large potential and scope of consultancy. This makes it difficult to prove with certainty whether the consultancy service shown in the accounts has been rendered or whether it is really valuable. It is also hard to determine whether the services are billed in collusion with those responsible in management.

A telling example of abuse of business consulting agreements is the involvement of several smaller consulting firms as well as the Big Four in the Luanda Leaks scandal.^[119] Isabel dos Santos, the daughter of a former Angolan president, used her father’s position and influence to acquire a lucrative network of investments and companies to embezzle millions of dollars of Angolan taxpayers’ money; consulting agreements turned out to be the main tool of value transmission between entities.

Another scenario for abuse of business consulting contracts involves the awarding of (mostly superfluous) contracts to relatives, friends, or close business partners and public officials. Company funds are thereby distributed to others for one’s own benefit, representing either fraud or embezzlement.^[120] The aim can be to promote private connections, one’s own business networks, or political contacts. Prominent examples of this can also be seen in the Luanda Leaks, but also in recent128 developments regarding public broadcasting in Germany.^[121] Here, too, the above-mentioned peculiarities of the business consultancy contract, the demanding objective verifiability of consultancy services, and the low level of institutional control play a decisive role, as they make it very difficult to detect irregularities in scope and execution of the contract.

4.2 Consulting Governance

The possibilities and widespread occurrence of abuse through consulting agreements calls for institutional counter-measures.

On the part of businesses, it is necessary to have effective control mechanisms already in the preliminary stages, which, at best, exclude the awarding of abusive contracts from the outset and ensure transparency. For this purpose, management and its representatives should be bound to procedures when awarding contracts to critical parties and should also be required to keep records on the consulting. Further, management and its representatives should be required to demand comprehensive documentation and a final report on each consulting project. If one exists, a compliance officer should have oversight in matters of consulting.

The Shareholder Rights Directive^[122] addresses part of this for listed companies in the novel Article 9c, which subjects transactions with related parties^[123] (‘RPT’) to the approval of the supervisory board and triggers a disclosure obligation for the company under capital market law.^[124] The premise that shareholders, board members, or other persons, whether in the majority or minority, can purposefully harm the company and its shareholders if they use their influence on the company to gain advantages for their own benefit or for the benefit other persons from their own sphere of interest, is teleologically decisive for the regime. Materially, the RPT regulation does not represent a novelty to national laws, especially due to the principles on the abuse of power of representation, for instance because in Germany the company group law (‘Konzernrecht’) addresses the dangers resulting from129 structural dependencies. However, in some respects, the RPT regulation is a useful addition, specifically because it is not bound to control thresholds, but also covers, for example, the use of board positions for harmful transactions. Furthermore, the RPT regulation also applies between companies affiliated below the control threshold, as long as one company has ‘significant influence’ on another, which is essentially the case from a shareholding of 20 %; in addition, only either the controlling or the controlled company must be listed on the stock exchange. Consulting agreements between the listed company and a party ‘related’ to the company or its organs are therefore subject to prior approval. It seems plausible for any company, regardless of its listing, to adopt an equivalent regime in its statutes. Of course, as can be seen in the mentioned examples, any governance instruments potentially have their limits, especially if the persons entrusted with the supervision are themselves involved in the abuse.

For consulting firms relying on reputation and integration in the legal order, it seems strategically important to introduce RPT-regimes and to effectively monitor compliance with regards to money laundering and embezzlement.

5.1 Liability to the Client

The question of liability of the consultant towards the client becomes acute when following a consultant’s advice leads to damages in the company. The breach of duty can consist in a qualitative deficit of the service, of the service provider, or in a breach of the general duty of consideration. As has been demonstrated above (Sections 2.2 and 2.3), and contrary to the assertion of many consultants, it is possible to determine objective criteria for the services of management consultants. The starting point is industry standards: questionable details of the services customary in the industry, which may be very technically specific, must be determined by an expert opinion.

Professional consulting errors can often not be judged on the basis of a single episode alone; rather, a comprehensive overall consideration and weighing of the advantages and disadvantages of the recommendation against those of another130 possible recommendation must be carried out.^[125] Thus, for example, the choice of a corporate form and the detailed structuring of the corporate relationship is not solely determined by tax considerations, but rather also by the contingent liabilities, the manner of participation of the shareholders, their reputation, and their creditworthiness with business partners.^[126] There are, of course, also clear-cut cases of miscounselling, especially in the area of restructuring, when, for example, the statutory obligation to file for insolvency pursuant to Section 15a of the German Insolvency Code (InsO) is not observed under the assignment to examine the financial situation of a company.^[127]

General principles of national law apply to liability limitations in a business consultant’s general terms and conditions.^[128] The exclusion of liability for the success of proper advice in the general terms and conditions is merely declaratory in nature,^[129] as proper advice does not constitute a breach of the duty of care. The risk of acting upon proper advice lies with the customer, as in the case of other subcontracted services.

Even if the violation of the duty of care is partly responsible for the damage, this is not necessarily to be borne completely by the consultant, because as shown above, a consultant is supplies knowledge and know-how, and the customer decides whether to act upon the consultant’s performance – if the deficiencies of the advice are obvious, the customer is partly to blame and should therefore bear part of the damage. The customer has at least a duty to cursorily check the work; although they may not be obliged to check all the work in view of the consultant’s superior knowledge and the added value that can justifiably be expected from their input, they may not, on the other hand, trust blindly either and is required to carry out a plausibility review.^[130] 131

5.2 Liability to Third Parties

The opioid crisis in the US has recently shed light on the third-party liability of strategy consultants, specifically in the case of McKinsey having to answer for advising a pharmaceutical company to aggressively market its painkillers without regard to the known addictive potential and errors in the pharmaceutical approval process.^[131] Whether contractual liability to third parties is admissible depends largely on national law. Under German law, for instance, contractual liability vis-à-vis third parties can only be considered according to the principles of contracts with protective effect in favour of third parties (§ 311 (3) BGB). The prototypical case of § 311 (3) sentence 2 BGB is the liability of a trustee, which is justified by the fact that a person, because of their expertise or reliability in the context of contract negotiations, claims a special degree of trust for themselves on the side of one of the parties and thus offers the other party an additional personal guarantee for the conclusion and fulfilment of the contract.^[132]

For example, a management consultant who takes over the management of a company in need of reorganisation and refers to his previous reorganisation successes in contract negotiations conducted as the company’s representative with third parties is liable as a trustee.^[133] In the normal course of business, the assumption of such a special, central position in contract negotiations and beyond the provision of advice is, of course, likely to be the exception. If, however, within the scope of the advisory activity, expert opinions are also prepared which are recognisably intended to be the basis for investment decisions of third parties, especially in application of the EU Prospectus Regulation, liability under § 311 (3) sentence 2 BGB is also relevant.^[134]

5.3 Management Liability and Consultancy

Closely related to business consultancy agreements is the question of the management’s release from liability through the use of external consultants. In this respect,132 some specific features of the business consultancy agreement itself must be taken into account.