Businesses and individuals frequently rely on the advice and skills of professionals such as solicitors, accountants, financial advisers and surveyors.  Occasionally, as a result of such reliance, there can be loss and unwelcome consequences to the business or individual. For example, an individual may suffer a loss on investments, following negligent financial advice or a business may have to move premises because its solicitors failed to serve timely notices to renew the lease on existing premises.  In such circumstances what legal redress do you or your business have? 

Are you entitled to bring a claim against the professional?

Before examining whether the professional has been negligent, it is necessary to consider whether you are entitled to bring a claim against them. 

Duty of care

You must be able to show you were owed a duty of care by the professional. In most cases this will be obvious, typically because you engaged the professional to advise you or act on your behalf. In other cases, a duty of care will be implied such as when a professional has held him/herself out to have certain expertise and has provided advice to you even though there was no formal contractual arrangement in place.

Loss

You must be able to show that a loss has been suffered and that the loss was caused by the breach of duty of care, not by other factors such as adverse market conditions.

Time limits

You must be in time to bring a claim.  Time limits (limitation) have been laid down in statute for different types of claims.  In most professional negligence cases, the time limit is six years from the date of the negligence but sometimes, when the negligence has not become evident until later, this time limit may be extended. If a claim is brought late the defendant will have a  strong and often undisputable defence.

Has the professional been negligent?

To bring a successful claim, you must establish a breach of professional duty by proving that the professional’s conduct fell below the standard of a reasonably competent professional in the same area of expertise and that this breach caused you loss.

In order to determine whether there has been a legal breach of duty which has caused losses, the facts must be analysed and considered in light of principles of law which have developed from cases decided by the courts. 

Similarly, there is legal precedent governing the measure of recoverable loss and, in general, there will only be compensation for those losses which could have been reasonably foreseen at the time of the advice or service provided by the professional. This is not always clear cut and may require detailed scrutiny of what was, or reasonably should have been, in the contemplation of the parties at the time.

Note that, in addition to a claim in negligence, you may have grounds for other claims such as breach of contract or breach of trust (this article, however, focuses on negligence claims only). 

Have you done anything to limit the compensation you may be entitled to?

Contributory negligence

Even if the professional has been negligent and you are within time to bring a claim, your damages might be reduced if, by your own negligence, you contributed to your loss.  For example, in a lender’s claim against a valuer for negligently overvaluing a property which was to stand as security for the loan, the lender may be deemed contributorily negligent if it was reckless, before making the loan, in checking whether the borrower had sufficient means to service the mortgage repayments.

Mitigation

Your award in damages might also be reduced if you did not take reasonable steps which could have been taken to limit the loss caused. 

Things to consider before taking legal action

In most cases, unless a case settles quickly, pursuing a claim can be a costly process and, even if you win at court, you will not recover from the defendant all the costs you have spent on the case.

It is worth checking your existing insurance cover (most household and motor insurance policies provide legal expenses cover to individuals). You are also advised to discuss fee paying arrangements with the firm of solicitors you wish engage on the litigation.

Bringing a claim involves an investment of time on your part, which can be disruptive to your business, and sometimes an emotional cost, particularly if you are an individual or a key member of the claimant business.

Steps to be taken before resorting to court proceedings

Direct contact with the professional

It is often worthwhile putting your grievance to the professional directly before involving solicitors, in case the matter can be resolved amicably and swiftly between yourselves.

Professional Organisations and Ombudsmen

Another possible route to resolution is to contact the professional’s regulatory body (such as the Solicitors Regulation Authority for solicitors) or the relevant ombudsman (e.g. the Financial Ombudsman Service or Legal Ombudsman). Subject to eligibility criteria, these organisations may be able to help with your complaint and facilitate a resolution.

A desired resolution may not always be compensation, particularly if financial loss is minimal. In some cases, an apology from the professional or knowing that they will receive a reprimand from their regulatory body can be enough to satisfy an aggrieved claimant.

Engaging solicitors

If the above steps do not result in satisfaction of your claim, your best option is to engage a firm of solicitors with a speciality in professional negligence. 

Pre-court action

If the specialist solicitors advise that you have a claim worth pursuing, the court rules (the Civil Procedure Rules) prescribe a procedure (the ‘Professional Negligence Pre-Action Protocol’) to be followed before resorting to court proceedings. This procedure is intended to encourage the early exchange of information and attempts to settle case without the need for, and costs of, court proceedings.

The first step is to send the defendant professional a ‘Preliminary Notice’ setting out brief details of the grievance, followed by a detailed ‘Letter of Claim’ with copies of supporting documents.  The Pre-Action Protocol then lays out a timetable for a response by the defendant (a ‘Letter of Acknowledgement’ within 21 days, followed by a ‘Letter of Response’ and/or ‘Letter of Settlement’ within 3 months of the Letter of Acknowledgment).

As a part of the pre-action correspondence with the defendant, your solicitors should seek to establish whether the defendant has insurance cover in place to defend the claim and meet any damages payable and, if not, whether they have sufficient personal assets instead.

During this period, and later should court proceedings become necessary, as a tactical move, it can be extremely beneficial to make ‘without prejudice save as to costs’ offers, to which the court will have regard at the end of the case, when it comes to considering the reasonableness of the parties’ behaviour and whether to penalise them in costs and interest.  Such offers, complying with the rules in Part 36 of the Civil Procedure Rules, are known as ‘Part 36 Offers’.

Alternative Dispute Resolution

Throughout the litigation process, whether at the pre-action stage or once court proceedings have commenced, the parties should consider alternative ways of resolving the dispute such as mediation.

If the original written contract between the claimant and the professional included an obligation for a resolution through arbitration, in the event of a dispute, this process should be followed.

Preservation of the claim

If, at any stage, the potential to bring a claim is about to expire due to limitation (see above under ‘Time Limits’), steps should be taken to preserve the claim either by issuing proceedings and then agreeing with the defendant to stay (freeze) the case so that pre-action conduct can be undertaken or by entering an agreement with the defendant to bring time to a standstill, thus preventing them from subsequently raising limitation as a defence to any claim.

Court proceedings

If settlement is not reached after following the Pre-Action Protocol steps, then as a last resort, court proceedings can be commenced.

The solicitors you engage should advise you beforehand on the likely costs and timeframe of taking a case through the courts. Some of these elements may be uncertain as they will depend on the responses made by the defendant and the timetable imposed by the court.  Often, it can take at least a year to have a case decided at a trial. 

Your solicitors will also advise you whether the opinion of an independent expert, in the same profession as the defendant, will be required or beneficial for your case.

In the majority of cases, settlement is reached before the court case is concluded (sometimes just before or even during a trial!).  Exploring settlement sooner rather than later in the court process will invariably mean less cost, time and aggravation to the parties and enable them to move on with their daily business and lives.