In this chapter of our Annual Insurance Review 2020, we look at the main developments in 2019 and expected issues in 2020 for legal practices.
Key developments in 2019
It has been an exciting year for loss of chance in solicitors' claims. There have been two big judgments:
Perry –v- Raleys: The Claimant argued that, because of bad advice, he had lost his chance to pursue a claim for special damages in his personal injury claim. The solicitors argued that the Claimant did not qualify for special damages and so he had not been in a position to pursue that claim honestly.
The argument concerned the extent to which the Court could examine the merits of the underlying claim that Perry alleged he had lost the chance to bring. The Supreme Court decided that there is a burden of proof on a Claimant to demonstrate that the claim they would have brought would have been an honest one. A Claimant cannot succeed by showing that he would have brought a claim that would have been dishonest. A Court is entitled to determine that issue on a full forensic examination of the facts at trial.
Edwards and Hugh James: The Claimant had a potential claim for special damages. A medical report obtained at that time verified that. Due to the negligence of his solicitors, he failed to pursue that claim.
The Court rejected the claim against the solicitors on the basis of an expert's report in the professional negligence case which essentially said that there was no claim for special damages. The Claimant appealed, arguing that it was wrong to take account of the expert's evidence because it had not and could not have been available at the time of the notional trial date. The Court of Appeal reversed the decision. The key issue was not what the Claimant could prove now. Crucially, it is: "what was the value of what he lost then".
The Court of Appeal judgment seems logical: what the Claimant is getting is damages for his loss of chance to pursue the original action. Taking account of developments after the notional trial date would be inconsistent with that.
The appeal to the Supreme Court was heard on 25 July 2019 and the judgment is awaited. This area of the law will continue to develop.
What to look out for in 2020
We anticipate that 2020 is going to be all about regulation. New SRA codes of conduct came into effect on 25 November 2019. The old Code has been split into two: the Code for Solicitors which addresses the expected standards of professionalism and the Code for Firms setting out the standards and business controls expected from firms. There are also new accounts rules.
Notwithstanding objections from the Law Society, solicitors are now also able to carry out 'non-reserved' legal work from within a business not regulated by a legal services regulator. They are also able to provide reserved legal services on a freelance basis. This change is aimed at allowing solicitors to work in more flexible ways and to allow clients to access solicitors without the extra costs imposed by a firm, but it may also lead to different tiers of solicitors operating under different requirements for professional indemnity insurance. This might result in confusion for the clients about the protections offered by the solicitor they instruct.
The new Codes include obligations on a solicitor to 'put matters right'. There is also an obligation to notify the client that they may have a claim against the firm. This is likely to be concerning to insurers.
The Codes have been streamlined and consolidated. They use much plainer English. However, there is a greater use of subjective words which we fear may lead to interpretational confusion. There is also far less actual guidance. We suspect that this may lead to compliance challenges.
A lot of work has already been done by firms to prepare but these are significant changes, the effects of which will be felt strongly over the coming years.