In our business and private lives alike, we all rely on professional advice and expertise from many quarters. We know that the right professionals add value to our businesses or protect them from risk. We use professionals we can trust, and often have a relationship built up over many years. Sometimes, however, we have a suspicion that we may have been let down. Our business may have lost money and we think an adviser may be to blame. If not examined, that suspicion will taint an important relationship and undermine its value to us.
People can be reluctant to look into such issues. This may be because of loyalty to the professional concerned, a sense of embarrassment at having let the situation develop or uncertainty as to whether the advice given, or action taken or not taken, really was inadequate. It is nonetheless important to assess the position. If there is nothing in your suspicion, you can rebuild your trust in the adviser. If it proves that there is a problem, you can objectively assess how to deal with it.
You are paying for a service. You are entitled to be happy that you are getting what you are paying for and should not be afraid of challenging advice or other professional input. Such challenges do not have to be adversarial. With the benefit of a careful prior assessment, very positive results can emerge from informal or formal complaints procedures or even mediation, which can lead to an outcome which is satisfactory to all parties without irreparably damaging the relationship. Professional indemnity insurers are increasingly open to early resolution of complaints and claims by mediation.
So what factors will be taken into account in assessing whether you are entitled to redress from a professional for failings in the service provided?
The basic requirements for a claim against a professional are:
- a duty owed;
- a breach of that duty;
- loss caused by that breach.
Proving that the professional’s act or omission caused the loss suffered is a frequent stumbling block.
A professional adviser may incur liability for breach of contract and/or beach of a duty of care owed in the tort of negligence. Less commonly, liability can arise from breach of fiduciary duty or breach of statutory duty.
The first question to consider is what was the professional engaged to do? The starting point will be the contract – what has been agreed. The agreement need not be in writing. In some cases only part of it may have been written down. But the contract is likely to contain relevant terms (express or implied) and it is important to establish what these are. The precise ambit of the contractual obligations will depend on a number of factors including the experience of the client.
One then looks at whether the professional has carried out their engagement properly or at all. Under section 13 of the Supply of Goods and Services Act (1982), in a contract for services, a professional acting in the course of business will be obliged to carry out the service “with reasonable care and skill”. The client is entitled to rely on the professional to exercise the highest degree of care and skill which a competent professional would exercise in work of that kind. This duty may be limited by contract, subject to the Unfair Contract Terms Act (1977) and any applicable professional rules. Level of experience is not relevant to the standard of care which is imposed although a special skill can raise the standard of care to be expected.
A concurrent duty in the tort of negligence may (but will not always) exist.
Establishing whether there is a cause of action in contract or tort can be important in that different limitation periods may apply to any claim. The limitation period (after which claims may not be brought) is often longer in tort than in contract. (As the effects of professional errors do not always reveal themselves immediately, checking the applicable limitation should be done as soon as possible.)
There are also differences in the measure of damages which can be recovered. In contract, damages seek to put the injured party in the position he would have been in if the contract had been properly performed. So for example the innocent party can seek to recover expected profits. In tort, however, the injured party is to be put in the position he was in before the tort was committed, which will not include expected profits.
The defence of contributory negligence is more widely available in tort claims than in contract claims.
Assessing the quantum of a claim can also pose interesting questions. Many claims against professional involve a claim for a loss of a chance.
That the professional’s error caused the loss must be established in fact and in law. In law, this is often called “remoteness of loss”. In contract a claimant can recover losses arising naturally from the breach or loss which was in the contemplation of the parties at the time the contract was made. In tort, the type of damage suffered must have been reasonably foreseeable at the time of the breach of duty.
A claimant cannot recover damages for any loss which could have been avoided by taking reasonable steps in mitigation. And in some cases the level of damages recoverable will effectively be capped by a restricted definition of the scope of a professional’s duty and the loss which can fall within it.
So if your analysis of duty, breach, causation and loss indicates that you may have real cause for concern, how should you proceed? In general, if a professional has fallen below the standard of work expected, he or she will welcome the opportunity of explaining or making amends for any failings. You may wish to secure financial redress. The professional will normally be keen to continue to work for you and you may find you can use the opportunity to refresh and restate your relationship. Having conducted an objective assessment of your position, and having invited your professional to address the issues, you will be able to take an informed decision as to whether this is appropriate or whether it really is time to move on.
This is a complicated area of law and reliance should not be placed on this article to make decisions about particular issues. The article by its nature is brief and is not a comprehensive statement of the law.