The Pre-Action Protocol for Professional Negligence (the Protocol) has been amended to include a requirement for claimants to consider adjudication at an early stage in proceedings.

The amended protocol came in to force on 30 April 2018 and applies to all professional negligence claims not involving construction & engineering, medical or defamatory disputes.

Background

The focus on alternative dispute resolution (ADR) is nothing new to professional negligence disputes. The protocol has always encouraged parties to consider ADR as an alternative to litigation and case-law has established that parties who ignore offers of ADR open themselves up to costs risks, even if successful in court.

In May 2016, a pilot adjudication scheme was launched with backing of the Professional Negligence Lawyers Association for disputes. Seeking to mirror the successful use of adjudication in construction claims, the pilot scheme was optional but offered a structured alternative to litigation.

The main advantages of adjudication are that:

  • it provides a mechanism for disputes to be resolved quickly and at proportionate cost;
  • the process is confidential; and
  • the parties can select an adjudicator with experience in the subject matter.

The parties can also decide whether or not the process is binding and how to deal with costs.

The revised Protocol

Paragraph 6 (i) of the Protocol now requires claimants to indicate, in their letter of claim, whether they agree to refer the dispute to adjudication and, if so, to list three proposed adjudicators or alternatively seek a nomination from the nominating body. If claimants do not wish to adjudicate, they should give reasons for not doing so.

The revised Protocol makes no provision for defendants to provide a response to any proposal for adjudication.

The greater push towards ADR is not surprising given the court's preference for parties to attempt settlement before litigation. In our experience, ADR is a key tool for resolving disputes at a proportionate cost. Trials can be expensive, require significant management time for clients and inevitably involve litigation risk. ADR allows the parties some flexibility to explore the opponent's case, consider the risks of pursuing the claim further and to attempt settlement at an early stage.

Adjudication will not be appropriate for all disputes but can be a useful tool in the right cases.

What is perhaps surprising, therefore, is the focus on adjudication above other forms of ADR. For example, mediation has become a regular feature of the pre-action process, is familiar to both lawyers specialising in professional negligence claims and institutional claimants/defendants (i.e. lenders and valuers) and is proven to work in the majority of cases. This is, perhaps, unlike adjudication which is still a relatively new concept in this type of dispute.

The Protocol does not make adjudication mandatory and parties are allowed to give reasons why they do not consider it appropriate. It is unclear what reasons will be considered valid by a court, although the offer of an alternative form of ADR is likely to be one. Whilst it is unfortunate that the Protocol places no requirement on defendants to respond to a proposal to adjudicate (or, indeed, indicate whether they wish to adjudicate), in practical terms defendants will find it difficult to ignore a reasonable proposal for adjudication or other form of ADR.

The other potential flaw in the revised Protocol is the need for the claimant to indicate their views on adjudication in their letter of claim. An early assessment will need to be made as to whether or not individual cases are appropriate for referral to adjudication so that the issue can be properly addressed in the letter of claim. But this assessment will be before the claimant will have seen what the defendant's case is, before any expert evidence is exchanged and will often even be before they have received disclosure of the defendant's key documents. How is the claimant to determine whether the claim is suitable for adjudication in this, relative, vacuum of information? In our view, it would have been better if the revised Protocol had specified that both parties should indicate whether they agree to refer the dispute to adjudication within, say, 4 weeks of the letter of response.

Time will tell whether adjudication will rise to the prominence that the Protocol seeks to place on it.