Summary

The Court of Appeal has ruled that the normal inference is that a client whose solicitor advises him to fight rather than settle will generally rely upon that advice unless it is proven otherwise.  

Facts

Linklaters advised Levicom on a dispute they had with two Swedish companies. Levicom alleged that Linklaters advised it negligently as to the strength of its claim, and that in reliance of that advice Levicom did not settle the dispute, but instead brought costly arbitration proceedings which it subsequently settled on unfavourable terms.  

First instance decision

At first instance, Peter Smith J held that Linklaters’ assessment of Levicom’s chances of success was within the range of opinions that could properly be given. However, whilst Linklaters did not intend to advise Levicom that the damages for breach were likely to be substantial, their letters of advice were not clear and were reasonably understood by Levicom as endorsing its belief that damages would be substantial. The judge accepted that Levicom had relied upon that advice.  

On the issue of causation, however, Smith J did not accept that there was any evidence that Levicom would have entered into a settlement even if it had received more pessimistic advice. It was held that Levicom had to show on the balance of probabilities that, if it had received the correct advice, it would have adopted a different negotiating stance, and this would have brought about a response from the Swedish companies which Levicom would have accepted by way of settlement of the dispute.  

Levicom was awarded nominal damages of £5 on the basis that Linklaters had been negligent because they failed properly to convey their advice to Levicom who reasonably understood that the solicitors' assessment of their position was considerably more optimistic than was intended. However, that negligence had not been causative of Levicom’s loss on the basis that Levicom would have proceeded with arbitration in any event.  

Court of Appeal

Levicom appealed against the first instance decision that Linklaters’ negligence was not causative of their loss.  

The Court of Appeal allowed Levicom’s appeal and held that Peter Smith J had approached causation in the wrong way. When a solicitor gives advice that his client has a strong case to start litigation rather than settle and the client then does just that, the normal inference is that the advice is causative. That inference is rebuttable and it may be possible to show that the client would have proceeded in any event. This was not established on the facts of this case. It was held that the evidential burden had shifted to Linklaters to prove that its advice was not causative. Had Peter Smith J approached causation in this way, it would have led to a different result.  

Levicom’s £37 million claim will now proceed to assessment.  

Practice note

  • Solicitors and their insurers in professional negligence claims should be aware of the difficulty of avoiding liability on grounds of causation by arguing that the client would have ignored competent advice and proceeded with litigation in any event.  
  • The defendant solicitor will need to show evidence that the client would have proceeded with the litigation, even if their advice had been different.  
  • Furthermore, solicitors should be careful to ensure that robust advice is supported by thorough investigation, reasoning and analysis