e&w solicitors - claims against solicitors checklist

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Professionalpractices update

QBE European Operations

Claims against solicitors - a checklist



QBE Professional practices update - Claims against Solicitors - a checkli st/Jan 2013 1

The purpose of this

document is to provide

a checklist of some of the matters which merit

consideration when a claim

is brought against a solicitor

(and does not include

consideration of claims of

fraud). It is not intendedto be used to conduct

the professional liability

litigation but as a guide to

some of the relevant points

that the solicitors instructed

to deal with a professional

liability claim on your behalf will consider in relation to

defence of a claim.

Limitation

• Were proceedings issued more than six years ater the

cause o action accrued?

• Are there dierent dates or the accrual o the cause o

action in contract and tort?

– In contract the primary limitation period will be six years

rom the date o breach, and in tort it will be six years

rom when the damage was suered. Claimants may try

to argue that the damage was suered at a later date than

the alleged breach o duty by the solicitor ollowing Law

Society v Sephton (ie eectively extending the limitation

period).

• Does section 14A o the Limitation Act 1980 apply?

– This gives an extended period o limitation o three years

rom the date o requisite knowledge.

•

Is there any argument that the solicitor owed a continuingduty o care to the client? (Carlton v Fulchers (1997 )).

Identity of the claimant

• Is the claimant a client?

– Common situations where it is sometimes unclear who

the client is include:

Whether the solicitor is acting or a company and/or the

shareholders, or a borrower and/or a lender, or or a

husband and/or a wie.

• I the claimant is not a client could the solicitor none the less

owe a duty o care?

– The tests are oreseeability, proximity and air just

and reasonable; assumption o responsibility; and an

incremental approach rom decided cases.

Identity of the defendant

• Has the claimant brought the claim against the irm,

individual partners or employees or both

• I claiming against the irm, has the claimant named the

correct entity? The claimant must sue the partnership that

existed at the time the cause o action accrued. This is a

point that is oten misunderstood, especially where the irm

has converted to an LLP since the cause o action accrued.

Claims against solicitors - a checklist



QBE Professional practices update - Claims against Solicitors - a checkli st/Jan 2013 2QBE Professional practices update - Risk Management/Jan 2013

What duties does the solicitor owe the

claimant?

• Is there a retainer letter and does it cover the work that is

the subject o the claim?

– In most cases a contractual relationship will exist between

the claimant and the solicitor either expressly or by

implication. I there is a retainer letter, then it is likely that

a number o the solicitor’s duties will be set out expressly.

The solicitor will also usually owe implied duties, such as the

duty to act with reasonable skill and care. There will also be

concurrent duties in tort which will be largely determined

by the terms o the retainer but may no be concurrent

– There is no such thing as an implied general retainer to

advise on everything to do with a client’s aairs, although

claimants can sometimes assume that this is the case. For

example, i a solicitor is instructed to advise a companyon the tax consequences o a transaction that does not

necessarily mean that he is obliged to give an individual

director personal tax advice.

• Are the solicitor’s iduciary duties relevant to the claim?

– The solicitor will also owe iduciary duties including a duty

not to act in conlict, a duty to act in good aith and a duty

o conidentiality.

• What is the scope o the duty o care that the solicitor owes?

A solicitor is not, without speciic agreement, a guarantor

o outcomes.

– Was the solicitor instructed to advise in relation to the

whole transaction or on a speciic part o it.

– What type o solicitors’ irm and department and

individual within the irm is involved in the matter?» I the solicitor or irm is held out as having particular

specialist expertise in an area then they will be judged

by the standard o a reasonably competent solicitor

with experience in that ield. (Hicks v Russell Jones

& Walker)

• What is the nature o the client?

– Is it an individual seeking legal advise or the irst time on

a private matter such as a will, or is it in-house counsel

at a corporate client giving a repeat instruction? An

inexperienced client is entitled to expect the solicitor to

take a broader view o the retainer (Carradine Properties

v DJ Freeman)• The solicitor will be expected to be competent in the ield

that is relevant to the particular matter (Hurlingham Estates

v Wilde & Partners)

• The solicitor is not generally under a duty to advise on the

wisdom o the transaction or to provide commercial advice

(Pickersgill v Riley)

• There may be a duty to warn the client about particular

issues the solicitor comes across during the retainer (Credit

Lyonnais SA v Russell Jones & Walker )

2



QBE Professional practices update - Claims against Solicitors - a checkli st/Jan 2013 3

Breach

• Does the error amount to negligence?

– Not every error a solicitor makes is negligent. The

usual position is that the solicitor is required to exercisereasonable care and skill (unless or example the solicitor

has agreed contractually to a higher standard o care). For

example, i a solicitor advises wrongly on the construction

o a document the error will not necessarily be negligent

i it is a reasonable construction. However, it may be

negligent not to advise the client that the matter is open

to interpretation.

• Did the solicitor take adequate instructions and was the

solicitor ollowing the client’s instructions?

– I the solicitor did act on instructions that will usually be

a deence unless the client’s instructions were a result o

inadequate legal advice.

• Was the solicitor relying on counsel’s advice?

– Solicitors are entitled to rely on the advice o counsel

properly instructed. The solicitor must however, exercise

his own independent judgment and reject counsel’s

advice i it is obviously or glaringly wrong (Locke v

Camberwell HA (2002) Ridehalgh v Horsefield ( 1994)).

• Does the claim involve allegations o breach o warranty o

authority?

– Liability or breach is strict.

Causation and foreseeability• What would have happened i the solicitor had done as the

claimant alleges they should?

– For example, i the client would have proceeded with the

transaction or litigation even i the correct advice had

been given there is no causation, as the “but or” test o

causation is not satisied.

• Has there been an intervening act by the claimant or third

party that has broken the chain o causation?

– For example, has the claimant been given subsequent

incorrect legal advice.

• Is the damage too remote?

Measure of damages

• SAAMCo applies to solicitors claims. A solicitor can only be

held liable or loss which alls within the scope o his duty (In

Haugesund v Depa the solicitors’ irm was not held liable

or all o the losses lowing rom a transaction where the

irm was only asked to advise on a speciic question on the

validity o the proposed swaps).

• What is the correct measure o damages?

– The basic rule is that the claimant should be put in

the position he would have been in i the solicitor haddischarged his duty.

• What is the correct date on which damages should be

assessed?

– The general, although by no means inlexible rule is that

damages are assessed at the date o breach.

• Loss o a chance issues must be considered where it is

necessary to speculate what a third party would have done

had the solicitor discharged their duties. For example, i it is

alleged that the solicitor should have advised the claimant

about the eects o entering into a contract, and it is ound

that i given proper advice the claimant would have tried to

re-negotiate the contract, the courts will assess the value o

the lost chance that the counterparty would have agreed to

the amendments.

• Damages or breach o a iduciary duty will be assessed on

a dierent basis, as they are restitutionary.

Contributory negligence/contribution

• Is there an argument o contributory negligence?

– This is not common in claims against solicitors, although

with some exceptions such as claims by lenders against

solicitors. The deence o contributory negligence is not

available in a claim or breach o iduciary duty.

• Can a claim or contribution pursuant to the Civil Liability

(Contribution) Act 1978 be brought?

– Are other proessionals responsible or the same loss,

eg an accountant, surveyor, counsel or a previous or

successive solicitor.

Mitigation

• Has the claimant mitigated his loss?

– Generally speaking a claimant is not obliged to embark on

uncertain or complicated and dificult litigation to mitigate

his loss (Pilkington v Wood (1953)). However, there are

exceptions. For example, a mortgage lender who alleges

a solicitor has been negligent has been required to obtain

possession o the property and enorce the security

(Western Trust Savings Ltd v Clive Travers Co).

Limitation of liability

• Is there a limitation o liability contained in the retainer

agreement

– Note that there are limits on the extent to which solicitors

can limit their liability and consider whether the Unair

Contract Terms Act 1977 or the Unair Terms in Consumer

Contracts Regulations 1994 might apply.



4179/Claims against Solicitors - a checklist/JAN2013

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or loss occasioned to any person acting or reraining rom acting as a

result o material contained in this summary.

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© QBE European Operations and Clyde & Co LLP 2013 .

Clyde & Co LLP’s Professional Indemnity Team has kindlygiven us full permission to reproduce this document,

information correct as at August 2012.

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