In recent years, private individuals have become increasingly reliant upon the advice and assistance of professionals such as solicitors, surveyors, financial advisers and accountants, particularly at times when, as now, any losses that might be suffered if things go wrong may have a more damaging effect. Also, if you are a private individual, the adverse consequences of getting something wrong are likely to be more damaging. However, sometimes professionals fail to perform their responsibilities to the standard expected of them. This can cause significant loss and damage to the client, who may be able to claim compensation in order to recover at least some of their losses.
The phrase ‘professional negligence’ is something of a misnomer since a claim against a professional can be based on a breach of a term in the contract made between the professional and the client (also sometimes known as ‘the retainer’), as well a breach of duty of care owed by the professional to the client in the tort of negligence, or both.
The retainer may be in writing but it does not have to be. If it is in writing, the contract may include terms that are not expressly stated but are implied for one reason or another. For example, in contracts for services where the professional is acting in the course of a business, a term will be implied into the contract that the service provided will be carried out with reasonable care and skill. This means that the professional undertakes to possess and to exercise reasonable skill in the art they profess and the client is entitled to rely on the professional to exercise the highest degree of skill and care that a competent professional would exercise in work of that kind. It is possible for the retainer to exclude or limit this implied duty (and other duties that are expressly stated in or implied into the retainer), subject to the law and professional rules.
A duty of care in the tort of negligence can arise whether or not there is a contractual relationship between the parties. A professional who gives advice which turns out to be wrong is not necessarily in breach of a duty of care. You will have to demonstrate that the professional fell below the standards of a reasonably competent professional, having regard to the standards normally expected in the relevant profession.
FREQUENTLY ASKED QUESTIONS
Who can bring a claim for professional negligence?
A claim for professional negligence is usually brought by the professional’s client. However, depending on the circumstances, a third-party may also be able to bring a claim.
Who can a claim for professional negligence be brought against?
In theory, a claim for professional negligence can be brought against any professional adviser.
How long do I have to bring my claim?
Claims for professional negligence must be brought within strict time-limits (known as ‘limitation periods’), otherwise this may provide an absolute defence to those claims in any event. The basic limitation period for a claim against a professional in both contract and tort is 6 years after the date on which the relevant cause of action accrued. In contract, the cause of action accrues as soon as the contract is breached. However, in the tort of negligence, no cause of action accrues until all elements of the tort occur. Also, special rules apply to claims brought in the tort of negligence (that do not involve personal injuries) in respect of what is known as ‘latent damage’, where, at the time the cause of action accrues, the client does not have knowledge of all relevant facts. In such circumstances, the limitation period may be extended to 3 years from the date that the client had such knowledge, albeit subject to a long-stop date of 15 years from the date of the negligent act in question. Therefore, even if a contractual claim for professional negligence has become statute-barred, it might still be possible to bring a claim against a professional in the tort of negligence.
The advice I was given was not in writing. Does this matter?
Whilst it will often be desirable for professionals to give advice in writing (for their own benefit as much as their client’s) there are many advantages in giving oral advice, not least because it creates an opportunity for discussion and clarification of any issue that the client may not have understood, and professionals frequently give advice orally. However, even if you were given advice orally, your professional adviser may still have made a note of any attendance on you during which any advice was asked for or delivered. Also, other documents may exist which may record the advice you were given. If no written record exists of the advice you received, this will not prevent you from bringing a claim against a professional, however it may make it more difficult to succeed.
My professional adviser’s terms and conditions exclude liability for professional negligence. Can I still make a claim?
A professional may attempt to exclude or restrict liability by an exclusion clause contained in the retainer. However, to be effective, an exclusion or limitation clause must be incorporated into the retainer and brought to the attention of the client before the contract is concluded. Also, parties do not have complete freedom to insert exclusion clauses into contracts. Generally, a professional cannot exclude or restrict their liability for loss and damage resulting from their negligence unless they can show that the clause is reasonable.
Also, of particular relevance to private individuals, where a contract is made with a consumer, clauses which have not been individually negotiated (including exclusion and limitation clauses) will be unenforceable if they are contrary to good faith and to the detriment of the consumer’s rights.
A professional cannot exclude or limit liability for death or personal injury arising from their negligence.
The use of exclusion and limitation clauses is also restricted in certain professions, such as for Solicitors.
Can I make a claim immediately?
No, not usually. Unless the particular circumstances of a dispute make it inappropriate to do so, the court will expect the parties to have complied with the Pre-action Protocol for Professional Negligence. The Protocol applies where a client wants to claim against a professional (other than a construction professional or healthcare provider) as a result of that professional’s negligence. The objective of the protocol is to assist the parties in attempting to achieve an early settlement of professional negligence claims, if possible, without the need for court proceedings. A party may be subject to an adverse costs order in any subsequent claim that might be begun if they have not properly complied with the requirements of the Protocol, even if they are successful in the claim.
How much compensation will I recover?
If you are successful in your claim, the court will award you compensation the aim of which is to put you in the position you would have been in had the professional not been negligent. How much money this will amount to will depend entirely on the particular facts of your case. However, you have a duty to mitigate your loss which means that you are not able to recover compensation for any part of your loss that you could have avoided or minimised by taking reasonable steps. Also, if any part of your loss and damage was partly suffered as a result of your own actions, any compensation awarded by the court may be reduced to reflect your share of responsibility.
Will I recover my legal costs?
If you make a claim and you are successful, it is usual for the court to make an order that the professional pay your legal costs as well as granting you compensation. However, it is unlikely that the court will award you all of the costs you spend with us. This may be important if you are a private individual. Typically, successful parties to a claim are awarded costs to be assessed on the Standard Basis, if the amount of costs to be paid cannot be agreed with the unsuccessful party. If costs are assessed by the court on the Standard Basis, you can expect to receive (very roughly speaking) between 60-70% of the costs that you will have incurred in bringing your claim. There will usually be a shortfall in recovery from the unsuccessful party of 30-40% of the costs you spend with us, which you will likely have to bear yourself even if your claim is successful and you should always bear this in mind. It is sometimes possible, though it is not usual, to obtain an order for costs on the Indemnity Basis, in which case the level at which costs is recovered is usually between (very roughly) 70-80% of the costs you will spend. If you bring a claim and you lose, you should expect that the court will make an order requiring you to pay the professional’s legal costs. Also, if your claim is not of sufficient financial value, it may be that the successful party is not able, in any event, to recover their costs (other than a relatively modest amount of court fees) from the unsuccessful party or, if they are, some of those costs may only be recoverable in a fixed amount.
What if my professional adviser is insolvent?
For professionals, protection against a professional negligence claim can be afforded by insurance. This is compulsory with some professions, for example, solicitors. This may mean that, even if your professional adviser is insolvent, or is of limited financial means, you may still be able to recover compensation.