A number of recent court decisions seem to suggest that it may be becoming more difficult to successfully bring a claim in negligence against solicitors. However, with the right legal advice a successful result can be achieved. It is important to consider as early as possible whether you might have a claim in professional negligence. An early appraisal with a solicitor will ensure that the correct steps are taken as soon as possible to protect and progress a potential claim.
In order to succeed in a claim of professional negligence the basic elements of duty, breach and causation must be established.
When will a duty exist?
A solicitor’s duty to his client is principally contractual, and its scope depends on the express and implied terms of the retainer and the basis of the client’s instructions. In Hodgson v Richard Wilson Solicitors Ltd [2015] All ER (D) 186 the court dismissed a claim that a defendant’s solicitor had been negligent in failing to advise the claimant to issue claims against third parties. It was held that, although the scope of the defendant solicitors’ retainer was wide, there was no express or implied duty to advise claimants to issue proceedings against third parties. Furthermore, in Balogun v Boyes Sutton & Perry [2015] EWHC 275 (QB) it was held that there was no duty to follow up and ask questions beyond the instructions given by the client and therefore the firm had discharged its duty.
Both of these cases confirm that it is important for a client to confirm their specific instructions and expectations when agreeing the terms of a solicitor’s retainer.
Breach of duty and causation
Once a duty has been established, a claimant must also show that a breach of that duty has occurred. In cases involving solicitors, the claimant should be able to show that a reasonably competent solicitor would not have acted in the same way or would have given different advice.
The claimant must also show that the breach of duty directly caused the losses claimed. A failure to establish a causal link between the breach and the loss has defeated a number of recent of claims. In the case of Watson Farley & Williams (a firm) v Ostrovizky [2015] EWCA Civ 457 held that even where there has been negligence, the losses were as a consequence of a number of factors.
Establishing causation is often difficult as it is a rare situation where only the client and solicitor are involved in the particular transaction and there are often other factors which could arguably have contributed to the loss suffered.
Loss
Damages for negligence are compensatory in nature and should have the effect of placing the claimant in the same position as if the wrong had not been sustained. However, the situation is different where the claimant’s loss depends on what the hypothetical actions of third parties would have been. This is called the loss of chance principle and requires the claimant to show that there was a real and substantial chance of the third party acting to the claimant’s advantage, if the professional had not been negligent. The claimant is not required to prove what the third party’s hypothetical acts would have been on the balance of probabilities. It is sufficient to show that the chance was substantial and not merely speculative.
An example of the application of these principles is the case of Wellesley Partners LLP v Withers LLP [2015] EWCA Civ 1146. The claimant argued that, but for the defendant’s breach of duty, it would have opened an office in New York and would have won business from a third party. It was held that the claimant first had to show, on the balance of probabilities, that it would have been able to put itself in a position to obtain the work from the third party in the US, and that there was a real chance that the third party would have awarded the work.
Mitigation
In the recent case of Michele Raffaello Bacciottini and Rosemary Anne Cooke v Gotelee & Goldsmith [2014] EWHC 3527 (Ch) it was held that whilst the solicitors had admitted a failure to advise that there was a planning restriction attached to the property restricting its residential use, the claimants had suffered no loss other than the costs of the application to remove the restriction. The claimants were awarded £250 being the cost of the application.
In this case, the claimants argued that they should have been awarded £100,000 (with interest) which was the difference between the value of the property in May 2007 without the planning restriction and the value of the property at that date with the planning restriction. However, it was found that because the restriction had been removed by a simple application costing £250, the claimants had not suffered any loss for which they should be compensated.
This case demonstrates the importance of not only establishing the key elements of liability but confirms that a proper assessment of causation and loss needs to be undertaken at an early stage. The mere fact that loss may be incurred as a result of the breach does mean that the claimant will be compensated in circumstances where that loss can easily be mitigated. A claimant is under an obligation to mitigate his losses and if he is successful in doing so then the claim for losses will be limited to those costs actually suffered.
