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Law Society Gazette – 13 May 2004

There is increasingly more to professional negligence actions than just conveyancing claims. Mark Smulian talks to the lawyers who sue other solicitors and defend them

Professional negligence claims against solicitors come in all shapes and sizes - from the large commercial contract that goes wrong through to the person who writes in green ink threatening dire revenge for some grievance.

What they have in common is that, unless settled rapidly, the solicitor concerned needs advice from another solicitor with experience of negligence actions. This puts the solicitors who specialise in this work in the curious position of having another solicitor, through an insurer, as their client.

As Paul Nicholas, the partner in charge of solicitors' professional negligence work at City firm Reynolds Porter Chamberlain, puts it: 'For a lawyer, it can be fascinating to be dealing with one's own profession.'

Reynolds Porter Chamberlain is one of the main firms to which insurers turn when a solicitor contacts them about a negligence action. Mr Nicholas worked with the commercial market before the Solicitors Indemnity Fund (SIF) was set up in 1976. The SIF was abandoned and replaced by the private insurance market in 2000. 'What goes around comes around and we're back to the commercial market,' he says. 'Though the Law Society has been largely successful in ensuring that the cover is as broad as it was under the SIF rules, there is necessarily a difference in attitude with a commercial insurer.

'They write all kinds of professional indemnity insurance and I think they see nothing particularly special about solicitors. The SIF had strong influence from solicitors on its board and it was seen as part of the Law Society.'

Andrew Blair, a partner in professional liability and commercial litigation at City firm Barlow Lyde & Gilbert, another specialist practice in this field, also reckons the end of the SIF has not had a huge impact.

'Different insurers have different claims philosophies. It is not a case of the commercial market as a whole differing from the SIF,' he says.

The last big boom in negligence cases came in the property crash of the early 1990s, after the mortgage boom of the previous five years.

Both buyers and lenders turned on solicitors, with claims that mortgages had been inadequately explained. Since then 'generally things have settled down', says Mr Nicholas.

While any practice area could see a solicitor suffer a negligence claim, property-related cases are still the biggest cause, he says.

This is borne out by the recent survey by Zurich Professional - the largest provider of solicitors' professional negligence indemnity cover - which confirmed that conveyancing continues to trigger more negligence claims against solicitors than other sectors. Such claims for the period from September 2002 to December 2003 accounted for 34% of total claims, up from 32% during the preceding year.

Residential conveyancing accounts for the lion's share, but commercial property cases are starting to provide a larger proportion of this work.

The second largest category arises from personal injury claims, usually where time limits have been exceeded.

Mr Nicholas has also noticed an increasing number of negligence cases arising from commercial contracts and transactions, 'largely because these deals have become increasingly complex'.

'These are not just City of London cases with mergers and acquisitions,' he says. 'Any firm involved in this work now faces all sorts of legal issues impinging on them.'

Mr Blair also finds that conveyancing and personal injury are the largest causes of negligence cases but that there is now 'nothing like the flood of property claims' that arose a decade ago.

He says: 'There is no trend whereby one could say that a particular area is a cause of real concern to the profession.'

One issue, though, is whether solicitors can limit their liability in negligence cases by saying to a client at the outset that there is a cap on claims.

'A solicitor might have cover for, say, 10 million and want a client to agree that that will be the upper limit of what could be recovered were a negligence case to arise,' Mr Blair explains.

'You can do it, but it is a commercial problem. Do you want to say to your client at the start that there is a limit if you are negligent?'

Professional negligence is a specialised area and Mr Nicholas says there is a natural reluctance among young solicitors to specialise in what might seem a narrow area of practice.

'The perception of a firm like ours is that we do insurance work and we would call ourselves insurance lawyers in the widest sense,' he says.

'If you are doing solicitors' claims, it is extremely interesting business because much of the development of negligence cases in the past 25 years has centred on solicitors. You are dealing with principles of professional liability and duty owed, and its scope.'

It needs a certain professional sensitivity too. 'Contact with solicitors is one of the few areas where the client may consider themselves equally or better qualified than you,' he says.

Mr Blair notes: 'One has to be sensitive about working with one's professional peers. You have to realise a negligence claim is very personal for them, and we cannot get too battle-hardened about it and think this is just another claim; it isn't for them.'

Although the firm 'in a sense profits from other solicitors' errors', it has to be aware that it is 'dealing with people you cannot flannel and who know what they are talking about'.

Solicitors on the receiving end of a negligence action are, he says, 'usually very keen to assist us and talk us through what has gone wrong, or they will say that "something has gone wrong, so OK let's rectify it"'.

Mr Blair finds the work interesting because he has to understand the breadth of issues about the law affecting the underlying case.

'Cases can be anything from a complex commercial transaction to a matrimonial dispute,' he says. 'That is where you have to work with the solicitor concerned and have the ability to grasp the subject.'

On the other side of the fence is Eleanor Wright, a solicitor at south London firm Fisher Meredith, who normally acts for the public against other solicitors. 'I don't imagine solicitors love other solicitors who act against them for negligence, but it is conducted through insurers and so relations are at one remove,' she says.

She confirms that conveyancing is the major cause of her work, but Ms Wright sometimes acts because of errors in criminal trials, as the firm works in this field. She says the courts will usually come down hard in cases where solicitors have failed to keep attendance notes, and have nothing to back their assertion about what they told a client. Courts are also hard on missed limitation dates.

Ms Wright is on the Law Society professional negligence panel, which offers members of the public one hour of free advice.

After that, panel members can decide whether or not to take the case, and this is matter for careful judgement.

'There are a lot of hopeless cases where the amount disputed would never recover the costs of litigation,' she says.

There is also the need to be selective and recognise that some claimants will have an unbalanced view, or even a personal grudge against their solicitors.

Ms Wright says: 'We do get a lot of "green ink" letters alleging negligence against solicitors, but alarm bells ring when you've seen a few of them.

'If someone is trying to sue the last five solicitors they have dealt with, there is not much incentive to take on their case and risk becoming the sixth.'

Unless of course you wish to make yet more work for those fellow lawyers who deal in the business of complaints against their own profession.

Mark Smulian is a freelance journalist