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Professional Negligence January 2012
1. Professional Negligence
Corporate INTL presents
ROUND
TABLE Professional Negligence
Andrea Cohen As a partner in the Commercial Litigation department at Pannone LLP,
Through our lifetimes we all rely on services provided by professionals, for example, in the finance, Management team member Andrea Cohen headed up the Professional Negligence unit dealing with a
range of claimant clients.
medical or legal environment. We often confide our matters to them and trust they will help us in a Professional Negligence Lawyers Association (PNLA)
T: +44 (0)117 905 5316
She is now the Compliance, Client Care and Training Partner for Pannone. Her
professional manner. However, if the standard of work is lower than you would reasonably expect, www.pnla.org.uk
role encompasses compliance, risk management, client care, training, graduate
recruitment and trainees, business continuity, insurance and data protection. She
the professional may have breached their duty of care to you, as the client. If that breach has
Partner
Pannone LLP also deals with professional negligence claims against the firm and aspects of
professional indemnity. She is a founder member of the Professional Negligence
caused you a financial loss, then you may have a claim for professional negligence.
+44 (0)161 909 3000
Andrea.cohen@pannone.co.uk Lawyers Association (PNLA) and member of the PNLA management team and
www.pannone.com
member of the Editorial Advisory Board of the “Journal of Professional Negligence”.
Professional negligence claims can be brought by Although PII makes it harder to make a claim Ms. Hopcraft commented on the proposals: “In my
either an individual or corporate entity against a against a professional, it has also become more opinion the change regarding the availability of
professional who provided a level of skill and care difficult to be protected by the insurance as a few entry to the ARP will reduce the overall cost to the
Susan Hopcraft is a member of Wright Hassall’s professional negligence
that fell below the reasonable standard. months ago the Solicitors Regulation Authority profession of the ARP and make it harder for firms Susan Hopcraft
Associate team and the specialist lender services group, with extensive experience
Susan Hopcraft, associate at Wright Hassall (SRA) has published proposals for changes to the to exist without proper insurance cover.” in professional negligence claims in the financial sector, including eight
LLP, explained that in order to be able to bring professional indemnity insurance for solicitors. Mr. Gore added: “It is likely that the availability Wright Hassall LLP years at CMS Cameron McKenna in London.
T: +44 (0)1926 884675
a successful claim one needs to prove that a of insurance policies will become more expensive
Susan.hopcraft@wrighthassall.co.uk
professional have fallen below the usual standard Andrea Cohen, management team member of and the controls tighter.” www.wrighthassall.co.uk Currently Ms. Hopcraft is very active on recoveries for lenders arising out of
of a typical professional in their position. That may the Professional Negligence Lawyers Association mortgage fraud.
be by doing something wrong, such as valuing a (PNLA) and partner at Pannone LLP, described Recovery of success fees to be abolished
property too high, or by failing to do something, for the main proposals: It is highly likely that, as early as April 2012, ev-
instance forgetting to serve a break clause on a • Removing the restriction of the single renewal eryone’s ability to bring a professional negligence
lease or register a legal charge. date. The SRA recommended that the single claim against a solicitor, accountant or other
Moreover, the act or failure also has to have renewal date was abandoned in light of the professional will be severely curtailed due to the Richard Gore is a litigation partner at Gregg Latchams LLP.
Richard Gore
caused loss. The loss is usually obvious and problems caused by having such a large volume implementation of the Legal Aid Sentencing and Partner
quantifiable in terms of the financial cost to put of business due to be conducted by the same Punishment of Offenders Bill. He is recommended in Chambers 2012 in dispute resolution as “an excellent
it right, but there may be a problem that no one annual deadline. As Ms. Cohen explained, currently, anyone can Gregg Latchams LLP
litigator with a no-nonsense approach; a lawyer you would want on your
T: +44 (0)117 9069 424
has yet spotted, or at least it has not cost any- • Permitting claims arising from work done for finan- approach a solicitor to fund civil litigation by ‘no F: +44 (0)117 9069 459 side in a scrap.” He is a long standing member of the Professional Negligence
thing yet. That loss may still be actionable. cial institutions to be excluded from the compulsory win no fee’ and if the case is assessed as a 60% M: +44 (0)791 6160387 Lawyers Association (PNLA) and deals with professional negligence claims on a
richard.gore@gregglatchams.com regular basis. He also writes and contributes to articles on professional related
However, as Richard Gore, partner at Gregg minimum terms of insurance. If the proposal were chance of success they are likely to be able to www.gregglatchams.com
Latchams LLP, emphasised, the claim must be accepted, firms which agree not to conduct convey- obtain insurance against losing the case. Success issues and tweets regularly about the subject.
made within the limitation periods, i.e. no later ancing (which is the area which involves the majority fees and insurance premiums are recoverable
than six years after the negligence took place. of work done for financial institutions) are likely to from a losing party. However, if sections 43 and
benefit from reduced premiums. 45 of the Legal Aid Sentencing and Punishment
Changes to professional indemnity insurance • Increasing controls over the ARP (Assigned Risk of Offenders Bill are approved by the House of
In order to protect themselves from negligence Pool). The SRA proposed reducing the time for Lords then we will all lose the ability to recover costs regime is withdrawn. She said: “If the land- Dynamic future of the sector for claims and complaints. However, the ap-
claims many professionals are covered by which a firm is eligible to be in the ARP from 12 success fees and insurance premiums if we have scape alters as widely predicted, then we aim to The professional negligence sector is currently proaches to damages and compensation are
professional indemnity insurance (PII). An indi- months to six months and require ARP firms to a strong civil case. continue to offer conditional fee agreements within experiencing many changes. According to Mr. entirely different. It is highly topical as to how
vidual who sues a professional covered by such develop and implement effective plans to either Ms. Cohen said: “The Bill is now in the Com- the revised framework. It is particularly the lower Gore, a potential consequence of the changes clarification will develop on the correct procedure
insurance might be put in a difficult position in exit the ARP into the open insurance market or mittee stage and a decision on the proposed value cases that may fall away if the Bill is passed in addition to those identified above will be that to be followed in such overlapping cases.”
relation to costs. Insurers are extremely rigorous undertake orderly closure. One of the issues on amendments will be made this or next month. The in its current form, because of the relatively high insurance companies will take a more robust Ms. Cohen also believes that ‘no win no fee’
in defending claims against their insured and, which the SRA was seeking views, was whether Bill then moves to the report stage. There is much level of costs required to bring these types of claim, approach to claims. From a commercial point and insurance against losing cases are likely to
unless the individual has the financial capacity the ARP should be available to firms as a “safety speculation on the outcome. Many members of as compared with the recovery. That will have an of view they may well perceive that customers become less available during 2012 and will po-
or means of funding to proceed with the claim, net” as the ARP provides policies of Qualifying the House of Lords have expressed concerns impact on businesses and individuals alike.” and lawyers will be less likely to pursue a claim tentially fall away altogether as a viable financial
there will be little recourse to the courts as it will Insurance for firms either temporarily for a short about the impact on access to justice for ordinary When asked about it what effects the Bill will all the way to trial and will thus raise irrelevant option shortly after that. “Much depends on the
be difficult to obtain legal representation. period at the commencement of the indemnity people. There will be considerable pressure for have in his opinion, Mr. Gore responded: “Whilst issues to counter and frustrate claims. decision of the House of Lords,” she said. “There
Ms. Hopcraft said: “There is no doubt year, or for a set period of time to allow firms to be some assistance to be given to non injury litiga- it is unclear what impact this will ultimately have, In his opinion an interesting recent development is therefore some urgency for potential claimants
that the simplest of claims can be muddied, “rehabilitated” back into the open market. tion in similar terms as for the injury cases, in par- my initial view is that claims against professionals was the case of Jones v Kaney where an expert in to take advice now as it may be very difficult to
over-complicated and delayed by defendants’ • Clarifying obligations on insurers to provide ticular in cases where the defendant is an insurer will drop off as the ability to recover ATE premiums a personal injury claim gave negligent advice and fund cases if the law is changed as proposed.
insurers. They might ask for a huge number of information to the SRA. The SRA proposed that or other large and well resourced business.” and success fees disappears. This will make it was pursued for professional negligence with the The PNLA is the only body providing details for
documents to defend their client and suggest all insurers will be required to provide information She added: “The PNLA has actively been raising less attractive to customers to pursue such claims claim succeeding. Previously the liability of experts specialists in professional negligence claims.
sorts of different scenarios to explain away the to the SRA regarding firms that fail to pay their awareness of the impact of the abolition of recovery and potentially less attractive to lawyers who will for negligent advice was severely limited. Those who think they might have a claim are very
professional’s mistake, lay blame on the claim- insurance premiums and firms that insurers of Conditional Fee Agreement (CFA) success fees be limited in the level of success fee they can Apart from the changes that are already taking welcome to contact our members.”
ant and even try to show how the error did not believe may have mis-represented information. At and After the Event (ATE) premiums on ordinary recover and will be less inclined to take on bor- place, there still many more to come. Ms. Cohen Giving her predictions on the developments in the
cause loss. Individuals need to have patience, present some of these information requirements claimants – whether individuals or businesses.” derline cases with the lack of definite cash flow. At noted there is some confusion currently about the professional negligence sector, Ms. Hopcraft said
fortitude and often deep pockets to run down are permissive rather than compulsory. The SRA Ms. Hopcraft noted that practitioners from her the same time lawyers will have to become more relationship between professional negligence claims that third party claims funding is likely to become an
the resources. Conditional Fee Agreements will work with the Association of British Insurers law firm have been working on publicising the innovative as to how they are able to offer funding and consumer Ombudsman schemes providing com- increasingly important aspect for higher value claims.
(CFAs) have played a key role in redressing the (ABI) to agree guidance setting out the situations impact of the Bill so that anyone with a claim has for these claims and I anticipate an increase in the pensation for poor or inadequate professional service. “We will be monitoring closely how this might become
imbalance between insurers and claimants.” in which firms should be reported. every chance to bring it before the advantageous use of discounted CFAs for a lot of claims.” She explained: “There is an overlap in scope available for lower value claims,” she concluded.
28 Corporate INTL January 2012 January 2012 Corporate INTL 29