Professional Negligence Claim - Anyone With Experience?

[AreYouJoking?]

First post plus it's a long one but any advice gratefully received. We do have lawyers engaged and working on this but I'm after a practical approach and thoughts from anyone with experience.

I was negligently advised by a major firm relating to the purchase of a business out of liquidation (I'd previously been a director of the business that was being purchased). I needed to ensure I complied with S216 laws so that I could trade under the previous name and was clear about that from the outset in writing.

However I was incorrectly advised around the process, which resulted in a breach of S216 and a statutory criminal offence and subsequent notice of investigation by the Insolvency Service, and then further advised incorrectly and told that the breach could not be remedied, which it could (and was) by a different firm who applied for High Court permission, which was granted. When raising this negligent advice with the person responsible they denied it and lied in writing in their response to me saying they did not know that I planned to use the previous trading name. I have it in black and white. Furthermore, the response to my later formal complaint also contained an outright lie.

The value of the claim is conservatively £500,000+ and probably north of £750,000 due to the impact it had on the business. I was unable to trade for several months while the issue was rectified, significant costs were incurred fixing it etc.

The firm has of course denied liability however indicated they will make a settlement offer but as of yet none has been forthcoming, so my next step is to proceed to the formal letter of claim, at which point all this will become public, which I have to assume the firm absolutely will not want to happen, because not only is the negligence very clear, but they have also lied to cover it up. The complete file I have been sent by them does not contain specific electronic communication where the person responsible states this lie which I assume is also deliberate.

So my question is has anyone been through anything similar and what was the outcome? Are the lies in black and white a matter for the SRA? How much do firms want to stop the formal letter of claim becoming public? From what I can see there are very few professional negligence claims that get to that stage, presumably because they are settled with an NDA. The firm have also refused to give their insurance details to me, is that because they plan to just settle rather than notify (similar to a car accident where you pay for repairs rather than going through insurance because of the impact on premiums)?

I will keep this updated as I progress through the claim process.

 

[Newchodge]

First post plus it's a long one but any advice gratefully received. We do have lawyers engaged and working on this but I'm after a practical approach and thoughts from anyone with experience.

I was negligently advised by a major firm relating to the purchase of a business out of liquidation (I'd previously been a director of the business that was being purchased). I needed to ensure I complied with S216 laws so that I could trade under the previous name and was clear about that from the outset in writing.

However I was incorrectly advised around the process, which resulted in a breach of S216 and a statutory criminal offence and subsequent notice of investigation by the Insolvency Service, and then further advised incorrectly and told that the breach could not be remedied, which it could (and was) by a different firm who applied for High Court permission, which was granted. When raising this negligent advice with the person responsible they denied it and lied in writing in their response to me saying they did not know that I planned to use the previous trading name. I have it in black and white. Furthermore, the response to my later formal complaint also contained an outright lie.

The value of the claim is conservatively £500,000+ and probably north of £750,000 due to the impact it had on the business. I was unable to trade for several months while the issue was rectified, significant costs were incurred fixing it etc.

The firm has of course denied liability however indicated they will make a settlement offer but as of yet none has been forthcoming, so my next step is to proceed to the formal letter of claim, at which point all this will become public, which I have to assume the firm absolutely will not want to happen, because not only is the negligence very clear, but they have also lied to cover it up. The complete file I have been sent by them does not contain specific electronic communication where the person responsible states this lie which I assume is also deliberate.

So my question is has anyone been through anything similar and what was the outcome? Are the lies in black and white a matter for the SRA? How much do firms want to stop the formal letter of claim becoming public? From what I can see there are very few professional negligence claims that get to that stage, presumably because they are settled with an NDA. The firm have also refused to give their insurance details to me, is that because they plan to just settle rather than notify (similar to a car accident where you pay for repairs rather than going through insurance because of the impact on premiums)?

I will keep this updated as I progress through the claim process.

There is only one sensible piece of advice. You have professionals dealing with this for you. Speak to them.

 

[UK Contractor Accountant]

The value of the claim is conservatively £500,000+ and probably north of £750,000 due to the impact it had on the business. I was unable to trade for several months while the issue was rectified, significant costs were incurred fixing it etc.

The claim I assume is costs incurred in rectifying + loss of profits in the intervening period.

I assume this a Firm of Solicitors that messed up as your refer to reporting to SRA?

 

[AreYouJoking?]

There is only one sensible piece of advice. You have professionals dealing with this for you. Speak to them.

I am, and they are dealing with it. I was just interested in any anecdotal experience from others who might have been through a similar situation as I'm learning on the go!

 

[AreYouJoking?]

The claim I assume is costs incurred in rectifying + loss of profits in the intervening period.

I assume this a Firm of Solicitors that messed up as your refer to reporting to SRA?

Yes correct on the costs and loss of profits.

It is a London firm, and one that would certainly not like this being made public as it would likely be damaging to their reputation / PR.

 

[UK Contractor Accountant]

Yes correct on the costs and loss of profits.

It is a London firm, and one that would certainly not like this being made public as it would likely be damaging to their reputation / PR.

Didn't the IP for the liquidated firm give you any heads up on re-using the company name if they handled the sale?

 

[UK Contractor Accountant]

SRA Reporting - extract below
We investigate serious or repeated cases of poor behavior or conduct. Types of things we usually investigate are set out below. I

• Dishonesty or fraud
• Misuse of client money

 

[AreYouJoking?]

Didn't the IP for the liquidated firm give you any heads up on re-using the company name if they handled the sale?

They told me to take legal advice, which I did. I just received the wrong advice.

 

[Paul Kelly ICHYB]

Wasn't there anything in writing about what exactly you were buying?

 

[AreYouJoking?]

Wasn't there anything in writing about what exactly you were buying?

Yes, it was everything the company had including all assets, intellectual property, website etc. The issue was around the S216 advice to enable me to use the previous trading name.

I put in writing to my lawyers that i wanted to use the previous name. I was however not given the right advice as to what was needed to do to mean that could happen.

 

[UK Contractor Accountant]

Pre-Action Protocol for Professional Negligence – Civil Procedure Rules – Justice UK

www.justice.gov.uk

Negligence and regulatory misconduct: the importance of self-reporting | Lockton

In this article, Andrew Pavlovic, professional discipline and regulatory partner at CM Murray LLP, a leading partnership, employment and professional regulatory law firm, sets out the circumstances in which firms may need to consider self-reporting misconduct to the Solicitors Regulation...

global.lockton.com

 

[Paul Kelly ICHYB]

We could go down the route of whether the brand is an asset or IP, but probably best to let the legal people sort it out

 

[UK Contractor Accountant]

Risk to law firms
Unfortunately, solicitors acting dishonestly in order to attempt to rectify mistakes is nothing new. In February 2022, the SRA published guidance (opens a new window) and a thematic review (opens a new window) on workplace environments, making clear that they may take action against firms as well as individuals where firm culture has caused or contributed to regulatory misconduct.

In relation to the covering up of mistakes, the SRA has indicated it may act against firms where it finds that the firm has failed to cultivate a ‘speak up’ culture, where solicitors feel able to admit to making mistakes without facing excessive criticism or sanction. When incidents of misconduct do occur, therefore, firms should reflect on whether this was a one-off incident or if it is symptomatic of a wider problem.

 

[Gyumri]

You need to tread very carefully before assuming that you have an open and shut case and take what your solicitors say - even if you have a KC on board - with a pinch of salt.

The path you are thinking of taking will cost you around £400,000 and several years of anguish. If that's what you'd like then go for it.

However, it is not the duty of a liquidator to advise you on the steps you must take - giving notice in the London Gazette etc - to enable you to re-use the name of the liquidated company. The onus is on you to comply with the law.

And forget the SRA as they are a laughing stock in the legal world.

Re-use of company names

www.gov.uk

 

[AreYouJoking?]

You need to tread very carefully before assuming that you have an open and shut case and take what your solicitors say - even if you have a KC on board - with a pinch of salt.

The path you are thinking of taking will cost you around £400,000 and several years of anguish. If that's what you'd like then go for it.

However, it is not the duty of a liquidator to advise you on the steps you must take - giving notice in the London Gazette etc - to enable you to re-use the name of the liquidated company. The onus is on you to comply with the law.

And forget the SRA as they are a laughing stock in the legal world.

The negligence is there written in black and white and backed up by the High Court judge when he ruled in my favour and gave me permission to use the name because I had been badly advised.

The firm will be on the hook for my legal costs, so in that sense I don't mind. They have said they will be making a settlement offer, which I'm sure they don't do if they know they've done nothing wrong.

It's not got anything to do with the liquidator it is entirely on the lawyers I retained to advise me with relation to the re-using of the name, and it is their negligence which is the issue.

 

[Gyumri]

The negligence is there written in black and white and backed up by the High Court judge when he ruled in my favour and gave me permission to use the name because I had been badly advised.

The firm will be on the hook for my legal costs, so in that sense I don't mind. They have said they will be making a settlement offer, which I'm sure they don't do if they know they've done nothing wrong.

It's not got anything to do with the liquidator it is entirely on the lawyers I retained to advise me with relation to the re-using of the name, and it is their negligence which is the issue.

the court giving you permission to re-use the company name does not prove negligence - the two issues are completely separate. You presumably had to comply with the law in order to gain the court's permission - which cannot be applied retrospectively.

If negligence can be proved then you would also need to prove that it caused you an actual loss.

If in the end you win your case it will take another two years to come to trial and you will have doled out buckets of money to solicitors and counsel in the meantime who will be laughing all the way to the bank at £500 per hour.

You will only ever recover some of your costs on a detailed assessment after say year 4. The court system in the UK is a mug's game for people in your position - as you may find out.

 

[Gyumri]

The negligence is there written in black and white.

Have a read:

Carruthers Law | A Guide to bringing a Professional Negligence Claim.

We set out below a guide to bringing a Professional Negligence claim against a Professional. Whether a Solicitor, Barrister, Accountant, Surveyor, Architec...

www.carruthers-law.co.uk

 

[numbersrule]

What do the Solicitors Ts&Cs say about their Limit of Liability?

( as opposed to their Level of Cover )

And what do your Legal Advisors say about that?

 

[AreYouJoking?]

What do the Solicitors Ts&Cs say about their Limit of Liability?

( as opposed to their Level of Cover )

And what do your Legal Advisors say about that?

It states it is £3m so not an issue on that front.

 

[Frank the Insurance guy]

The firm have also refused to give their insurance details to me, is that because they plan to just settle rather than notify

Hi @AreYouJoking? ,

Sorry to hear of your situation.

In answer to your query above, it is a common misconception that having their insurance details is relevant or helpful.

If you had insurance details, it would make no difference - you would not be entitled to approach them directly or make a claim against the policy.

The insurance policy is the firm's and it is only them that can make a claim under the policy.

I suspect that the firm have notified their insurers and the firm are acting on the insurer's instructions/advices. Unfortunately, in potentially large claim scenarios, the Insurers will take a "wait & see" approach to see what you do!

Your best option is to proceed to formal legal action, but this will cost you!

The firm may make an offer (likely supported by their insurer), if the cost of such offer would be less than the potential legal costs the insurers would incur - As your potential claim is considerable, it may mean insurers will hold fast and pay huge costs to defend their position.

In my experience, the larger the potential claim, the longer and more drawn out this will be - expect this to take a considerable length of time, effort and money!

 

[WaveJumper]

Hi @AreYouJoking? ,

Sorry to hear of your situation.

In answer to your query above, it is a common misconception that having their insurance details is relevant or helpful.

If you had insurance details, it would make no difference - you would not be entitled to approach them directly or make a claim against the policy.

The insurance policy is the firm's and it is only them that can make a claim under the policy.

I suspect that the firm have notified their insurers and the firm are acting on the insurer's instructions/advices. Unfortunately, in potentially large claim scenarios, the Insurers will take a "wait & see" approach to see what you do!

Your best option is to proceed to formal legal action, but this will cost you!

The firm may make an offer (likely supported by their insurer), if the cost of such offer would be less than the potential legal costs the insurers would incur - As your potential claim is considerable, it may mean insurers will hold fast and pay huge costs to defend their position.

In my experience, the larger the potential claim, the longer and more drawn out this will be - expect this to take a considerable length of time, effort and money!

Very sound advice and deep pockets and a strong nerve required. Having worked in an industry that in (my words) always engaged lawyers with very “big boots” it will be dragged out and settlement will only come on the steps of the court. If you can afford to hold out that long.

 

[AreYouJoking?]

Hi @AreYouJoking? ,

Sorry to hear of your situation.

In answer to your query above, it is a common misconception that having their insurance details is relevant or helpful.

If you had insurance details, it would make no difference - you would not be entitled to approach them directly or make a claim against the policy.

The insurance policy is the firm's and it is only them that can make a claim under the policy.

I suspect that the firm have notified their insurers and the firm are acting on the insurer's instructions/advices. Unfortunately, in potentially large claim scenarios, the Insurers will take a "wait & see" approach to see what you do!

Your best option is to proceed to formal legal action, but this will cost you!

The firm may make an offer (likely supported by their insurer), if the cost of such offer would be less than the potential legal costs the insurers would incur - As your potential claim is considerable, it may mean insurers will hold fast and pay huge costs to defend their position.

In my experience, the larger the potential claim, the longer and more drawn out this will be - expect this to take a considerable length of time, effort and money!

Thank you, this is a useful perspective. Regarding the insurance it was more a question of whether they are planning on settling without claiming on their insurance, which is what our lawyer believes. Whilst it is a large sum to me, for this particular firm it is likely not that big. They have been involved in several negligence claims that are orders of magnitude larger than this.

They have tried to put me off filing a letter of claim by stating they will be putting forward a settlement offer. I assume this is to avoid the details of the claim becoming public and the negative PR and reputational damage that will bring.

 

[WaveJumper]

Thank you, this is a useful perspective. Regarding the insurance it was more a question of whether they are planning on settling without claiming on their insurance, which is what our lawyer believes. Whilst it is a large sum to me, for this particular firm it is likely not that big. They have been involved in several negligence claims that are orders of magnitude larger than this.

They have tried to put me off filing a letter of claim by stating they will be putting forward a settlement offer. I assume this is to avoid the details of the claim becoming public and the negative PR and reputational damage that will bring.

Fingers crossed for a good (speedy) positive outcome best of luck

 

[Newchodge]

Thank you, this is a useful perspective. Regarding the insurance it was more a question of whether they are planning on settling without claiming on their insurance, which is what our lawyer believes. Whilst it is a large sum to me, for this particular firm it is likely not that big. They have been involved in several negligence claims that are orders of magnitude larger than this.

They have tried to put me off filing a letter of claim by stating they will be putting forward a settlement offer. I assume this is to avoid the details of the claim becoming public and the negative PR and reputational damage that will bring.

Your second paragraph is completely illogical. You already know that they 'have been involved in several negligence claims that are orders of magnitude larger than this.' so why would your letter of claim (letter before action?) worry them. Even if it were to be made public, which is not normal. Why are you issuing the letter of claim and not your solicitor? Once the other side knows you have instructed a solicitor they would stop communicating with you and everything, including a settlement offer, would go via them.

 

[AreYouJoking?]

Your second paragraph is completely illogical. You already know that they 'have been involved in several negligence claims that are orders of magnitude larger than this.' so why would your letter of claim (letter before action?) worry them. Even if it were to be made public, which is not normal. Why are you issuing the letter of claim and not your solicitor? Once the other side knows you have instructed a solicitor they would stop communicating with you and everything, including a settlement offer, would go via them.

I am assuming that law firms (of all sizes) do not like allegations of their negligence being made public. From what I can understand from The Times (I can't post a link but it's a URL ending "listed-firms-lead-table-of-lawyers-being-sued-tdkh0ft2l") a very very small number end up reaching the formal letter of claim being submitted and details thus becoming public knowledge.

The vast majority of negligence claims are related to conveyancing. This is in a different area and given the importance of this sector to the firm I suspect it would have significant impact on their reputation (and thus business / profits).

 

[Newchodge]

I am assuming that law firms (of all sizes) do not like allegations of their negligence being made public. From what I can understand from The Times (I can't post a link but it's a URL ending "listed-firms-lead-table-of-lawyers-being-sued-tdkh0ft2l") a very very small number end up reaching the formal letter of claim being submitted and details thus becoming public knowledge.

The vast majority of negligence claims are related to conveyancing. This is in a different area and given the importance of this sector to the firm I suspect it would have significant impact on their reputation (and thus business / profits).

How does a letter of claim become public knowledge?

 

[AreYouJoking?]

How does a letter of claim become public knowledge?

When it gets filed with the court (and the appropriate fee paid) it will end up on caseboard.io and the likes of law360 trawl these sites for things that look interesting. As does The Times - who note that professional negligence claims can have a significant impact on the valuation of firms.

 

[Newchodge]

When it gets filed with the court (and the appropriate fee paid) it will end up on caseboard.io and the likes of law360 trawl these sites for things that look interesting. As does The Times - who note that professional negligence claims can have a significant impact on the valuation of firms.

A letter of claim, also called a letter before action, gets sent to the potential defendant, no one else. The first thing that gets filed with the court is the claim. Have a look here as you seem to be acting without the input of your lawyer. https://www.tozers.co.uk/insights/what-is-a-letter-of-claim

 

[AreYouJoking?]

A letter of claim, also called a letter before action, gets sent to the potential defendant, no one else. The first thing that gets filed with the court is the claim. Have a look here as you seem to be acting without the input of your lawyer.

I'm following exactly what my lawyer says I should do.
We are sending a letter pointing out the omission of various incriminatory emails in the file supplied.
We are giving them one final chance to provide the settlement offer they said they would.
If they do not then we will file the claim.

 

[WaveJumper]

I'm following exactly what my lawyer says I should do.
We are sending a letter pointing out the omission of various incriminatory emails in the file supplied.
We are giving them one final chance to provide the settlement offer they said they would.
If they do not then we will file the claim.

Keep us posted on how you get on, best of luck

 

[Gyumri]

I'm following exactly what my lawyer says I should do.

I hope he's also asked you to set aside £350,000 + for his firm's legal fees.

 

[numbersrule]

It states it is £3m so not an issue on that front.

I suspect the £3m you refer to is their Level of Cover, not their Limit of Liability, which may be the lesser of two or more very different amounts and clearly defined in their Terms as opposed to their Insurance Certificate.

Were the other separate Claims recent? Is their policy 'In the Aggregate?' Or Any One Claim?.

Are they keen about a settlement offer because they have no headroom left in an Aggregate policy? Meaning the Liability rests with the Solicitors as opposed to the Insurers?

 

[Frank the Insurance guy]

I suspect the £3m you refer to is their Level of Cover, not their Limit of Liability, which may be the lesser of two or more very different amounts and clearly defined in their Terms as opposed to their Insurance Certificate.

Were the other separate Claims recent? Is their policy 'In the Aggregate?' Or Any One Claim?.

Are they keen about a settlement offer because they have no headroom left in an Aggregate policy? Meaning the Liability rests with the Solicitors as opposed to the Insurers?

The Insurance limit will be on an Any One Claim Basis (Not in the aggregate) - this is needed to comply with the SRA's minimum requirements. Therefore the other claims are not relevant to the insurance cover in respect of this claim as each one will have its own limit.

 

[AreYouJoking?]

I suspect the £3m you refer to is their Level of Cover, not their Limit of Liability, which may be the lesser of two or more very different amounts and clearly defined in their Terms as opposed to their Insurance Certificate.

Were the other separate Claims recent? Is their policy 'In the Aggregate?' Or Any One Claim?.

Are they keen about a settlement offer because they have no headroom left in an Aggregate policy? Meaning the Liability rests with the Solicitors as opposed to the Insurers?

It states

"Limitation of our liability

We will not be liable to you for any losses or costs you may incur in excess of £3 million. We consider this limitation on our liability to be fair and reasonable"

According to our lawyer, the reason they are keen to offer a settlement is that the negligence is clear cut and that they probably don't want to go through their insurer but rather settle. The analogy I was given was the equivalent of a car accident where you pay for the repairs without telling your insurance to avoid messing up your no claims or increasing your future premiums.

 

[AreYouJoking?]

I hope he's also asked you to set aside £350,000 + for his firm's legal fees.

No, but if we had to pay that then we would surely recover it in due course. I don't see how that would make sense for them to do as they would also have significant fees from their own side, plus the amount owed from the claim. So they'd be out well over £1m by the end of it, when they can settle now for a significantly lower amount.

Our next step might be to serve a Part 36 Offer.

 

[Gyumri]

No, but if we had to pay that then we would surely recover it in due course.

You may get back 75% if you are lucky on a detailed assessment and only after another three years have passed.

Our next step might be to serve a Part 36 Offer.

That will help concentrate their minds but the essential document you need to read is the retainer with your former solicitors to verify the scope of the work they were undertaking to provide in regarding the re-use of your old company name.

Did it specifically include providing legal advice as to your ability to re-use the former company name? If not then you may have an uphill struggle to prove negligence.

 

[Michael Loveridge]

You may get back 75% if you are lucky on a detailed assessment and only after another three years have passed.

That will help concentrate their minds but the essential document you need to read is the retainer with your former solicitors to verify the scope of the work they were undertaking to provide in regarding the re-use of your old company name.

Did it specifically include providing legal advice as to your ability to re-use the former company name? If not then you may have an uphill struggle to prove negligence.

A lot of this advice seems to be predicated on the basis that the OP is acting in person. He clearly isn't, and has retained solicitors.

Consequently, all the warnings about costs are probably unnecessary. A claim like this would nearly always be dealt with under a Conditional Fee Agreement, whereby the lawyers accept the costs risk in return for a slice of the expected damages.

Such arrangements normally also include an ATE insurance policy, which insures against the risk of losing and being ordered to pay your opponent's costs.

So from the OP's point of view he doesn't need to worry about the costs, as someone else will be picking up any legal bills.

Of course if he doesn't have a CFA in place it's a wholly different matter, and in that case he needs to ask his solicitors why. If they're not willing to run the case on a CFA then it means that they don't rate his chances of success as sufficiently high to share the risk. This should raise a big red flag.

But the OP does seem to be confused. To be clear, the letter of claim would - or should - always be drafted by a solicitor or counsel, as it's a formal document and has to comply with the professional negligence protocol. It's sent to the Defendant, and they are normally allowed three months to respond. Most cases are settled without going to court.

However, the letter of claim is certainly not a public document, and it should definitely not be disclosed to any third party, at least without the agreement of the solicitors.

It's only if court proceedings are issued that the matter is then in the public domain, and the press - or anyone else - can obtain copies of the claim documents.

 

[Gyumri]

A lot of this advice seems to be predicated on the basis that the OP is acting in person. He clearly isn't, and has retained solicitors.

So from the OP's point of view he doesn't need to worry about the costs, as someone else will be picking up any legal bills.

If he was an LIP then he could claim £16 per hour as his costs, but he has engaged solicitors and for a claim of this size a small fortune would be at risk. The OP might find some funder to finance the litigation and pay his solicitors fees but in that case you can be sure that the OP will be left with just a few crumbs - if he wins. Funders are not registered charities.

 

[Michael Loveridge]

If he was an LIP then he could claim £16 per hour as his costs, but he has engaged solicitors and for a claim of this size a small fortune would be at risk. The OP might find some funder to finance the litigation and pay his solicitors fees but in that case you can be sure that the OP will be left with just a few crumbs - if he wins. Funders are not registered charities.

You're entirely missing the point. If a claim is being run under a CFA the claimant doesn't have to pay any legal fees, win or lose.

If he wins, the lawyers will recover their charges from the opponent, and they also take a cut of the claimant's damages as their success fee; and if he loses his lawyers don't charge him for their work and the ATE insurers pay his opponent's legal costs.

 

[The Resolver]

Thsi needs to be with the PI insurers. The firm is obliged by Rule 9 of the SRA Indemnity Insurnce Rules to notify their insurers of your claim and to provide you with the insurers contact details. Under Rule 8 the SRA can provide that information.