Firms brace for negligence impact
When a client choses to retain the services of a solicitor (or other professional person) they are relying on their specialist expertise to help them get the best possible outcome. A professional has a duty to exercise “reasonable care and skill” when dealing with their clients. A failure to meet this standard, giving rise to a mistake that a reasonable professional person working in the same field would not have made, could give rise to a negligence claim if the client has suffered a financial loss as a consequence of the mistake.
Negligence claims against solicitors can arise for all manner of reasons but common themes are:
Recent Case Law
Recent case law has seen the court reinforcing established principles and highlighting the importance of clear advice and tightly drafted retainers.
Brook Properties (Birmingham) Ltd v Alton & Co 
In this case, the court assessed the extent to which a solicitor must ensure that a client understands the advice that they have given.
Mr Irfan and Mrs Parveen (husband and wife), agreed to lend Mrs Parveen’s uncle £700,000 (to redeem an existing charge on his property and avoid repossession) in exchange for an arrangement fee of £100,000, 10% interest and security over the uncle’s property. Mr Irfan and Mrs Parveen acquired the Claimant company, Brook Properties (Birmingham) Limited to be the vehicle for the loan. The Claimant instructed the Defendant, Alton & Co, to act on its behalf in connection with the loan.
Prior to finalising the loan, the Defendant became aware that in addition to the exiting charge on the uncle’s property, there was also a restriction on the property preventing the disposition of the estate without the consent of the Serious Fraud Office (who were at that time investigation the uncle’s affairs). For this reason the Defendant advised the Claimant in a letter sent by fax not to proceed with the loan and followed up with further advice by phone. The Claimant’s instructions were that the uncle was seeking to resolve matters with the SFO and to proceed with the loan, which was duly completed and a charge registered against the property in its favour. The charge was subsequently removed by Crown Court Order.
The Claimant asserted that the Defendant had failed to advise them that the restriction placed on the title by the SFO would take precedence and that they had not received the written advice. Moreover, Mr Irfan and Mrs Parveen did not speak good English and they may not have understood the Defendant’s advice.
The Court dismissed the claim finding:
This case emphasises the importance of ensuring that all advice given is clear, in writing and understood by the client.
Minkin v Landsberg 
This was an appeal by the Claimant, Mrs Sharon Minkin, in a solicitor’s negligence action against the dismissal of her claim on liability. The central issue of the appeal was whether the duties of the Defendant, Ms Lesley Landsberg (a solicitor practising as Barnet Family Law), were limited to the extent that she asserted and that the court of first instance had held.
The Defendant was instructed to draft the terms of a financial remedies consent order agreed between Mrs Minkin and her ex-husband, Mr Gary Minkin, following divorce. Ms Lansberg was not instructed to advise on the terms of the order, which had been negotiated directly between Mr and Mrs Minkin. Mrs Minkin subsequently regretted agreeing the terms of the order and made a claim for professional negligence against Ms Landsberg on the basis that she had failed to advise or warn against entering into the consent order. The court of first instance dismissed Mrs Minkin’s claim on the basis that the retainer was limited and Ms Landsberg had no duty of care to advise on the merits of the underlying agreement.
The Court of Appeal upheld the decision. Jackson LJ summarised the applicable principles as follows:
Antonio Caliendo (2) Baranaby Holdings LLC v (1) Mischon de Reya (a firm) (2) Mischon de Reya LLP 2016
Former Queen’s Park Ranger’s Chairman, Antonio Caliendo, and Barnaby Holdings LLC, bought a claim against the firm of solicitors Mischon de Reya in relation to the sale agreement of a significant shareholding in QPR Holdings Ltd to Sarita Capital Investment Ltd (a vehicle for Flavio Briatore) and Bernie Ecclestone on 1 September 2007 (“the Agreement”). The Claimants contended that the terms of the various documents which were entered into by the parties to the Agreement differed materially, and to the detriment of the Claimants, from the terms which Mr Caliendo had instructed Mishcon de Reya to implement on their behalf.
Mishcon de Reya denied that it was retained by the Claimants or assumed any duty to the Claimants. Moreover, the Claimants had suffered no loss, or were contributorily negligent. Mishcon de Reya also took issue with a number of the key factual foundations for the Claimants' claims.
Arnold J held that Mischon de Reya had not been retained, expressly or impliedly, to act for the majority shareholders of QPR in the sale of their interest in the football club however they did owe a limited duty arising from an assumption of responsibility. Mischon de Reya had not acted in breach of that limited duty and the breaches of duty complained of did not in any event cause the claimants any loss.
Arnold J found that Mr Caliendo was not a witness on whose evidence he could safely rely. He said that the case “involved arguments of legal ingenuity but no merit”.
This case serves as a further reminder of the importance of ensuring that the solicitor/client retainer is drafted in clear terms and that the scope of the solicitor’s duty of care in unambiguous..
For further information about bringing a professional claim see our Professional Negligence FAQ’s.
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