When an individual instructs a solicitor, they may research and make various enquiries to establish which solicitor is best suited to their matter, seeking to find an expert in that field. Solicitors frequently instruct barristers (counsel) as part of their client’s legal team to provide advocacy and additional expertise. Solicitors often rely on advice from counsel when advising clients. Whilst a solicitor is entitled to rely on counsel’s advice, and the more specialist the nature of the advice the more reasonable reliance will be, in doing so they need to properly consider that advice rather than simply accepting the advice without further scrutiny.
The recent case of Richard Terence Percy v (1) Merriman White (2) Raymond John Murphy (3) David Mayall  EWHC 22 (Ch) highlights the requirement for solicitors to exercise independent judgment and use their own expertise to ensure that it is reasonable to rely on counsel’s advice. It also highlights the need for appropriate supervision of junior solicitors as it is not excusable in terms of liability for negligence to assert that an individual lacked experience.
The initial matter which led to this decision was a commercial dispute involving a joint venture. Two individuals (Mr Percy being one of them), each through their own separate companies, set up a third company through which they intended to purchase, refurbish and re-sell properties. Suspicions arose between the two individuals about misappropriation and/or misuse of company funds for personal benefit.
Mr Percy instructed a law firm called Merriman White (MW) in relation to the dispute. The scope of MW’s engagement letter with Mr Percy included “to commence proceedings on your behalf, if so advised by counsel”. The day-to-day conduct of the matter was with a solicitor with 2 years post-qualification experience. MW instructed Mr David Mayall, counsel, to advise on this matter.
At a conference, Mr Mayall advised that the preferred course of action was for Mr Percy to bring a derivative claim, stating that, based on the evidence he had seen, “the Company will almost certainly win, so we have very good prospects of success in regard to liability”. According to MW, Mr Mayall did not warn that there was any possibility that the court would reject the proposed course of action wholesale in the way that later transpired, nor did he advise as to the advantages and disadvantages of that course of action as opposed to seeking a winding-up order. On this basis, MW advised their client to “pursue litigation as aggressively as possible”.
Mr Percy issued a derivative claim and was offered £500,000 during a mediation to settle the claim. No clear advice was given to Mr Percy by MW to accept this offer and so the offer was not accepted. Following this, permission to pursue the derivative claim was not granted nor was an application for permission to appeal that decision.
Professional negligence claim
Mr Percy instigated a professional negligence claim against MW and Mr Mayall on the basis that:
- They failed to advise that there was a risk that permission would not be given for the derivative claim to proceed;
- They wrongly advised that it was “very rare” for a court to wind up a company on just and equitable grounds; and
- They failed to advise that the sum of £500,000 offered to the client during a mediation was within the bracket deemed to be a sufficient sum to compensate his losses.
The professional negligence claim was eventually settled by MW and Mr Percy agreed not to pursue Mr Mayall on the basis that each side paid their own costs. MW then sought a contribution from Mr Mayall on the basis that he was liable for the “same damage”.
The High Court (the Court) considered Mr Percy’s claim disclosed a reasonable cause of action against MW, whether or not MW was in fact liable, and that MW was prima facie entitled to a contribution from Mr Mayall.
When assessing the contribution recoverable by MW from Mr Mayall the Court held that the responsibility for the loss and damage suffered by the client was more attributable to MW rather than Mr Mayall as before Mr Mayall had even been instructed there had been an offer to settle which MW had not adequately analysed or advised on; the Court also considered that MW were responsible for failing to accept the offer of £500,000 given that Mr Mayall had not been present at the mediation. However, the Court considered that MW was not entitled to take Mr Mayall’s advice to “press on with proceedings” at face value rather than engage with settlement discussions further. The Court also took account of the fact that MW had held themselves out in the letter of engagement as “experts in commercial law”.
The Court did not consider there was any authority to suggest that because one of the solicitors at MW who completed a large amount of the work was less experienced than Mr Mayall, he would be in any way less liable. A solicitor is expected to exercise reasonable skill and care of a competent solicitor acting in his/her field.
Notwithstanding the above, the Court ordered that Mr Mayall make a contribution of 40% of the settlement sum paid by MW for his responsibility in the matter which arose as a result of failing to properly analyse the options available to Mr Percy, including winding up and arbitration options; failing to advise on the derivative claim from the perspective of the company; failing to advise on the £500,000 to some extent given he indicated that he had been aware of that offer.
Whilst the solicitors in this case were able to secure a contribution from counsel as result of the negligence advice provided to them this case makes it clear that whilst a solicitor is entitled to rely on counsel’s advice, they cannot simply follow this advice without scrutiny and must exercise their own judgment. The more specialist the advice from counsel, the more likely it is to be considered reasonable for a solicitor to rely on it.
Further information is available on our website:
- Professional Negligence claims against lawyers
- Professional Negligence claims against finance professionals
- Professional Negligence claims against property professionals
- Professional Negligence case studies
- Frequently asked questions relating to Professional Negligence
- Further blogs relating to Professional Negligence
You may also be interested in our Professional Negligence podcast in which we discuss the potential claims arising against lawyers, finance professionals, property professionals, and brokers as a result of the COVID-19 pandemic.
about the author
Rebecca Ryan is an Associate in our Dispute Resolution team. Rebecca's practice covers a wide range of disputes, including professional negligence, reputation and media, and civil fraud and investigations.