When settlement advice goes wrong

2 September 2020

Solicitors and barristers owe a duty to their clients to act with reasonable care and skill at all times, not least when conducting settlement negotiations and providing advice on settlement. With the majority of claims settling outside of court, common complaints of negligence in this area include giving incorrect or negligent advice about settlement offers, failing to properly assess the value of the claim or advising a client to “under settle” a claim.

In the leading case of Hickman v Blake Lapthorn, the claimant sought damages against his solicitor (first defendant) and counsel (second defendant) for their alleged negligence in connection with the settlement value of a personal injury claim. In this case, the claimant sustained head injuries after being involved in a car accident in which the driver at fault had been uninsured. The first defendant contacted the Motor Insurers Bureau (MIB), a body which offers compensation to victims injured by uninsured drivers. MIB stated that the claimant could not benefit from their scheme because the driver knew or ought to have known that the car was being used without valid insurance. The first defendant instructed the second defendant to advise on the strength of MIB’s defence and to settle particulars of claim and provided him with copies of various medical reports. Certain medical reports indicated that the claimant’s capacity for paid employment was minimal in view of his physical, cognitive and behavioural difficulties. Following advice from the second defendant that he had a 60/40 chance of succeeding on liability against MIB, the claimant decided to accept an offer from MIB of £70,000 damages. Following the settlement of his case, the claimant attempted to regain full employment but was unable to work due to fatigue and an inability to concentrate. The claimant brought a claim against the two defendants on the basis that they had advised him to “under settle” his claim and had failed to take into the account the possibility that he would be unable to work. The Court found in favour of the claimant; the defendants had breached their duty of care by failing to examine the possibility, which was apparent on the papers, that the claimant could claim for loss of earnings and care on a lifetime basis and including it in their advice.

The second defendant recorded in his evidence that he thought it appropriate to keep his advice to the claimant simple.  The Court found that “this was not a case where counsel simply advise that the value of the claim was of the order of £X. It was a case where counsel had to advise that the value of the claim dependent upon the success of rehabilitation and whether [the Claimant] would then be able to hold down a job. Counsel had to advise on the likely range of value.”  The judge did not think this was simply an error of judgment and found the omission to be “clearly wrong” and negligent. In respect of the solicitor’s role, the judge found that when the first claimant saw the way the second claimant was approaching the estimate of the value of the claim, the first claimant was in breach of her duty when she failed to raise the possibility that the claimant might never get into employment.

It is clear from the above, and our experience of settlement issues in potential negligence claims, that solicitors and barristers must take into account all the relevant factors when advising their clients about making or accepting offers to settle claims at the appropriate time. They should also keep all settlement options under review (including whether offers of settlement previously made should be withdrawn if their client is no longer willing to settle for that sum) and they should ensure that offers of settlement are promptly communicated (and recorded by way of a written advice) and explained to their client (and their insurers).

In the Court of Appeal case of Dunhill v W Brook & Co and Crossley, despite finding in favour of the defendant solicitor and barrister, the court of first instance made some valuable observations about the preparation of attendance notes during settlement negotiations. The Court found that some of the attendance notes produced for the court to consider had limitations due to (1) counsel negotiating directly with each other in the absence of their instructing solicitors which meant that the trainee solicitor producing the note had an incomplete insight into counsel’s reasoning, and (2) the notes were too short compared to the length of time of attendance at court and the settlement discussions. Although the inadequate attendance notes did not amount to a breach of duty and therefore a finding of negligence in this case, the importance of preparing clear and accurate attendance notes of settlement discussions (either during the discussions or at the earliest opportunity) cannot be underestimated.

Finally, it is important for claimants to bear in mind that in order to be successful in a professional negligence claim it is not enough to just prove that their solicitor or barrister breached their duty of care by providing services that fell below the standards of a reasonably competent solicitor/barrister. Claimants also have to prove that they have suffered loss as a result of their solicitor or barrister’s negligent act or advice. This is commonly referred to as “causation”. The relevant test is whether “but for” the professional’s negligence would the loss still have occurred? A claim will not succeed if the claimant did not suffer any loss, for example, because the claimant would have acted in exactly the same way had their solicitor or barrister not been negligent.

Further information

If you require advice around a possible professional negligence claim relating to settlement, please get in touch with our professional negligence team

Further information on professional negligence claims against solicitors and barristers is available on our website here.



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