Breach of Duty
Professionals such as solicitors, accountants, tax advisors, engineers and insurance brokers owe a duty of care to their clients to supply their services with reasonable skill and care. In addition, the professional will owe contractual duties which sit alongside the common law duty of care.
Professional negligence is the phrase used to describe the situation in which the professional has breached its duties by failing to perform the services to the required standard. These are the standards that could be expected from a reasonably competent professional, having regard to the standards normally in his profession.
There are many reasons and circumstances which may lead to a professional negligence claim, too many to consider them all. Typical claims would include:
- Failure to complete a project, either on time or at all;
- Poor recommendations for business strategy;
- Clerical errors with significant consequences.
Loss and Mitigation
The client will need to prove that the loss they claim is a direct result of the negligent advice or actions of the professional. Not every negligent act will give rise to a loss which the client can recover. In some cases, an intervening event will operate to mean that the client’s loss was not caused by the original negligent act.
Clients affected by negligent advice also have a duty to mitigate their loss. The client is obliged to take reasonable steps to minimise their loss and avoid taking steps that will increase the loss. Losses which could have been avoided by taking reasonable steps will not be recoverable.
Limitations of Liability
Where the relevant services have been supplied under a contract, frequently the professional will include a limitation of liability clause in the contract terms. The limitation of liability clause will typically state that certain types of loss are excluded. The clause may also specify a limit on the maximum amount of damages that the client will be able to recover from the professional. Well-drafted clauses can offer protection to the professional but will not always be effective. In some circumstance,s they can be subjected to a reasonableness test in the courts.
Many professionals will have professional indemnity insurance in place by which, subject to terms, the insurer will agree to indemnify the professional for claims arising from negligence. In some sectors, insurance is required as part of the regulation of the professional.
Even when a professional perform a service to the best of their abilities, a negligence claim can arise if the client perceives the services delivered differently. Often a claim will arise out of circumstances that were beyond the professional’s control.
Having professional indemnity insurance in place can help protect the business from allegations of professional negligence which lack merit. The insurer will wish to appoint solicitors to investigate and defend the claim in these circumstances.
Professional negligence claims are subject to time limits, typically six years from the act of negligence. In certain circumstances, this time period may be extended if the client was not aware of the negligence. If the claim is brought beyond the time limit, the professional will be able to defend the claim on that basis. If you are a client considering bringing a professional negligence claim then it is always prudent to act quickly.
Do you have a potential professional negligence claim you wish to discuss further? Then please contact the Pannone Corporate team on 0800 131 3355 for a confidential discussion regarding your circumstances.