Despite widespread use of case management systems and conduct rules requiring better risk management in law firms, many professional negligence claims are still caused by basic errors such as missing time limits in personal injury claims. Our specialist team has also seen a notable increase in under-settlement claims. This article highlights some recent developments and looks at under-settlement claims in more detail.

As lawyers practising in this area know, events occurring after the notional trial date may be taken into account in some circumstances (Charles v Hugh James Jones and Jenkins [2000]). The Court of Appeal has now ruled on the question of what should be done when, after the notional trial date, some entirely new event supervenes that could not have been known about at the date of the original trial (Hibbert Pownall & Newton v Whitehead and McLeish).

In Hibbert Pownall, the mother of a child suffering from spina bifida brought a wrongful birth claim. She committed suicide before it was concluded. Her estate could then only claim damages limited to the cost of care and loss of earnings incurred by the mother before her death together with her pain and suffering. The original claim was settled for a reduced amount accordingly.

Defendant delays

In the professional negligence claim brought on behalf of the estate, the court held that but for the defendant solicitors’ negligent delays, the first action would have been successfully concluded before the mother’s death and the claim would then not have been limited to losses incurred up to the date of her death. However, the defendant solicitors successfully argued that their breach of duty occasioned no recoverable loss to the estate.

The reasoning in the judgments differs. The majority held that the loss to the estate was irrecoverable on public policy grounds. The defendants should not be held liable for failure to recover for the estate what “on the full facts amounts to an uncovenanted windfall”. The court should not speculate when it knows.

The court specifically left open the question of what should happen in a case where a supervening event, occurring after the notional trial date, would, if taken into account in the later action, increase the damages rather than diminish them.

As from 1 July, 2008, claims management companies that conduct claims for claimants must have professional indemnity insurance. The minimum level of cover is quite low, at £250,000 for a single claim and £500,000 for aggregated claims, as set out by an amendment to the Compensation (Claims Management Services) Regulations 2008.

Allegedly under-settled claims are becoming increasingly common. Allegations we have seen include premature settlement based on insufficient information, failure to consider specific heads of damage, failure to advise on provisional damages and failure to advise the claimant sufficiently on an offer.

The claimant has to show that overall his claim was under-settled. It may not be relevant that one part of the claim was wrongly calculated if, in fact, the settlement figure was in the right range. The court will take account of the likelihood that one witness or expert might have been preferred over another.

Two relatively recent cases in this area reached very different results. In Hickman v Blake Lapthorn and Fisher [2005], an offer to settle was made by the original defendant at court just before the liability trial was due to start. There had, understandably, been no full investigation of quantum. The original claim was settled on the assumption that the claimant would obtain full-time employment.

In the event, the claimant was unable to work. It was held that the claimant’s advisers should have taken into account the real possibility, apparent from the papers, that the claimant might not work again. The claimant should have been advised of the likely value of the claim if he could not return to work and would not have accepted the offer had he been so advised. The claimant, therefore, succeeded in the professional negligence claim.

Discounted figures

By contrast, the claimant failed in Walker v Chruszcz and Irwin Mitchell [2006]. Again, the claimant was advised to accept a heavily discounted figure on the morning of the trial.

However, it was held that the basis for this advice was that there were serious concerns about the claimant’s
reliability as a witness, that the clai-mant had been reasonably and sufficiently advised that there was a real risk of losing on liability, and the claimant had had a choice as to whether or not to accept the offer.

In Walker, unlike Hickman, there was no successful allegation that the claimant’s legal advisers had failed properly to advise on the likely value of the case on full liability, although the leading counsel’s earlier valuation was described as “very conservative”.

Surprisingly often, claimants will allege under-settlement even when they have been clearly advised by their original solicitor not to accept an offer and have rejected that advice.

The claimant’s argument usually is that the advice was insufficient or unclear in some way. We successfully defended such a claim at trial, where the defendant solicitor had advised: “My advice to you must be that it is unsafe to accept this offer without obtaining further evidence… to rule out residual brain damage. The offer of £40,000 is probably reasonable if henceforth you can put all this behind you.

“However, there is a real risk that it substantially undervalues your claim. You cannot come back for more if you accept this offer. My advice therefore has to be that you should undergo further tests and look at the position in the light of those.”

The defendant solicitor also had several discussions with the claimant to try and persuade her to wait at least until counsel’s advice could be obtained. At trial, it was common ground that the claim would have been worth more had the further investigations been carried out, as it transpired that the claimant did have some brain damage (although she did have capacity).

The claimant argued that the defendant had not advised in sufficiently robust terms and had not given her enough information about the quantum potential of the claim. It was clear at trial that at the time of settlement she (and her husband) knew that the claim would be worth a six-figure sum if she was unable to return to work as a result of her injuries. The judge held that the defendant solicitor had advised in sufficiently clear terms of the real risk of under-settlement and the claim was dismissed.

Many litigants, after settlement, think they might have done better. As Justice Davis said in Walker: “…such persons might also usefully bear in mind this thought (in practice, perhaps less frequently entertained by them): ‘If I had fought, I might have lost’.”

 

For further information please contact: Mary Duncan, partner and head of department

This article was first published in Legal Week.