Professional Indemnity: fears that agreements may form the basis of a new type of claim

Conditional fee agreements (CFAs) could provide 'fertile ground' for professional negligence claims against solicitors, lawyers were warned last week.


Barney Micklem, a professional negligence partner at City firm Reynolds Porter Chamberlain (RPC), predicted that CFAs would form the basis of a new type of claim.


He told delegates at an RPC seminar that there could be several different types of CFA-related claims: 'A client may say "if you had told me I could have used a CFA, I would have brought my claim". Or they could say "if you had told me about the horrors of CFAs [and the risk of paying double costs], I would have folded immediately".


'Solicitors stand to lose a lot if a case goes to trial and they lose. So if the solicitor says take the settlement, the client can say "you advised me to settle because of a conflict of interest".'


One delegate from Bar Mutual, which provides the bar's compulsory professional indemnity scheme, said it was 'keeping an eye out for where a firm has acted on a CFA and there is an allegation that they cut and ran'. He said: 'I have seen no evidence of that so far, but it is a fertile source of future litigation.'


Meanwhile, Reynolds Porter Chamberlain partner Katherine Rees said that the complaints regime to be introduced as part of the government's legal services reforms could cause problems for solicitors. She said: 'The new regime will spell the end of negligence claims against solicitors under £20,000 through the courts. The public will prefer to go through the office for legal complaints (OLC). That is not necessarily a bad thing, as the legal costs in these cases rapidly stack up and become more than the underlying claim.


'But as practitioners, if we were facing a complaint, we would be concerned as to whether the OLC, where there is a majority of non-lawyers, will be able to deal with quite technical negligence claims against us, even if they are low value.'


Ms Rees added: 'There is a risk of inconsistent findings if you have different bodies dealing with misconduct, [which will still be dealt with by the Law Society], and inadequate professional service [which will be dealt with by the OLC].


'Legal professionals take allegations of misconduct very seriously. If a complaint is made which involves an element of alleged misconduct, then the OLC will hive off that part of the complaint for the [Law Society] to deal with. It will aim to deal swiftly with that part of the complaint. That means the solicitor will be foisted with the OLC findings as he is trying to clear his name with the Law Society.'


She added that while a claimant would not be able to claim compensation for distress through the courts, 'there is nothing to stop the OLC awarding it. Claimants will be able to do a lot better through the OLC than they would through the courts.'