Ruling threatens assistants

Solicitors this week warned that a recent House of Lords ruling leaves lawyers exposed to direct negligence actions.The Lords dismissed an appeal in Merrett v Babb, in which the Court of Appeal ruled earlier this year that a chartered surveyor was personally liable for a mortgage valuation he had carried out more than seven years earlier.The ruling impacted on all professionals - including assistant and associate solicitors who give advice to clients on behalf of their employers.Peter McGuire, a partner with City firm CMS Cameron McKenna, who acted for the chartered surveyor, Mr Babb, said: 'The pay which employees receive is not commensurate with the risk of attracting a personal liability, and such exposure is unlikely to have ever been contemplated by them.'He said that professionals in small firms were likely to face the greatest exposure.Louis Armstrong, chairman of the Royal Institute for Chartered Surveyors (RICS), said he was surprised and disappointed by the decision.

He added: 'This is an issue of major public importance for all professionals, particularly at a time of economic slowdown, when the number of corporate failures tends to rise.'RICS is urging all professionals to check their liability position.Meanwhile, the Court of Appeal has held that a firm of solicitors which relied on the undertaking of another firm in a property conveyance was not negligent.London firm Daybells advised its buyer client that a property could be taken free of a charge in reliance upon the sellers' solicitors' undertaking.

The undertaking was not correct, and Daybells was sued.David Rutherford, partner and head of the legal professional indemnity group at City firm Ince & Co - who advised Daybells - said the decision would be mostwelcome for conveyancers and other professionals wrestling with the Bolitho case, a 1998 House of Lords action in which it was held that a professional practice which does not cater for an obvious risk may beacting unreasonably.Jeremy Fleming