professional negligence claims

How Can Businesses Protect Themselves From Professional Negligence Claims?

Linkilaw Company Law, Employment Law Leave a Comment

When you contact a professional advisor, you expect them to approach your business affairs with care and skill.

Even professionals make mistakes – and sometimes these can adversely impact your business with disastrous results. Only last week we learnt that BP will pay $18.7 billion for its gross negligence which resulted in the 2010 Gulf Oil spill.

Clients expect high service standards and are more likely to resort to litigation when such standards have not been met. In a nutshell, the test for professional negligence requires you to show that you were owed a duty of care, that the professional breached this duty, and that the breach caused you to suffer physical or financial loss.

So how can businesses protect themselves from professional negligence claims?

Contracts

 Well getting your paperwork in order is a must. It is always good practice to negotiate and sign a written contract setting out what has been agreed. Don’t despair if you don’t have anything in writing as a claim is still likely under general law.

Professional Indemnity Insurance

We live in an increasingly litigious culture and this has led to a significant increase in businesses taking out Professional Indemnity Insurance. PII is an essential risk management tool and covers legal liability arising from professional services should a third-party claim to have suffered loss as a consequence of the alleged negligence. PII protection can cover both the actual loss (i.e. damages) or the legal costs in defending a claim.

Create A Paper Trail

If you have identified loss and professional work which falls short of the required standard, then you should first gather all relevant documentation. Relevant documents are likely to include the contract and correspondence, emails and documents relating to the work carried out and the loss suffered.  You should also create a record of the management cost in dealing with the issue.

Make A Complaint

Proportionality is key and you should first give the professional a chance to put things right. Internal complaints procedures are also fine for really simple issues, but if you are not happy with the response, or if the offer of compensation undervalues the damage then you should seek specialist legal advice. Check that the professional’s insurers are on notice.

Financial Ombudsman Service

The Financial Ombudsman Service may be able to resolve claims against financial advisers or insurance brokers worth up to £150,000. Claims are independently assessed and awarded compensation.

Legal Proceedings

If the above is unsuccessful, you will need to instruct a solicitor to draft a letter of claim. The professional has 3 months to deliver a reasoned response. The parties are then expected to explore an out of court settlement. A large number of disputes settle at this point.

Only when all of the above steps have failed can legal proceedings be started. The parties will then detail their cases, the court will order a timetable to resolve the dispute (including an exchange of disclosure, witness statements and expert reports) and then set a trial date.  This process can take a couple of years. The parties can (and are actively encouraged to) settle at any time without incurring further legal costs.

Legal proceedings can go on for years and costs can be substantial. Bear in mind that you may become liable to pay the other side’s costs if you lose, but this risk can be insured in advance.

Avoiding an hourly retainer, costs in bringing a claim can be funded through a ‘no-win, no-fee’ arrangement. A success fee will become due and paid out of the damages recovered.

Time Limits

Professional negligence proceedings must be issued within 6 years of the date that loss was caused.  In certain circumstances a claim can be made later if the loss was not known about (and then a claim can be made within 3 years of knowledge of the loss). The rules on time limits can be a minefield and difficult to apply, so it is best to seek legal advice sooner rather than later.

Article written by Rachel Furniss.

Need Expert Legal Advice For Professional Negligence Claims?

Then get in touch with us today and we’ll connect you with qualified and vetted lawyers specialised in this area. Click below to get your full set of free quotes.