Claim for professional negligence:
Your key questions answered

This guide is essential reading for anyone contemplating a claim for professional negligence. In it we provide answers to the numerous and wide-ranging questions we commonly get asked as specialists in this field.

What exactly is professional negligence?

Professional negligence is a generic term used to describe the legal claim that arises when a professional person makes a mistake, either in the form of an error or an omission.

A claim for professional negligence may be based on one or a number of different legal grounds or causes of action. These include breach of contract or retainer, negligence, breach of trust, breach of fiduciary duty or breach of statutory duty.

What is the difference between negligence and professional negligence?

Negligence is a legal cause of action that is routed in the law of tort. It provides a legal basis for seeking compensation in a wide range of circumstances, where loss or damage is suffered as a result of a breach of a duty of care. Claims for negligence are most commonly made in cases of personal injury, where physical harm is caused.

Professional negligence, in its strictest sense, is negligence committed by a professional. However, and as stated above, the term is more commonly used in its wider sense to refer to a number of different legal causes of action that can be, and frequently are, combined in claims against professionals.

Is professional negligence misconduct?   

Mistakes that lead to a claim for professional negligence can also lead to proceedings for misconduct, and vice versa, but this will not be so in every case. The distinction between them lies in large part in the ‘mischief’ that each type of action seeks to separately address.

Whereas professional negligence is concerned with incompetence on the part of a professional and with providing redress, through an award of compensation, for a financial loss or liability caused, misconduct (and the disciplinary proceedings it can give rise to) is concerned with breaches of professional codes of conduct and with providing regulation, through the imposition of sanctions. The result is that different rules, issues, parties and procedures apply according to which type of action is being pursued.

So far as any claim for professional negligence is concerned, a finding of misconduct on the part of the professional concerned can certainly be relevant. But it is not an essential requirement and, by itself, it will not prove professional negligence.

How do you prove professional negligence?    

To prove professional negligence a court must usually be persuaded that (i) the professional owed a duty of care to the claimant; (ii) the professional breached that duty of care; and (iii) the breach caused a recoverable loss. The burden of proving professional negligence rests with the claimant: the onus is not on the defendant to disprove the claim.

The standard of proof applied is the same as it is in other civil claims, namely, a balance of probability. This means that in order to succeed in any claim, the claimant must establish that it is more likely than not that the professional was negligent.

The standard of proof is discharged by presenting evidence to the court. This can take the form of documentary evidence, witness evidence or expert evidence. More often than not, a combination of evidence is relied upon.

It is important to understand that this short ‘overview’ is intentionally simplified and that behind it lies a vast and complex body of law that regulates each of the essential elements of negligence. It should also be appreciated that both identifying and securing the right evidence to support a claim is crucial and often requires a careful forensic analysis. Further, and once the necessary evidence is secured, skill and experience are then required to present the claim in the most effective manner.

Can I make a claim for professional negligence?

If you or your business has incurred a financial loss or liability as a result of a mistake made by a professional adviser, then you may well be able to make a claim.

For you to make a claim it is not necessary that you know the precise nature or amount of the financial loss or liability that you have incurred, although this can be helpful. The nature of the loss you can recover and the value of your claim can be (and may need to be) determined at a later date.

It is also not always necessary in order to make a claim, for your loss or liability to have been caused by your own professional adviser. In certain circumstances, you may be able to make a claim for professional negligence against an adviser instructed by someone else. We explain this in more detail in our article: Third Party Claims for Professional Negligence

Even if the firm or practice at fault is no longer trading or has been dissolved, it may still be possible to make a claim and recover compensation. The support available to claimants in these circumstances is explained in our article: Claims against closed professional firms and practices

How do I claim for professional negligence?

Most claims are commenced by following the procedures set out in the Pre-Action Protocol for Professional Negligence. For claimants, these include preparing and serving a detailed letter of claim for professional negligence, addressing each of the matters stipulated by the Protocol.

Generally, the Protocol has had a positive effect on the efficient resolution of claims, by providing clarity and consistency around the process of making a claim for professional negligence. However, and not surprisingly, it does not provide all of the necessary ingredients for making a successful claim. Crucially, it cannot and does not provide a detailed analysis of the factual matrix underpinning the claim, nor an assessment of the legal principles and evidence that bear on the merits and value of it.

If the claim cannot be resolved at the Protocol stage, it will then be necessary to commence court proceedings. This involves submitting a Claim Form and a Particulars of Claim for professional negligence to the court, together with the appropriate court fee. These are legally technical and important documents, the drafting of which requires considerable care.

What losses can I recover in a claim for professional negligence?

This will depend in large part on the nature of the task the professional person was instructed to undertake and what losses were caused (both as a matter of fact and law) by the mistake made. In appropriate circumstances, the courts have been prepared to award compensation for a wide range of different types of losses including, for example, loss of profits, mental distress, costs of reinstatement and loss of management time.

A substantive guide to the different types of compensation commonly awarded in claims for professional negligence can be found in our guide: Compensation for professional negligence: What can I recover?

Is professional negligence compensation taxable?

In certain circumstances a capital sum received as compensation for professional negligence can be liable to a capital gains tax (CGT) charge. Perhaps not surprisingly, this can be a complicated issue upon which it may be prudent to seek specialist tax advice.

In short, where there is no underlying asset and where the compensation received in a single set of legal proceedings is £500,000 or less, there is unlikely to be any liability to pay CGT. This is as a result of the exception for professional negligence claims contained within paragraph 11 of the Extra Statutory Concession D33 (ESC D33).

Where the compensation received in a single set of legal proceedings is greater than £500,000, a claim can be made for that sum which is in excess of the threshold to also be except from CGT. That claim should be made to HMRC no later than in the tax return for the tax year in which the claim was compromised or judgment given.

Do I have to mitigate my loss when making a claim for professional negligence?

Quite possibly. If you have sustained financial loss, you should take all reasonable steps to mitigate that loss and take no unreasonable action which would exacerbate it. Should you fail to do so, the court is likely to prevent you from recovering compensation for that loss which it considers was unreasonably incurred.

This ‘duty’ can lead to much confusion and uncertainty and further guidance on it can be found in our article: The duty to mitigate in professional negligence claims

Do I need to instruct a solicitor to make a claim for professional negligence?

You are not required to instruct a solicitor to advise and represent you, but it is usually sensible to do so. Making a claim for professional negligence is often a complicated and time-consuming process and a successful outcome can very much depend on the way in which a claim is prepared and pursued.

To help you decide between instructing a solicitor and going it alone, we identify and comment on some of the key factors you should consider in our guide: Professional negligence claims – Do I need a solicitor?

If you do decide to instruct a solicitor, you would do well to instruct one who genuinely specialises in claims for professional negligence. While an increasing number of solicitors purport to undertake work in this niche area, there are relatively few true specialists. To assist you in identifying the best solicitor to act for you in relation to your claim, we have highlighted seven key features to consider as part of any search in our guide: Professional negligence solicitors: How to find the best

Against who should I make a claim for professional negligence?

Where the negligent professional is employed by a company or partnership, a claim for professional negligence will usually be made against the employer. However, in certain circumstances, it may also be possible to pursue a claim against an employee personally. This is discussed in more detail in our article: Personal liability of employees: An emerging issue 

Where multiple professionals are retained, it is not uncommon for more than one of them to have made a mistake that has caused or contributed to the financial loss you have suffered. This commonly arises in litigation, where clients instruct solicitors and barristers, and in conveyancing, where clients instruct solicitors and surveyors.

Deciding which of these professionals to sue can be a complex decision, involving legal and commercial considerations. This is explained in more detail in our article: Multiple defendants in professional negligence: Which to sue?

How much does it cost to claim for professional negligence?

The cost varies enormously from one claim to another and is affected by so many different variables. The complexity of the claim, the volume of documents relating to it, the need for expert evidence and the response of the defendant are just a few of the factors that can have a bearing on cost.

Fortunately, there are an increasing number of ways in which to fund a claim for professional negligence and more information on this particular topic can be found in the section: Fund a Claim

Can I also claim for the legal costs I incur in making a claim?

If the value of your claim exceeds £10,000, and if it is successful, then you can usually seek an agreement or court order requiring the defendant to pay your legal costs in addition to any compensation. What proportion of your costs the defendant may have to pay depends on a number of factors and while it is usual to be awarded the majority of the costs incurred, it is rare to be awarded all of your costs.

Even if my claim is successful how do I recover the compensation and costs awarded to me?

The financial standing of a defendant should always be considered before embarking on any compensation claim. Fortunately, in claims for professional negligence, most defendants carry professional indemnity insurance to meet any compensation and/or costs awarded against them. Consequently, the prospects of actually recovering a compensation or costs award are generally much better than in many other areas of litigation.

The benefits of professional indemnity insurance for claimants and how it operates in practice are explained in more detail in our guide: Professional Indemnity Insurance: A Claimant’s Guide

How long does it take to make a claim for professional negligence?

This invariably depends on a range of factors, including the nature and complexity of the claim and the way in which it is presented and pursued. If the claim is straightforward, it is possible that it could be resolved within 3 months. However, a more usual time-frame is 6 to 12 months. A hotly contested or highly complex claim may take considerably longer to resolve.

Will I have to go to court?

Not necessarily. The vast majority of claims for professional negligence are resolved without having to go to trial. Many of these are resolved under the Pre-Action Protocol for Professional Negligence and without the need for court proceedings to be commenced.

Are there time limits for bringing a claim for professional negligence?

Yes. There are specific time limits for commencing a claim for professional negligence and these are strictly enforced. Generally, you have 6 years from the date on which either the mistake was made or you suffered financial loss. However, you may have 3 years from the date of discovering the mistake, if later.

We have produced a short introductory guide to the time limits that apply to claims for professional negligence: Time limits for professional negligence claims – FAQs. In addition, we have provided a more detailed and technical account of the dangers in this area in two complementary articles: A present danger: Primary limitation in professional negligence and A present danger: Secondary limitation in professional negligence

Is there any alternative to making a claim for professional negligence?

If you have incurred a substantial loss or liability due to an error or omission by a professional, a claim for professional negligence is usually the most appropriate way of securing compensation. However, there may be alternatives, particularly if the loss or liability incurred is modest.

One such alternative is to make a complaint to an industry ombudsman, such as the Financial Ombudsman Service, the Legal Ombudsman or The Property Ombudsman.

Although these services are more accustomed to dealing with complaints about poor levels of service, rather than a claim for professional negligence, they are often prepared to consider all matters in issue.

While key advantages include the fact that these services are free to use and non-binding, these are accompanied by a range of disadvantages, some of which are highlighted in the many criticisms posted online in user reviews. Amongst them is the assertion that the process can be very slow and that only a limited assessment is undertaken.

A more detailed examination of the service provided by the Legal Ombudsman is available in our guide: Legal Ombudsman Complaints Service – An Independent Guide

What should I do next?

How best to proceed with any claim will very much depend on your individual circumstances, which we would be happy to discuss with you on a confidential basis.

If you would like to arrange an initial consultation with us, free of charge or commitment, please do not hesitate to contact us on 0800 195 4983 or by email at mail@pnclegal.com.

As you can discover here, at PNC Legal there is much more than just the fact that we specialise exclusively in resolving claims for professional negligence that sets us apart from most other solicitors.

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