UK: Professionals: Limiting Liability

Last Updated: 16 January 2007
Article by Peter Maguire

Limitations of liability are now regularly employed by professional firms, as they seek to protect themselves in an increasingly demanding environment, in which the size of transactions continues to increase and few (if any) relationships are sacrosanct.

Professionals and the clients who instruct them need to be aware of:

  • the options available to firms (e.g. a specific monetary amount or "liability cap", a limitation based upon the firm's available insurance cover etc)
  • the court's likely approach if the "reasonableness" of any limitation of liability is challenged under the Unfair Contracts Terms Act 1977
  • limiting liability to third parties (where a duty of care is assumed)
  • drafting issues (e.g. the use of aggregate limitations of liability, the scope of the operative clause etc)
  • practical steps for firms to consider
  • future developments, including the impact of cultural issues (such as the attitude of partners and clients), the approach of professional indemnity insurers and other factors which will influence the extent to which limitations of liability become more commonplace

These matters are relevant to the formulation of any policy on limiting liability and in considering whether existing limitations are likely to prove to be enforceable in the face of a challenge in the courts.

Further reading: Please see below to view the full article, which first appeared in Insurance Day on Friday 12 January 2007. The article focuses on solicitors but addresses issues of general application to all classes of professionals.


Full Article

Limitations of liability are now regularly employed by professional firms, as they seek to protect themselves in an increasingly demanding environment, in which the size of transactions continues to increase and few (if any) relationships are sacrosanct.

Professionals and the clients who instruct them need to be aware of:

  • the options available to firms (e.g. a specific monetary amount or "liability cap", a limitation based upon the firm's available insurance cover etc)
  • the court's likely approach if the "reasonableness" of any limitation of liability is challenged under the Unfair Contracts Terms Act 1977
  • limiting liability to third parties (where a duty of care is assumed)
  • drafting issues (e.g. the use of aggregate limitations of liability, the scope of the operative clause etc)
  • practical steps for firms to consider
  • future developments, including the impact of cultural issues (such as the attitude of partners and clients), the approach of professional indemnity insurers and other factors which will influence the extent to which limitations of liability become more commonplace

These matters are relevant to the formulation of any policy on limiting liability and in considering whether existing limitations are likely to prove to be enforceable in the face of a challenge in the courts.

Full article below as appeared in Insurance Day on Friday 12th January. The article focuses on solicitors but addresses issues of general application to all classes of professionals.

Solicitors' liability at 'Know your risk'

In the face of an increasingly demanding environment for law firms and reducing levels of premium income, containing the liability of solicitors has never been more important for insurers underwriting solicitors' business.

Issues of quantum and contribution were, therefore, the principal themes at CMS Cameron McKenna's Fifth Annual Solicitors' "Know your risk" seminar, held in London recently.

Delegates, comprising representatives of large law firms and leading insurers and brokers, heard presentations from Peter Maguire, Maxine Cupitt and Peter Mansfield, partners in the firm's insurance and reinsurance group.

Recent cases on loss of chance, particularly the House of Lords decision in Gregg v Scott [2005], have clarified and reaffirmed the traditional approach to the doctrine of loss of chance and this remains a very fertile area for claims against solicitors.

The generally harsh approach of the courts, particularly in lost litigation cases (as exemplified in Dixon v Clement Jones [2004]), has only served to encourage this trend.

There was better news for firms and their insurers in the Court of Appeal's application of SAAMCO principles concerning the scope of duty and recoverable loss. In Andrews v Barnett Waddingham LLP and Another [2006], a consultant actuary was found liable at first instance on the basis that the claimant's loss was "inextricably linked to the negligently given information".

The decision was reversed by the Court of Appeal on the grounds that there was no causative link between the element of the advice complained of and the loss which the claimant had suffered in taking out an Equitable Life with profits annuity.

In terms of the information/advice distinction, the Court of Appeal was prepared to focus on the particular breach in question, rather than on the adviser's role as a whole. This is a significant development and, depending on the particular facts, similar arguments will be available to solicitors and other professionals.

The theme of reducing the ultimate liability of law firms continued with a discussion of the legal and practical matters arising out of claims for contribution or, as one judge put it, "the dextrous art of passing the buck".

There is a dearth of case law on apportionment of liability as between barristers and solicitors, although a finding of liability was made against counsel in Hickman v Blake Lapthorn and Another [2005], a case involving under-settlement at the court door.

Having regard to his role as the barrister with conduct of the claim, his seniority and his leading role in valuing the claim and advising on settlement, the court apportioned liability two-thirds to counsel and one-third to the solicitors.

In terms of procedural developments, some concern was expressed about the new provisions of CPR 5.4, under which, from October 2, 2006, non-parties can obtain access to pleadings on the court files.

Although the rule was originally intended to be retrospective in effect, the Law Society's swift response in obtaining injunctive relief and in making an application for judicial review persuaded the Department of Constitutional Affairs to introduce a new rule on December 18, 2006, abandoning the proposed retrospective effect of the rule.

Going forward, adverse publicity may be a concern for solicitors involved in litigation and, although any party or other person identified in the pleadings can apply to the court to restrict access, the new provisions are likely to encourage arbitration and ADR.

This article first appeared in Insurance Day on Friday 12 January 2007.

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq

Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.

The original publication date for this article was 15/01/2007.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.