UK: "Find A Solicitor" Facility On Trial: The Court Of Appeal Decision In Schubert Murphy

Last Updated: 18 September 2017
Article by Tom White
Most Read Contributor in UK, December 2018

The Court of Appeal in The Law Society of England and Wales v Schubert Murphy has confirmed that the question of whether the Law Society owes a duty of care to solicitors and others who use its online "Find a Solicitor" facility should go to trial, rejecting the Law Society's appeal against the dismissal of its application for strike out/summary judgment. Although the Court took the view that the claimant would face hurdles in establishing that a regulatory or professional body owes a duty of care to its members or to the public, the determination of whether a duty arose in this case was fact sensitive and warranted further enquiry.

Solicitors' firm Schubert Murphy had settled a claim for negligence and breach of trust brought by its client in relation to Schubert Murphy having unknowingly transferred the purchase price for a property to a fraudster. In doing so, Schubert Murphy had used the Law Society's "Find a Solicitor" facility before making the transfer to check the status of the firm and individual solicitor, a "Mr Dobbs", who was purportedly acting for the seller. It transpired to be a sham firm set up by a fraudster. However, the firm and the individual solicitor were on the Roll of Solicitors and therefore came up on Schubert Murphy's "Find a Solicitor" check.

The Law Society did not compensate the firm or its client under the Solicitors' Compensation Fund on the basis that as the fraudster was not a solicitor the case fell outside its remit. Schubert Murphy therefore sought damages for negligence and a contribution under the Civil Liability (Contribution) Act 1978 from the Law Society.

The Law Society applied for summary judgment and/or to strike out the claim for negligence and/or contribution under the Civil Liability (Contribution) Act 1978. The application was refused and the Law Society was granted permission to appeal.

On appeal, the Law Society argued that the judge had made a number of errors.

Firstly, it argued that the judge failed to start his analysis on the basis that the direct and immediate cause of loss was the fraud of the third party, the supposed "Mr Dobbs", and not the Law Society, and, therefore, following Smith v Littlewoods Organisation Ltd (1987), special circumstances were required to impose liability on the Law Society. In Smith, Lord Goff stated that when the claimant is seeking to hold the defendant responsible for having failed to prevent a third party from causing damage to the claimant by the third party's own deliberate wrongdoing, "it was not possible to invoke a general duty of care; for it is well recognised that there is no general duty of care to prevent third parties from causing such damage." The Court in Smith recognised, however, that there are special circumstances in which a defendant may be held liable for such damage, for example, where there had been an assumption of responsibility or where a duty arose under contract. The Law Society submitted that there were no such special circumstances in this case so it could not be held liable for the damage caused by the third party.

The Court of Appeal rejected this and held that although a regulator does not generally owe a duty of care in relation to the way in which it carries out its regulatory functions, making information available through the "Find a Solicitor" facility was arguably an additional and voluntary service going beyond what the Law Society was required to do under the applicable statutory regulations. Given the Law Society's encouragement of the use of the facility to find solicitors and the absence of recommendations of other checks, its actions created a risk that the facility would be relied upon, as well as an opportunity for fraud. This went beyond the Law Society's statutory regulatory obligations. It was therefore arguable that this case might fall into one of the special circumstances envisaged in Smith, where a defendant may be held responsible even where the direct and immediate cause of the claimant's loss was the fraud of a third party. Moreover, it could not be said that there was no prospect of finding that the Law Society had assumed responsibility in relation to the information provided by using the facility.

Secondly, the Law Society argued that the judge had wrongly distinguished Yuen Kun Yeu v Attorney General of Hong Kong (1998). In that case the financial regulator was held to owe no duty of care to see that members of the public who deposited money with a regulated deposit-taking company did not suffer loss through the company acting fraudulently or otherwise poorly. The judge at first instance in Schubert Murphy held that Yuen was "of limited assistance to the defendant on the facts of this case. It does not establish that in no circumstance can a regulator be responsible for economic loss caused by a regulated person or company. All that it decides is that on the facts, which are likely to be replicated in the Financial Services Industry in many cases, the Commissioner owed no duty to see that members of the public minded to deposit money with a regulated deposit taking company did not suffer loss through the affairs of such companies being conducted in a fraudulent or imprudent fashion." On appeal, the Law Society argued that the judge should have followed Yuen and held that as the information the Law Society provided was limited to that which was mandatory under its statutory duties, the provision did not give rise to a duty of care.

The Court of Appeal held that Yuen could be distinguished from the present case because the regulatory function in question in that case involved an exercise of discretion as to the fitness of the regulated person or entity which did not give rise to a statutory duty to potential depositors, and it was in that context that the court was steered away from the imposition of a tortious duty of care, whereas there was no discretion involved in the question of whether someone was or was not a solicitor.

Thirdly, the Law Society argued that the judge had misapplied the threefold test in Caparo v Dickman (harm must be reasonably foreseeable, the parties must be in a relationship of proximity, and it must be fair, just and reasonable to impose liability). On the material before the court, the Court held that a factual enquiry was necessary to determine the purpose of the online search facility and the way it was presented, and whether the facility went beyond the exercise of the Law Society's regulatory functions before it could be said that there was no prospect of a finding that a relationship of sufficient proximity existed between the parties. Allied to this was the need to identify exactly how the facility worked and the extent to which it identified the individual user, or was akin to the provision of information to the world at large. On the question of whether it was fair, just and reasonable to impose a duty of care, the Court concluded that further factual enquiry was necessary to determine the consequences of the imposition of the duty, and the security of conveyancing transactions in particular.

There were also important policy considerations which required a full exploration at trial:

  1. If a distinction was drawn between the provision of information by telephone (it being accepted by the Law Society that a duty of care might be imposed if Schubert Murphy had telephoned the Law Society to ask whether the solicitor was genuine) and an automatic response from a website, then there was a real risk that the policy objective of digitalisation would be impaired or defeated.
  2. Who should bear the irrecoverable loss caused to the innocent purchaser in circumstances where either the solicitor's insurance does not cover the full extent of the loss or he is granted relief under s61 of the Trustee Act 1925?

The profession and its insurers must now await the trial to determine whether and in what circumstances completion monies paid to a fraudster in reliance on information provided by the Law Society can be recovered from the Law Society. Given the prevalence of property frauds and the frequency with which solicitors can be caught up in them, whichever way the final decision goes it will likely be an important one.

The approach of the court is also of wider interest, particularly in relation to the question of whether professional and regulatory bodies can be held to account for inaccurate statements made by them in relation to who is or is not authorised by them. Although the weight of the case law suggests that a duty of care in tort, in addition to the regulator's statutory duties, may not be imposed, it remains to be seen whether a trend may develop of authorities being held more accountable following the 2015 decision in Sebry v Companies House in which Companies House was held liable for the effects of posting a notice of winding up against the wrong company.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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

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

Tom White
In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
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
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions