The cost of getting it wrong
February 16, 2011
Posted by:Sonita Hayward
I have just read a report about a construction company that brought a professional negligence claim against its former solicitors and barrister relating to advice that it received about planning issues. The claim was for approximately £50 million. The case against the solicitors went to trial and the construction company lost. The barrister settled the claim for £2.6 million weeks before the trial, without any admission of liability. As a result of the claimant company losing the claim, they had to pay their former solicitors' costs. The solicitors claimed that their costs should be paid on an indemnity basis (that is, the benefit of the doubt is given to the party claiming their costs and it is for the opponent to prove that they are not entitled to them) because a) the claimant's disclosure had been so poor; b) the claim was exaggerated and fundamentally flawed; c) the claimant refused to accept a reasonable offer settlement and d) the claimant's principal witness gave unsatisfactory evidence. The costs judge accepted the former solicitors' arguments and ordered that costs of £8000,000 be paid by the claimant to their former solicitors.
Courts do not award costs on an indemnity basis lightly. After-the-event insurance is crucial when in a claimant position because if you pursue a claim that is unsuccessful you will be held responsible for your opponent's costs. I don't know what advice, if any, was given to the claimants about the risks of their case, but pursuing an exaggerated and flawed case where both disclosure and witness evidence are shaky is a sure-fire way to incur the wrath of the court. All litigation should be pursued carefully and clients should receive advice at each stage of the claim about the risks they are facing so that they do not end up worse off as a result of taking action. The solicitors firm did make an offer to settle the claim for £1.2 million but this was rejected. Luckily for the claimant, the £2.6 million settlement from the barrister will cover the £800,000 legal bill they now have to pay (I don't have any information about the claimant's own costs) but it's nowhere near the £50 million originally sought. It's possible that the claimant company may now seek new professional negligence solicitors - and they should choose very carefully to make sure that they get the right advice.