Wake Up to Claims of Negligence; Mounting Pressure on Businesses during the Recession Has Fuelled a Sharp Rise in the Number of Advisers Being Sued for Professional Negligence. Sarah Trendell-Smyth Looks at This Growing Trend and What Advisers Can Do to Deflect Rising Premiums

Article excerpt

Byline: Sarah Trendell-Smyth

It's an unfortunate fact that during a recession claims against professional advisers, such as solicitors, brokers, accountants and surveyors, amongst others, increase significantly.

Last year, for example, 80 claims against solicitors were heard in the High Court, a jump of 158 per cent on the previous 12 months. This is a trend the insurance team at Mills & Reeve in Birmingham has also noticed. In the year August 2008 to August 2009 the number of instructions the team received increased by 50 per cent compared to the same period the previous year.

One such instruction was in July this year, in which we successfully prevented one claimant's attempt to pursue a pounds 30 million claim against a firm of solicitors. The Court of Appeal agreed with us that the claims capable of pursuit were worth more like pounds 1 million.

One explanation for the rise in the number of negligence actions stems from the need for businesses and individuals to attempt to recoup losses they may have suffered as a result of the economic downturn.

In the past, such claims may not have been pursued, either because they were correctly seen as weak, or because companies preferred to focus on expanding and driving their business forward, rather than getting embroiled in a potentially lengthy and expensive legal battle. However, the fall in value of assets, such as property and shares, and the contraction of the market generally, has led to businesses reviewing non-performing assets. In doing so, errors in a professional's handling of a transaction, or the provision of bad advice, can be brought to light. …