Professional negligence law needs to catch up

The buzzwords around law and legal practice at the moment centre around fixed fees and unbundled legal services. Whilst no 2 legal matters are the same and in some areas, such as litigation, fixed fees are very difficult as so many matters are outside the lawyers (and sometimes clients control), I fully understand that, whether

Home » James Swede » Professional negligence law needs to catch up

The buzzwords around law and legal practice at the moment centre around fixed fees and unbundled legal services.

Whilst no 2 legal matters are the same and in some areas, such as litigation, fixed fees are very difficult as so many matters are outside the lawyers (and sometimes clients control), I fully understand that, whether for business or personal matters, clients want certainty.

It is easy to criticise lawyers – some criticisms are perceived lack of flexibility and that the lawyer doesn’t see things from the client’s perspective. These arguments centre around the fact that law has traditionally been more of a profession than a business. Providing professional advice, taking the medical analogy, is fiercely giving the client the very best advice in a way which is not dependent on costs. However, this kind of advice comes at a cost, and that’s a big differentiator between law and medicine. With medical matters, whether via the NHS or private medical insurance, the client doesn’t directly pay for what can be extremely expensive advice, whereas for law they do.

The tug of war

From the lawyer’s perspective, it is our job to consider all the ifs, buts, possibles, maybes and nuances of a situation or contract, based on knowledge and experience. The problem is that sometimes pointing out what appear to be unlikely risks or contingencies to clients creates conflict and clients may argue that they don’t agree and don’t want to pay for that level of protection – they want to make their own value and risk assessment.

A SWOT approach to law ?

Most businesspeople are very familiar with a SWOT (Strengths, Weaknesses, Opportunities, Threats) approach and may feel that lawyers don’t utilise this kind of business methodology enough. As a solicitor, I know that the risks to clients are not always readily apparent to them and can also arise because at some point in the future, another clever lawyer may look to pick holes in a contract or advice which isn’t completely thorough, which instead is based on a cost-benefit-business approach.

What’s this all got to do with professional negligence ?

Let’s assume that a client comes to me for advice on a  commercial contract relating to a business transaction worth £125,000.00. The matter is, in pure legal terms, quite complex and ideally we would want to fully protect that client. The client says they have a budget of legal fees of £2,500.00 plus VAT maximum. They will not spend a penny more and consider that this amount is proportionate to the transaction.

I consider myself a business person as much as a lawyer so I fully understand my client’s business based approach. I fully explain the risks to my client that the time budget may not allow for the transaction or documents to be as thorough as I would like. The client understands and agrees and we have a contract which makes this clear.

Several years later, a problem arises on the contract. The client considers his options, and as a businessman, decides to look at the easiest ways to recover his losses. Going after a lawyer is an attractive option, as we are compulsorily insured. Nothing personal but he considers blaming my firm. Under contract law, I am on fairly safe ground. After all, I clearly warned about the risks and the problem he has falls squarely within the areas of advice I said I couldn’t fully cover (although that can also be very hard to define).

Not breach of contract but breach of duty of care

The difficulty is that the client has another option – he can sue me for professional negligence rather than breach of contract.

My duty, under current professional negligence law, is to provide advice commensurate with a reasonably competent solicitor with my level of skill and experience. This duty takes no account of constraints put on me by my client on costs. The duty reflects a time when lawyers were more professionals than providers of business services. It no longer reflects the reality of the legal market.

Many clients are not unreasonable – like me, they are able to see the other point of view, but many are simply unaware of why the issue of fixed fees and/or unbundled, compartmentalised legal services can be so problematic. It is not in many cases the lawyers being difficult, it is a system which, whilst frankly benefiting clients, does not reflect the rapid changes in what clients want of their lawyers. Something needs to change, not only with lawyers but with the law.

James Swede

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