Weightmans LLP key case round up and news. 1 September Insurance/Regulation (Lawyers/Solicitors/Barristers)

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1 Weightmans LLP key case round up and news 1 September 2014 We hope our readers have had a good summer break and have come back feeling refreshed. Our regular round up covers highlights from the month of August, we hope it is an interesting read. Insurance/Regulation (Lawyers/Solicitors/Barristers) Professional indemnity insurance proposals The Law Society strongly urged the SRA to defer any change in the limit of professional indemnity cover until adequate consultation had taken place. The proposal has proved very controversial with the Legal Consumer Services Panel (LCSP) and the Sole Practitioners Group (SPG) also joining the debate. Guideline hourly rates decision d The decision paper of Lord Dyson, Master of the Rolls, has been published. Lord Dyson states that he was not able to accept the new rates which were recommended by the Civil Justice Council Costs Committee due to a lack of evidence. Chartered legal executives will be able to recover grade A costs after reaching 8 years post qualification experience and regulated costs lawyers will be able to recover grade B and C costs depending on the complexity of the work from 1 October Personal injury claims c The government has gone ahead with plans to ban law firms offering inducements in respect of personal injury claims and a new clause has been inserted into the Criminal Justice & Courts Bill accordingly. Success fees, ATE premiums and human rights? r Comments made in Coventry v Lawrence [2014] UKSC 46 have suggested that the pre-jackson regime of recoverable success fees and ATE premiums may have in fact breached the European Convention of Human Rights. Lord Neuberger did not pursue the argument any further and stated that the government needed an opportunity to address the court. There is a concern that if a breach is established the decision will lead to considerable litigation which has led to much debate in the legal press.

2 ABS s A study of 43 ABS s licensed between 2012 and 2014 has revealed that 50% of the applications took more than 6 months longer than initially envisaged and 89% said that they would have changed their application approach. The Law Society President has stated that ABS s have not had the expected impact on the legal services market and although there have been a number of high profile ABS s, their impact has been much lower than was expected. There have been a number of developments in this area in the public sector. The SRA licensed the first local authority ABS, Buckinghamshire Law & Limited, earlier this month. The ABS, which is made up of a number of solicitors from the council and fire authority, will start operating on 24 November A second local authority ABS, HB Public Law, was granted an ABS licence soon after. HB Public Law which is a shared legal service set up by Harrow and Barnet Councils in London will start operating on 1 December SRA consultation on client protection p The SRA have been reviewing ways in which client protection is delivered through the SRA s compensation fund and professional indemnity insurance arrangements. The SRA are now calling for evidence as to how those two measures impact upon one another. Contributions are required by 30 September Warning issued by ICO to solicitors and barristers b The Information Commissioner's Office (ICO) has advised barristers and solicitors to keep personal information secure, especially paper files, following a number of reported data breaches involving the legal profession. The ICO has issued a reminder to barristers and solicitors that serious breaches of the Data Protection Act can result in the ICO serving penalties of up to 500,000. Claims Management Regulation Report The CMR Annual Report for the period 2013/2014 has been published. Their priorities for the year ahead focus on addressing issues concerning the handling of PPI claims, reviewing the referral ban in the personal injury market, taking any necessary enforcement action and tackling the problem of unsolicited marketing. The Ministry of Justice has revealed that almost 600 claims companies responsible for nuisance calls and texts have been closed and the number of firms that are regulated to handle compensation claims has fallen in the past 12 months. The Claims Management Regulator has issued fresh warnings about the power to impose tough sanctions on those firms that flout the rules. SRA to open Register of o f Solicitors to comparison websites w The SRA has said that it will open up its register of solicitors and law firms to comparison websites. The announcement comes as a response to the Legal Consumer Panel s longstanding desire for regulators to put a core and reusable set of minimum data into the public domain. Former News International lawyers to face disciplinary tribunalt Two former lawyers at News International will face the Solicitors Disciplinary Tribunal over their involvement in the phone hacking scandal following a complaint in 2011 from the MP Tom Watson. They are accused of keeping facts secret and providing false advice to the board. The hearing will take place during October Legal Ombudsman to review Internal Investigations Guidance The bar s disciplinary tribunal has held that a barrister was not guilty of professional conduct in failing to comply with (reasonable) requests from LeO to provide documents where LeO had itself failed to co-operate by letting the barrister have documents which LeO held. Following the case LeO has announced that it is to investigate its internal investigations guidance and policies. Warning issued about bogus/clone firms f The Council for Licensed Conveyancers (CLC) has warned firms to be aware of bogus offices being set up as clones of legal practices in order to steal mortgage loans, advances and client account information. The CLC has set out guidance as to ways to protect firms and also how to deal with bogus/clone firms.

3 Financial services/financial s Ombudsman Mortgage complaints on the increase i The Financial Ombudsman s Service (FOS) has announced that there has been a 2.2% year-on-year rise in mortgage complaints between April and June Generally complaints were down on last year s figures, mainly due to a reduction in PPI complaints. Accountants ICAEW granted power to licence l probate ABS s Parliament has approved an order giving ICAEW the power to licence probate ABS s. The final hurdle now is for accountants to pass a two day course which will enable them to start offering probate services to the public. A recent report by ICAEW has revealed that 250 firms have expressed an interest in the widened powers and the first licences are set to be granted in September Deloitte Administrators referred to ICAEW over Comet collapse c Following an 18 month investigation, three individuals from Deloitte have been referred to ICAEW following the collapse of the electrical goods group, Comet. It is alleged that they failed to consult with workers and unions properly in respect of redundancies. Furthermore ICAEW is also to investigate whether there was a conflict of interest as Deloitte had worked for Comet prior to the 2012 collapse. Grant Thornton to face enquiry e The Financial Reporting Council (FRC) has launched an enquiry into Grant Thornton s preparation of the accounts of one of its clients, AssetCo. The investigation is set to last 12 months before a decision is made as to whether to pursue formal disciplinary action. Professional negligence/conduct n (Lawyers/Solicitors/Barristers) Breach of duty and loss of opportunity o Chweidan v Mishcon de Reya Solicitors [2014] EWHC July 2014 The claimant instructed the defendant firm in respect of a claim for unfair dismissal and age discrimination against JP Morgan. The claimant had won his claim against his employer but he lost on appeal at the EAT. The defendant admitted breach for failure to lodge a cross-appeal in time. The court awarded the claimant damages based on an 18% loss of chance as there was a more than negligible prospect of success. Hirtenstein & Another v Hill Dickinson LLP [2014] EWCH July 2014 The claimant H purchased a yacht which developed severe problems. H was advised by the defendant that a personal guarantee from the beneficial owner was effective. The guarantee did not cover the yacht s condition. HD admitted negligence in informing H that the guarantee covered the yacht s condition but denied that it had any causative effect, contending that the purchase would have gone ahead anyway. The court held that the claimant had not suffered any actual loss and awarded only nominal damages. The court said that an astute solicitor would have pressed the beneficial owner for a personal guarantee as to condition, but failure to obtain one did not denote negligence. The breach lay in the manner of communication about the guarantee. There is also interesting comment about the correct method of valuing damages which in this case was on the basis of repairing to warranted condition.

4 Construction/Building/Property litigation Bank of Ireland v Faithful & Gould & CRBE Limited ited [2014] EWHC 2217 (TCC) 10 July 2014 F&G settled a large claim brought against it by the bank and then sought contribution from the surveyors who had valued the property for the bank. The loan was for a residential development in respect of which F&G was project manager. The developer went into administration. The court held that the losses were caused by the developer going into administration on account of its lack of resources. CBRE s gross development valuation had never been tested and no loss had been suffered as result of their valuation. The bank had not relied upon the firm s valuation of the site s residual market value, so any loss calculated with reference to that value was not recoverable. The court also dealt with some interesting points on contribution on the basis or assumption that F&G had succeeded in establishing that CBRE had some liability. Hunt & Others v Optima & Strutt & Parker [2014] EWCA Civ July 2014 The defendant built a block of flats and engaged a firm to carry out inspections of the buildings and produce architect s certificates for the benefit of the purchasers and lenders. The certificates were issued but the building work was unsatisfactory and the inspections were found to have been negligently carried out. The claimants each bought flats and were told that they would come with an architect s certificate. All but one of the claimants received the certificate after exchange and execution of the lease. The firm sent copies of the certificates to the defendant s solicitors who then sent them to the claimants solicitors. It was held, in the first instance, that the certificates constituted negligent misstatements and that the firm owed a duty to take care when carrying out the inspection as well as a duty to take care when producing the certificates. The claimants were awarded damages for breach of contract, breach of duty and negligent misstatement. The defendant appealed the decision but the Court of Appeal upheld the first instance decision. Greenwich Millennium Village v Essex Services Group plc and Others [2014] 11 July 2014 Following a flood at a recently constructed block of flats the building owner issued a claim against the main contractor who in turn sought an indemnity from sub-contractors. The judge at trial found that the mechanical sub-sub-sub-contractor had been liable for two defects which had been the principal cause(s) of the flood and, as such, they were liable under the indemnity clause even though the defects would have been apparent on inspection by the contractor next up the line. The Court of Appeal said this was a classic construction court case where the Court of Appeal should not interfere with findings of fact. The design and supervision failures did not break the chain of causation. Procedure Collateral attack Ridgewood Properties Group & Others v Kilpatrick Stockton LLP & Finers Stephens Innocent LLP [2014] EWHC 2502 This is an interesting application of the principle of collateral attack arising in the context of a loss of chance claim against solicitors. The claimant entered an agreement with a landowner to develop petrol filling stations owned by the landowner. The claimant had to obtain planning permission within a specified time, but before that could be achieved the landowner sold his interest in the sites without making any reservation of the claimant s rights. The claimant failed in its proceedings against the landowner and it was held that the claimant had affirmed the agreement, which had lapsed when they failed to obtain planning permission within the stipulated time. The claimant then issued fresh proceedings against its solicitors seeking damages for the loss of opportunity to terminate the agreement and to bring a claim for damages for the loss of chance to secure the requisite planning permission. The High Court held that the new claim was a collateral attack on the initial factual findings and conclusion of the court in the earlier action. Rules Committee backs changes c to Part 36 Regime The Civil Procedure Rules Committee (CPRC) is set to consider the possibility of simplifying the Part 36 Regime. Further to a meeting held last month the report suggested that the regime was too technical and many offers being made were failing on technical grounds.

5 Further information If you have been involved in any cases, would like to have an article placed in the weekly round up or would like any further information on these cases, please contact one of the following:- Mike Grant (Partner) on or at Patrick Gaul (Partner) on or at This update has been provided by Weightmans LLP to keep you informed of key decisions which could impact on your business. The professional risk team provides a national service from a network of UK offices. We have been representing insurers and their professional clients for over 30 years. The latest version of the Legal 500 named Weightmans LLP Liverpool and Manchester offices as the number one professional negligence team in the North West. If you wish to discuss a particular issue please contact any of the following:- Robert Crossingham (Partner) on or at robert.crossingham@weightmans.com Mickaela Fox (Partner) on or at mickaela.fox@weightmans.com Quentin Fox (Partner) on or at quentin.fox@weightmans.com Michelle Garlick (Partner) on or at michelle.garlick@weightmans.com Mike Grant (Partner) on or at mike.grant@weightmans.com James Holman (Partner) on or at james.holman@weightmans.com Ed Lewis (Partner) on or at ed.lewis@weightmans.com This update does not attempt to provide a full analysis of those matters with which it deals and is provided for general information purposes only. This update is not intended to constitute legal advice and should not be treated as a substitute for legal advice. Weightmans accepts no responsibility for any loss, which may arise from reliance on the information in this update. The copyright in this update is owned by Weightmans Data Protection Act: Pursuant to the Data Protection Act 1998, your name may be retained on our marketing database. The database enables us to select contacts to receive a variety of marketing materials including our legal update service, newsletters and invites to seminars and events. It details your name address telephone fax website mailing requirements and other comments if any. Please ensure you update our marketing team with any changes. You have the right to correct any data that relates to you. You should contact James Holman, our Data Protection Officer in writing, at 100 Old Hall Street, L3 9QJ with any complaints. The data will be retained for as long as we consider it appropriate and is for our own internal use only.