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Stephen Baker
Stephen Baker,
DIRECTOR
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Solicitors duty of care when settling litigation
09 May 2013

A recent case shows that great care needs to be taken by the legal representatives of both parties when advising their clients as to realistic settlement figures and the risks involved in fighting the action to trial.

The recent Court of Appeal decision Langsam v Beachcroft LLP (2012) is an example of a case where a claimant succeeded in recovering substantial damages pursuant to a settlement before trial following advice obtained from his legal team, but then sued his solicitors afterwards, alleging that they had provided unduly pessimistic advice as to his prospects of recovering damages at a level higher than the settlement sum.

The facts 

The claimant’s solicitors, Beachcroft LLP, acted for the Claimant Mr Langsam in a claim against Mr Langsam’s accountants Hacker Young, which was itself a professional negligence claim. The accountants did not challenge liability; in other words they did not require Mr Langsam to prove a breach of duty of care on their part. However the amount of damages and causation remained hotly contested items needing to be resolved at trial. Mr Langsam’s claim was dependent on proving that a number of eventualities requiring third party decisions would have been resolved in his favour if the negligence had not occurred. This is known as a “loss of a chance” claim and of necessity requires the claimant to give a discount from the full level of damages in order to take account of the possibility that the chance(s) would not have been realised.

The case against Hacker Young ultimately settled with the accountants agreeing to make a payment of £1million.

Prior to settlement Mr Langsam’s solicitor, an experienced professional negligence litigator, took advice from leading counsel on the claimant’s prospects of recovering damages at a higher level than that offered by the accountants and in the course of obtaining that advice addressed the varying degrees of risk that might be faced at trial over the various third party decisions that would need to be resolved in Mr Langsam’s favour at trial.

The Claimant sued his solicitors alleging various acts of negligence, but in particular alleged that they had given advice to settle the action at too low a figure. The defendants contested the claim and relied on the fact that they had sought specialist advice from leading counsel on settlement and acted in accordance with that advice. The barrister was not a defendant in the proceedings.

The decision 

The Court of Appeal upheld the trial judge’s finding that the defendants had not been negligent, that their representative had properly instructed leading counsel and that he was entitled to rely on the advice from leading counsel. The trial judge found that although the barrister’s opinion on settlement was a cautious one it fell within the wide range of views as to quantum that could reasonably be expected in the case, and that accordingly his advice was not clearly wrong. The Court of Appeal agreed with the trial judge that the defendant solicitors remained under a duty to consider whether the advice from counsel was glaringly or obviously wrong but there was no evidence that they had not done so and in this case liability could not be found against the firm as the trial judge had determined that the advice counsel gave was not wrong.

Practice points 

Given the large number of third party decision making hurdles that had to be overcome by the claimant in this case it is not surprising that quantification of damages was going to be a very difficult exercise and that as a result the court at both first instance and appeal levels was unwilling to find Mr Langsam’s lawyers negligent. Nonetheless the case serves as a useful reminder for parties engaging in litigation to ensure that their expectations are managed effectively by seeking proactive advice as to the range of damages awards they might expect at trial depending on the likelihood of success on the various issues that have to be dealt with at trial. The earlier that advice can be obtained the more likely it will be that the case can be settled, but in complicated cases such as this one much may turn on whether a key witness is willing to provide a helpful and credible witness statement. Exchange of witness statements is one of the last steps to take place before trial, but in appropriate cases it may be prudent to take an initial witness statement from a key witness at an early stage in proceedings.

For more information about the issues raised in this article or to find out more about how the Dispute Resolution team can help you please contact Stephen Baker on 0118 952 7206 or email [email protected].

Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.

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