One of the most frequently asked questions we receive is, ‘How much compensation can I claim for professional negligence?’
In most instances it is pretty straightforward to identify the amount of compensation that is likely to be recovered in a successful professional negligence claim. The calculation is primarily based on the financial loss that has flowed directly from the actions of the wrongdoer.
So, if for example a solicitor misses an important time limit and your case is struck out as a consequence, then you will claim compensation for the financial losses you have incurred as a direct result of the solicitor’s carelessness. This will usually be the value of the case that has been lost, together with any wasted legal costs.
But sometimes, the compensation people want to claim can give rise to more difficult legal issues. Under English law for instance, compensation cannot be claimed for loss that is deemed to be too ‘remote’ from the error or not ‘reasonably foreseeable’.
If you are left wondering, ‘How much compensation can I claim for professional negligence?’, then you are very welcome to call our free legal helpline. Our specialist professional negligence solicitors will be happy to give you guidance on the compensation that can be claimed in a particular scenario. While it is not always possible to identify a precise figure right at the outset, it is usually possible to establish the basic legal principles that will apply and use them to offer an informed estimation of what the compensation is likely to be.
The principles of ‘remoteness’ and ‘reasonable foreseeability’ can give rise to very complex legal disputes. It can be difficult for someone who is not legally trained to appreciate the nuances. Indeed, even some solicitors struggle with the concepts. In the remaining part of this article we will look in greater detail at the difficulties that can arise, with particular emphasis on a recent court decision that is set to impact directly when anyone asks, ‘How much compensation can I claim for professional negligence?’
At the heart of many disputes over the level of compensation that can be recovered is the “SAAMCO” principle, named after a 1996 case which said that:
“a person under a duty to take reasonable care to provide information on which someone else will decide upon a course of action is, if negligent, not generally regarded as responsible for all the consequences of that course of action. He is responsible only for the consequences of the information being wrong.”
The facts in the SAAMCO case were relatively simple. A valuer negligently overvalued a property that the bank was going to use as security. SAAMCO claimed the negative equity on the property that had occurred as a result of a market crash. The logic of their argument was that if the valuer had not over-valued the property in the first place, SAAMCO would not have invested in the property so that when the market crashed it wouldn’t have made even greater losses. The courts disagreed, stating that there was a difference between “advice” and “information”. In this instance, the valuer had merely given information on the value of the property; what SAAMCO then did with it was up to them and the valuer could not be held responsible for the consequences of the information being wrong.
Confused? It isn’t easy to immediately grasp the nuances of the judgment, particularly as there wasn’t much guidance given about the differences between “advice” and “information”. It has always been a cause of much legal argument as to whether something is or is not “information” or “advice”. As the Supreme Court in another case stated:
“information given by a professional man to his client is usually a specific form of advice, and most advice will involve conveying information. Neither label really corresponds to the contents of the bottle”
It is welcome relief therefore that the Court of Appeal has now made its decision in Manchester Building Society -v- Grant Thornton UK LLP  EWCA Civ 40. It is quite similar to the facts of SAAMCO. Based on negligent advice by Grant Thornton, MBS entered into a series of fixed rate mortgages hedged against long term swaps. But as a result of the most recent financial crash, MBM had to close out the swaps, incurring significant transaction fees and losses. In the Judgment the Court sets out the SAAMCO principle:
- It is first necessary to consider whether it is an “advice” case or an “information” case. This is a necessary first step because the scope of the duty, and therefore the measure of liability, is different in the two cases.
- It will be an “advice” case if it can be shown that it has been “left to the adviser to consider what matters should be taken into account in deciding whether to enter into the transaction”, that “his duty is to consider all relevant matters and not only specific matters in the decision” and that he is “responsible for guiding the whole decision making process”.
- If it is an “advice” case, then the negligent adviser will have assumed responsibility for the decision to enter the transaction and will be responsible for all the foreseeable financial consequences of entering into the transaction.
- If it is not an “advice” case, then it is an “information” case and responsibility will not have been assumed for the decision to enter the transaction.
- If it is an “information” case, the negligent adviser/information provider will only be responsible for the foreseeable financial consequences of the advice and/or information being wrong.
- This involves a consideration of what losses would have been suffered if the advice and/or information had been correct. It is only losses which would not have been suffered in such circumstances that are recoverable.
This clarification is going to be of immense assistance in determining whether or not a professional was providing advice and therefore how much compensation can be claimed against the likes of solicitors advising in commercial transactions, auditors and accountants.
So if you want to know, ‘How much compensation can I claim for professional negligence?’, then give us a call on 0808 139 1595 or email brief details of your case to us at [email protected] and we will provide a free initial assessment of the value of your case and the availability of no win, no fee funding.