Solicitors’ negligence: liability & damages for misconduct of litigation – loss of chanceDavid Partington
Recently I was asked to advise in a case where a the client’s former solicitor had “allowed” his claim to be struck out for non compliance with court orders. In a secondary tranche of litigation, the client sued his erstwhile solicitor.
The solicitor’s defence was that he had been unable to obtain instructions and comply with the orders from the court because the client had absented himself from the country for a considerable length of time. The client’s response to that was that he had been away for a time, but he was always contactable, and anyway he had been back in the country for quite a while and the solicitor had never tried to contact him to inform him of the orders and take instructions.
It was a peculiar case, and possibly a sad one, because one plausible explanation for the chaos was that the solicitor concerned had suffered a total nervous breakdown – which is not unknown, particularly given the stresses of modern litigation. I have seen it happen before.
However, regrettably, it soon became apparent that it was one of those cases where I and my instructing solicitor were destined to have a distinct difference of opinion. In this profession it is inevitable that this happens from time to time, and when it does handling it in a professional and good mannered way is one of the aspects of the job that we barristers have to do. Contrary to popular opinion, I have not yet been awarded a degree in infallibility, and so I find it does pay dividends to have an open mind, and when necessary re-asses. On the other hand, sometimes it is necessary to stick to your guns and call it as you see it. You can’t pull your punches if the client’s interests require that you should not do so, however it might affect your practice. It is the professional and ethical obligation which I and all other “professionals” should work to. Anyway, we had a conference, and it got a bit uncomfortable at one point.
The case threw up a number of issues which are common to “prof neg” litigation, particularly post “Jackson”. I won’t dwell on the ins and outs of the facts in this particular case, but there are some general observations to be made about this type litigation.
First, in the absence of special circumstances solicitors who fail to issue claims within the relevant limitation period or allow their clients to be prevented from being able to defend proceedings for procedural reasons will be liable in negligence. One can go so far as to say that if a solicitor with the conduct of a case “allows” that case to be struck out for want of compliance with some limitation period or failure to abide by a court order, the client discharges the legal burden on him to establish a prima facie case in negligence, and the evidential burden passes to the solicitor to show why he was not negligent: see below.
By the way, that analysis by reference to the legal and evidential burden is a surprisingly important tool in the analysis of many cases, and I have found it a very useful one since I finally “got” it, listening to a judgment from a very bright judge a few years ago. But I digress.
To say that a solicitor owes his client a contractual duty (and a concurrent duty in tort) to exercise reasonable care and skill in the handling of his client’s case is now trite law, but that doesn’t really get you very far. As Oliver J. said in the seminal case of Midland Bank v Hett, Stubbs and Kemp “a contract gives rise to a complex of rights of which the duty to exercise reasonable care and skill is but one”.
Indeed so. The exact nature and extent of the duty owed derives from precise terms of the retainer, and indeed how a solicitor ought to respond to and carry out that retainer. So, for example, if a client instructs the solicitor to run an obviously bad point it is almost certainly the solicitors duty to warn the client about it, and the nature and extent of that warning will in turn depend on many factors, including the possible seriousness of the point and the character and experience of the client. Giving advice to, say, Richard Branson probably requires different nuances than giving advice to, say, a young man called Joey Essex of whom I had never heard until he came to may attention lately, interviewing politicians during the general election campaign. An odd example, but you get my drift.
These are matters of general application. Where this mattered in the case in point was that in outline the claim looked fine, but nobody had taken the trouble to get a proof of evidence from the client about exactly what he had instructed the former solicitor to do in the original action, exactly what he had told him had happened, and exactly what he had instructed his former solicitor to complain about (or not complain about). That was a problem, actually, because you have to know that before you can analyse a case properly. In the case, there was to my mind something of an issue not simply that the original claim had been struck out, but also whether that claim had been properly pleaded in the first case and what should and should not have been pleaded, and who bore the responsibility for that.
But where I and my instructing solicitor really had a little bit of a fall-out was when it came to the issue of potential damages. My instructing solicitor seemed to have assumed that if the client’s former solicitor’s liability was established, our client would simply be awarded everything he had claimed in the original action. I begged to differ, and as the Victorian lawyers may put it, I raised a demurrer. In my opinion, I said, there were a number of factual issues in the original action which might have meant that the client lost, and even if he had one there were heads of damages being claimed in the original action which were, shall be say, speculative.
I did not, therefore, on the particular facts, consider that this was a case which the client would inevitably have won and obtained all the losses claimed. In my view, therefore, were damages would be assessed by reference to a loss of a chance of what might have been obtained in the original action, and that would involve some form of discount based on the assessment of the chances of success in that action.
My solicitor did not look happy about this. Are you quite sure, he asked (in that sort of way that indicates you have issues with reality, and might need some time in the Funny Farm). I said: yes, I was. He said he didn’t agree. I said: I am sorry, in my opinion, that’s how it works. He said: I think you are wrong. I sipped my coffee. The client, who was doing the head tennis thing, looked unhappy. Oh dear. And understandably so, because the case had been going on for quite some time, including with the assistance of previous counsel who had had to drop out of the case due to personal matters, and no one had mentioned this potentially unwelcome complication. So, without going too far into it, it seemed appropriate for me to set out the approach to damages in such a case in some detail. So, here’s how I see it.
Assessment of damages
- In a case against a solicitor (and against any professional based on an allegation of negligence) in order to plead a case in negligence properly, and work out what loss flows from that case, it is always necessary to analyse with precision exactly what the retainer was, what acts which are said to be negligent and why, what the solicitor should have done and did not do, and how these led to the losses claimed.
- The precise nature of the claim for damages will depend on what the parties contend would have happened if there had been no negligence and, as in every area of the law relating to damages, the principal task in every case is a careful analysis of the facts and assessment of what would probably have happened in the absence of a breach of duty.
- The assessment of damages in every case is subject to the overriding principle that the damage that has been caused is not too remote from the solicitor’s breach of duty, which broadly speaking means the damage must have been foreseeable.
- Whether the claim is brought in contract or tort the fundamental principle governing the measure of damages is that that the claimant should be put, so far as money can do it, and subject to the rules on remoteness, in the position he would have been in if the solicitor had discharged his duty.
- In the context of litigation which has been negligently dealt with, the usual starting point is Kitchen v Royal Air Forces Association. In that case the claimant’s late husband had been electrocuted and killed in an accident. The claimant’s solicitors failed to issue proceedings alleging negligence within the appropriate limitation period. The claimant sued the solicitors in negligence. The defendant argued that the claimant had to show on the balance of probabilities (51/49 per cent) that she would have won at trial; if she succeeded on that she “won all”, and if not she should recover nothing. The trial judge rejected this approach and held that the most the claimant could have recovered at trial was £3,000 but reduced damages to £2,000 because of “difficulties in the action”. The Court of Appeal agreed, and in the classic passage below essentially analysed the nature of the claim against the solicitors in terms of the loss of a chance:
“If, in this kind of action, it is plain that the action could have been brought and [that] if it had been brought that it must have succeeded, of course the answer is easy. The damaged claimant would recover the full amount of the damages lost by the failure to bring the action originally. On the other hand, if it be made clear that the claimant never had a cause of action, that there was no case which the claimant could reasonably ever have formulated, then it is equally plain that the answer is that she can get nothing but nominal damages for the solicitor’s negligence…
The present case, however, falls into neither one nor the other of the categories which I have mentioned. There may be cases where it would be quite impossible to try “the action within the action”…In my judgment, assuming the that the claimant has established negligence, what the court has to do in such a case as the present is to determine what the claimant has lost by that negligence. The question is: Has the claimant lost some right of value, some chose in action of reality and substance? In such a case it may be that its value is not easy to determine, but it is the duty of the court to determine that value as best it can.” 
- Thus, in a case such as this defendant solicitors do not simply step into the shoes of the original defendants. In the ordinary case the court has to determine the value of the case at the date of a notional trial. This will involve making proper allowance for the probabilities of success and other contingencies.
- In Mount v Barker Austin Simon Brown LJ considered that the applicable principles were as follows:
- The legal burden lies on the claimant to prove that in losing the opportunity to pursue his claim (or defence to counter-claim) he has lost something of value i.e. that his claim (or defence) had a real and substantial rather than merely a negligible prospect of success.
- The evidential burden lies on the defendants to show that despite their having acted for the claimant in the litigation and charged for their services, that litigation was of no value to their client, so that he lost nothing by their negligence in causing it to be struck out. The burden is heavier in a case where the solicitors have failed to advise their client of the hopelessness of his position. If the solicitors have advised their client with regard to the merits of his claim (or defence) such advice is likely to be highly relevant.
- If and insofar as the court may now have greater difficulty in discerning the strength of the claimant’s original claim (or defence) than it would have had at the time of the original action, such difficulty should not count against him, but rather against his negligent solicitors. It is quite likely that the delay will have caused such difficulty and quite possible, indeed, that that is why the original action was struck out in the first place. That, however, is not inevitable: it will not be the case in particular (a) where the original claim (or defence) turned on questions of law or the interpretation of documents, or (b) where the only possible prejudice from the delay can have been to the other side’s case.
- If and when the court decides that the claimant’s chances in the original action were more than merely negligible it will then have to evaluate them. That requires the court to make a realistic assessment of what would have been the plaintiff’s prospects of success had the original litigation been fought out. Generally speaking one would expect the court to tend towards a generous assessment given that it was the defendants’ negligence which lost the plaintiff the opportunity of succeeding in full or fuller measure.
- In the same case another judge  said:
“When a person sues his former solicitors for negligence for the conduct of proceedings which led to his action being struck out, his loss is normally measured by reference to his prospects of success in the primary litigation – see Kitchen v. RAF Association  1 WLR 563. However in order to recover for the loss of this kind the court must be satisfied that the plaintiff had at least a real or substantial chance that he would have succeeded in the primary action, not merely a speculative one. If his prospects fall short of that, the court will ascribe no value to them, but provided the court can see that there were real prospects of success it will evaluate them notwithstanding the difficulties that may involve.”
- In Harrison v Bloom Camellin the defendant solicitors admitted negligence in failing to serve a writ properly in 1992 in relation to a new business venture which turned out to be a disaster. In relation to damages, Neuberger J. held that that both matters of law and fact should be resolved on the basis of a loss of chance. He also considered whether that the extent to which the court would be prepared to take a “broad brush” approach depended on the circumstances. In that case he could form a detailed view on separate issues as there was substantial evidence and limited delay from the defendant’s negligence. He found that there was a better than even chance of establishing that the accountant’s report was negligent, rather less than that in establishing that they had made oral assurances, and there had to be a small discount in relation to reliance. That gave a discount of 35 per cent. There was a further discount of 20 per cent to reflect the fact that the business might have got into difficulties anyway fore reasons unconnected with the defendant’s negligence, and a total discount of 48 per cent was allowed and applied to the claimants, claims for damages.
- In Haithwaite v Thomson Snell & Passmore the defendant solicitors admitted that they had negligently caused the loss of the claimant’s litigation against an NHS trust. The defendant solicitors contended that the action was worthless, despite their advice (and counsel’s advice) at the time that it stood a 50-60 per cent chance of success. It was held that the court’s task was to consider the value of the claimant’s lost chance of pursuing his claim. When a court was called upon to put a value on a claimant’s lost chance of pursuing litigation against a third party, its task was not normally to determine definitively how that litigation would have been decided: it was the prospects and not the hypothetical decision in the lost trial that had to be investigated. The judge found that that the claimant had lost a 40 per cent chance of establishing negligence against the NHS trust and a 75 per cent chance of establishing causation against the NHS trust. The overall loss of a chance was therefore 40 x 75 per cent, namely 30 per cent. The original claim amounted to £392,336.44. Accordingly, the overall value of what the claimant lost was 30 per cent of that figure.
- Finally, in the recent case of Chweidan v Mishcon de Reya, Simler J. set out a comprehensive test for the calculation of lost chance in professional negligence claims. The judge held that the correct approach to take in a situation where the Claimant had to overcome multiple separate hurdles was a mathematical one, i.e. to assess the probability of success for each hurdle, and multiply these together to give an overall probability. She set out a 6-point process for assessing such claims:
(1) The claimant must prove a more than negligible prospect of success.
(2) If the court decides that the claimant’s chances were more than merely negligible then it must make a realistic assessment of what would have been the claimant’s prospects of success had the original litigation been fought out.
(3) The court should then assess the likely level of damages the claimant would probably have received, then apply an appropriate fraction to reflect the various uncertainties of litigation.
(4) In some cases a broad brush approach is appropriate for this exercise whilst in others the court should examine the potential prospects in greater detail.
(5) The court must take into account that the oral and documentary evidence before it will be more limited than if the underlying action had proceeded to trial. It must also account for the possibility that settlement could have been achieved. It is wrong in any event for the court to conduct “a trial within a trial” or make any firm findings about what would have been decided.
(6) If there are “separate hurdles”, the percentage prospects of each of these should be multiplied together to give an overall lower percentage prospect.
- In that case, the judge evaluated the claimant’s total prospects at 18 per cent. This was calculated on the basis that he had a 50 per cent chance of winning the age discrimination cross-appeal, and a 33 per cent chance on the underlying claim following the appeal. This gives a 16 per cent chance, which was nominally increased for reasons which are not material to this Note of Advice. The claimant was awarded 18 per cent of his £357,574.86 total claim against his solicitors. He received £64,363.47 in damages.
As I said above, without going into the facts in great detail, I did not consider the original case was straightforward in terms of liability or damages claimed. It was one where the client had prospects of success. So, I concluded that the correct approach to the assessment of damages is by reference to a loss of chance assuming the case had been adequately pleaded in the first place, and my advice was and remains to that effect.
 Godefroy v Jay (1831) 7 Bing 413
  Ch 384
  1 WLR 563, CA
 Lord Evershed MR at 574 – 575, with whom the other Lord Justice’s agreed
  PNLR 493
 Moore-Bick J
  Lloyds Rep PN 89
 Although the court would be more ready to take a firm view on whether the claimant would have succeeded or failed on a pointy of law rather than a matter of fact, for obvious reasons
 The calculation is a 52 per cent prospect of success arrived at as follows: (100 – 35) x (100 – 20)
  EWHC 647 (QB)
  EWHC 2685 (QB)