The Protocol
Our team has extensive experience in claims for professional negligence, including claims against solicitors, accountants, surveyors, trustees and other professionals and we have been successful in obtaining many multi-million-pound recoveries for Our Clients.
The Pre-Action Protocol for Professional Negligence applies to these claims and covers claims for negligence against all professionals, except those in the construction or healthcare sectors, or those concerning defamation.
The primary purpose of the Protocol is to promote the settlement of claims by ensuring that both parties fully understand the nature of the claim alleged, the evidence supporting the claim, and the defences of the Defendants. By encouraging this early exchange of information, the Protocol aims to reduce the number of disputes that escalate to court, saving time and costs for all involved.
Importance of Complying with the Pre-Action Protocol
Before looking at the Protocol itself, it is important to set out why it is vital that parties comply. Compliance with the Pre-Action Protocol for Professional Negligence is crucial because it establishes the standards that the courts consider the normal and reasonable approach for handling professional negligence claims.
Paragraph 3.1 of the Protocol sets out that, if court proceedings are initiated, the court will determine whether to impose sanctions for substantial non-compliance with it. This guidance is aligned with that set out in the Practice Direction for Pre-Action Conduct and Protocols, which suggests that while the court is likely to disregard minor or technical breaches, substantial non-compliance can lead to significant sanctions against the offending party.
Paragraph 3.2 expands the scope of the Protocol by setting out that the parties are expected to act reasonably when operating the timetable and exchanging information during the Protocol period. This means that even if the Protocol does not explicitly address a specific issue, parties should abide by its spirit by acting reasonably and cooperatively.
Preliminary Notice of Claim
The first step in the Protocol process is for the Claimant to notify the Defendant in writing once there are reasonable grounds for a claim. Paragraph 6.1 of the Protocol sets out that this preliminary notice should:
- Identify the Claimant and any other parties.
- Contain a brief outline of the Claimant’s grievance.
- Provide a general indication of the financial value of the claim, if possible.
- Ask the Defendant to inform their professional indemnity insurers immediately.
The Defendant is required to acknowledge receipt of this letter within 21 days, as stipulated in paragraph 6.2 of the Protocol.
Letter of Claim
When the Claimant decides there are sufficient grounds for a claim, a detailed Letter of Claim should be sent to the Defendant in accordance with paragraph 6.3 of the Protocol. This letter must:
- Identify any other parties involved in the dispute;
- Include a clear chronological summary of the facts, along with copies of any key documents;
- Specify the details of the alleged negligent act or omission and what the professional should have done differently;
- Set out how the act or omission caused the loss suffered, setting out the consequences and what would have occurred but for the negligence;
- Provide an estimate of the financial loss caused by the alleged negligence, detailing how the loss is calculated. If it is not possible to supply these details in the Letter of Claim, the Claimant should explain why and indicate when they will be able to provide this information;
- Confirm whether an expert has been appointed, provide the expert’s identity and discipline; and
- Request that a copy of the Letter of Claim be forwarded immediately to the professional’s insurers.
Letter of Acknowledgment
The Defendant should acknowledge receipt of the Letter of Claim within 21 days, as required by paragraph 7.1 of the Protocol.
Investigations
Following the acknowledgment, the Defendant has three months to investigate the Claim and respond with a Letter of Response and/or a Letter of Settlement, in line with paragraph 8.2 of the Protocol. During this period, the Defendant should:
- Assess whether the Letter of Claim complies with the Protocol’s requirements and, if not, inform the Claimant of the deficiencies and the further information required, as outlined in paragraph 8.1 of the Protocol.
- Evaluate whether the Claimant has presented a legally and evidentially sound case or merely alleged wrongdoing without substantial evidence.
- Review the provided evidence, including expert opinions and key documents.
If more time is needed to complete the investigation, the Defendant should promptly request an extension from the Claimant, explaining the reasons for the delay and the anticipated extension required, as specified in paragraph 8.3 of the Protocol. The Claimant is expected to agree to reasonable requests for extensions to avoid unnecessary delays.
Response to the Letter of Claim
Upon completing their investigation, the Defendant should send a Letter of Response as detailed in paragraph 9.2.1 of the Protocol. The Letter of Response should:
- Be sent in open correspondence (as opposed to being ‘without prejudice’)
- Clearly state which parts of the claim are admitted or denied, providing reasons for their stance.
- Specifically address the allegations.
- Provide the Defendant’s version of disputed events.
- Offer an estimate of the financial loss if it disputes the Claimant’s estimate. If an estimate cannot be provided at that time, the response should explain why and indicate when it will be available.
- Include copies of key documents not previously exchanged.
This letter, while not a formal defence, is a crucial step, as the court may impose sanctions if it significantly differs from the eventual defence, as outlined in paragraph 9.2.2 of the Protocol.
Paragraph 9.4.1 sets out that if the Letter of Response denies the claim entirely, the Claimant may proceed with court proceedings.
Experts
The protocol recognises that in professional negligence claims, the parties and their advisers will require flexibility in their approach to expert evidence.
In a professional negligence claim, separate CPR 35 expert opinions may be needed on breach of duty, causation or the quantum value of the claim.
Paragraph 11.2 of the Protocol sets out that the parties should co-operate when making decisions on appropriate expert specialisms, whether experts might be instructed jointly and whether any reports obtained pre-action might be shared and should at all times have regard to the duty in CPR 35.1 to restrict expert evidence to that which is reasonably required to resolve the dispute.
Any expert reports obtained at the pre-action stage are only permitted in proceedings with the express permission of the court.
Alternative Dispute Resolution (ADR)
The Protocol imposes an obligation on the parties to consider whether some form of ADR is more suitable than litigation. The courts have a wide discretion to sanction parties in costs if they are held to have behaved unreasonably by refusing to engage in ADR. This is not to say that a party would necessarily face costs sanctions for declining to accept an invitation to participate in an ADR process: this would depend on whether the refusal to participate was reasonable in all the circumstances.
In practice, it is common for the parties to professional negligence claims to engage in some form of ADR, although not necessarily always at the pre-action stage.
Mediation is a commonly used form of ADR for professional negligence claims and often leads to a successful resolution of the dispute, either on the day of the mediation itself or in the course of follow-up negotiations after the mediation.
Conclusion
Adhering to the Pre-Action Protocol for Professional Negligence involves detailed and timely communication between the parties. Every step, from the preliminary notice to managing experts and engaging in ADR, is crucial.
Elysium Law will help you navigate the complexities of the Pre-Action Protocol for Professional Negligence, ensuring full compliance and thereby avoiding potential court sanctions for non-compliance. We will put forward robust representations that effectively outline your claims or defences, facilitating early settlement discussions and saving you the time and costs associated with litigation.
We have extensive experience in representing large, often multi-national groups in claims for professional negligence brought by or against solicitors, accountants, surveyors, trustees and other professionals and have been successful in obtaining many multi-million-pound recoveries for Our Clients.
For further guidance on professional negligence claims, contact our experienced team today.
