Business Law: Act fast on professional negligence claims, says Rob Adam

THE Legal Aid, Sentencing and Punishment Act 2012 may sound like an innocuous piece of legislation but the impact on professional negligence claimants could be devastating.

If you think you have a claim against a professional for negligence (be it a solicitor, accountant, architect or doctor), you need to act fast. The changes introduced by this Act, which comes into force next April, will profoundly affect the way such claims can be funded.

For many years now, solicitors have entered into Conditional Fee Agreements (no win no fee agreements) with clients to fight these cases. Solicitors take the risk – if they win they are entitled to be paid their fees and a success fee. The fees and success fee can be recovered from the negligent professional’s insurers.

In addition, solicitors routinely obtain what is called “after the event insurance”. This is a policy that will pay the other side’s costs if the claim is unsuccessful. The premium for this insurance could be claimed from the losing party.

The combination of insurance and the no win no fee agreements have helped level the playing field in claims against insurers, who inevitably have massive resources to deploy against these types of claim.

However, from April 1, 2013, the Legal Aid, Sentencing and Punishment Act will change the landscape of professional negligence work. On any insurance policy or conditional fee agreement entered after that date, the insurance premium and success fee cannot be recovered from the losing party. In other words, the claimant has to meet these liabilities. These costs can be very significant.

The insurance can take a few weeks to organise and without it many claimants do not wish to take on the risk of litigation. The insurance industry is, I’m sure, hoping this change in the law will stifle claims against negligent professionals.

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It is therefore crucial that if you believe you have a claim for professional negligence that you contact your solicitor well in advance of the April 1, 2013 cut off date. It is also important to ensure you have obtained an insurance policy and entered a conditional fee agreement before that date to give yourself the best chance of securing a just result on your claim.

This article is for general information purposes only and does not constitute legal or other professional advice. We would advise you to seek professional advice before acting on this information. Ashton KCJ is authorised and regulated by the Solicitors Regulation Authority (Recognised Body number 45826) and by the Financial Services Authority.

: : Rob Adam is a partner at Ashton KCJ Solicitors.