When I take on a file with a view to bringing proceedings for professional negligence, I usually have a pretty good idea of what I am looking for. Invariably, I will have had a chat with the client and we will have discussed what has happened and why he (or she) thinks that there has been negligence on the part of the lawyer, surveyor, accountant or other professional. I can then guide my investigations to identify the evidence required to support what the client is alleging.
However, my enquiries aren’t limited purely to seeking out evidence to support what the Client has said but also to see if there is any other allegation that can be made. This is quite important as it would be negligent of me to look through the papers and say that the Client doesn’t have a claim against his accountant and simply close the file when it is glaringly obvious that he actually has a claim against his solicitor for missing a time limit!
I have been thinking about this quite a bit recently, simply because I have just finished a lengthy trial around which this issue revolves and am awaiting the judgment.
The basic facts: My client had just struck a really great deal with a big commercial organisation which I will call – inspiringly – “BCO”. BCO were keen to get the agreement in writing and get it all signed up as they, according to my client (who I will call, just as inspiringly, “Mr Client”), were as keen as he was to get the deal finalised.
It was rather a good deal from Mr Client’s point of view. He had a patent in an item which BCO wanted. Part of the deal was that Mr Client would give them a licence in the patent in exchange for which, he would become an employee of BCO on what one can only describe as, ‘healthy terms’. For some reason that I cannot fathom, BCO set up the deal in two agreements – a Licence Agreement for the patent and a Contract of Employment for Mr Client’s services. Mr Client was happy about this as he understood that if one was terminated, the other would be terminated also. In fact, his Contract of Employment specifically said that the Licence Agreement was an ‘essential’ part of it.
Now Mr Client is not, by his own admission, one for paperwork so when he got the documents, he phoned up a recommended law firm (might as well go for the hat trick and call it “Law Firm”!) and made an appointment to see a solicitor about his Contract of Employment. The solicitor had a look at it and said to Mr Client that she felt she ought to have a look at the Licence Agreement as well.
Having reviewed the documents, she gave Mr Client the thumbs up and he signed the documents, excited about the new project. At least he was excited for a whole year. Right up until the time BCO terminated the contract. In fact, right up until the time they pointed out that there was a defect in the Licence Agreement and whilst the Licence Agreement was ‘essential’ to the Contract of Employment, the Contract of Employment was not ‘essential’ to the Licence Agreement. More importantly, because of the way the agreements were set up, it was the Contract of Employment that held all the financial terms; the Licence Agreement was silent on the issue of money. In short, BCO were able to get rid of Mr Client on his ‘healthy terms’ employment contract and continue to licence the patent for free!
We have argued throughout that Law Firm were negligent. They should have noticed that the two agreements did not hinge together the way that Mr Client understood. Law Firm countered this by saying that their instructions were only to read through and advise on the Contract of Employment, not the Licence Agreement. They confirm this by pointing to their Client Care letter which says that is all they will do. We counter-argued (as is the wont of lawyers) that they had expanded the retainer by asking to see the Licence Agreement and by agreeing to read it, they therefore had a duty to point out the huge problems with it.
The case is a lot more complicated than this, with many more issues and counter-issues than I can possibly get into a short article. You can hardly have six years of litigation over such a small point without developing others. However, what I have highlighted above is the crux of the matter.
I am not sure how it is going to turn out but given there is so much case law that supports our position, I am pretty confident we will succeed. At the same time though, I am sure that my opposing solicitor is probably saying the same thing as there is case law which supports her position. I suppose it comes down to the old joke – get five solicitors in a room; you’ll get six different opinions!
However, the case does underline the need for lawyers and their clients to look at the broader picture when undertaking any transaction to ensure that the various pieces fit together as the parties intend; Failure to do so is likely to lead rapidly to a professional negligence claim.
Emma is a professional negligence solicitor and a member of the Professional Negligence Lawyers Association. Call her on 0808 139 1595 for an initial chat.