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Professional Negligence Claims and Compensation Levels

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When a solicitor begins the process of preparing a civil litigation claim for professional negligence, one of the most common questions their Client will ask is ‘how much compensation should I expect’? Whilst the short answer could be ‘how long is a piece of string’ (which is not very helpful, of course!), once the nature of the claim and the amount of financial loss suffered as a result of the negligence has been established, it should be fairly straightforward to establish the amount that can be claimed for.

Calculating Your Professional Negligence Compensation

The main metric used when calculating the likely level of compensation that you may be entitled to is based on the total, accumulated financial loss that has resulted from the actions of the negligent party. As an example, say you were using the services of a law firm to pursue a business claim against a supplier and your solicitor missed a time limit deadline, resulting in your claim being struck out; this would clearly be negligent on behalf of the law firm, and the compensation from the subsequent professional negligence claim amount would be based both on the value of the failed claim plus the related legal costs incurred.

However, not all cases may be quite so straightforward. For example, the law in England states that compensation cannot be claimed for loss that is deemed to be too 'remote' from the error or not 'reasonably foreseeable'. The principles of 'remoteness' and 'reasonable foreseeability' can often result in added complexity, and it will be difficult for someone who is not properly trained to appreciate the ins and outs that they will bring. Central to disputes of compensation levels in professional negligence claims 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.

So, as you can see, the devil is very much in the detail and it isn’t easy to immediately appreciate the nuances of the judgment, especially as there wasn’t much guidance given about the differences between “advice” and “information”. In fact, whether something is or is not “information” or “advice” as long been the cause of legal argument amongst solicitors and barristers.

Commercial Litigation Funding

If you are thinking about taking legal action against another individual or company but are worried about the costs involved, Advantage Litigation Services have the skills and expertise to help you find a way of funding commercial litigation without risking your personal finances or those of your business. Click here to contact us today or call 0800 160 1298 to see how we can help.

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