The scope and nature of the duties owed by a professional person to his or her clients continued to engage the courts in 2024. In Miller v Irwin Mitchell LLP [2024] EWCA Civ 53 and Niprose Investments Ltd v Vincents Solicitors Ltd [2024] EWHC 801 (Ch), the court considered the scope of a solicitors' retainer, and the extent to which a client's sophistication (or lack of sophistication) can impact upon the nature of that retainer. The decisions are not entirely consistent, and we expect issues concerning the scope and nature of retainer to continue to be the focus of litigation in 2025 and beyond.
More widely, we expect economic pressures, and the COVID 'hangover', to continue to contribute to an increase in the frequency, complexity and value of claims against professionals. COVID-related claims against professionals have been relatively few but that may change following the appointment of a 'COVID Corruption Commissioner' with a focus on recovering funds following fraud.
Regulatory and legislative changes, especially around ESG issues, will heighten compliance burdens and may lead to more claims. An increasing focus by corporates on client change and sustainability issues may result in more claims against consultants and other professionals relating to inadequate advice or actions. The rise of cyber threats, including data breaches and ransomware attacks, and the impact of AI, all pose significant challenges for professionals, with each profession facing unique challenges and risks.
The conduct of professionals – both inside and outside of the office – also continues to be the subject of intense scrutiny by regulators, particularly in the finance and legal sectors, leading to more claims of misconduct or action by professional regulators. With the SRA announcing that it expects to take action this year in relation to the Post Office scandal, we expect the conduct of professionals, and advice given by professionals, to be under the spotlight.
FSMA regulated professionals will be considering the impact of the FCA's recently published review of the ongoing advice charges; and we also expect to see claims for secret commissions increase following the recent Court of Appeal judgment in Johnson v FirstRand Bank Limited, Wrench v FirstRand Bank Limited and Hopcraft v Close Brothers [2024] EWCA Civ 1106, which will have application outside the motor finance arena. There are concerns the FCA will take a more interventionist approach to commission disclosure practices across other financial products. The FCA also continues to focus on consumer duty and targeting behaviour that is not producing good outcomes for consumers – see for example the recent Dear CEO letter to SIPP providers putting pressure on them to resolve complaints at FOS. We may, though, be about to see a significant shake-up of the way in which claims against FCA-regulated professionals are handled.
Following Rachel Reeves' Mansion House speech, the FCA and FOS have issued a joint request for input on modernising the redress system, particularly in relation to 'mass' redress events. The call for input recognises the impact that mass redress events like PPI have had on the financial services sector. This is welcome news as it has been long thought by many stakeholders that the FOS jurisdiction is out of control, with non-legally qualified investigators and ombudsmen being able to award redress in excess of £400,000. The introduction of fees for CMCs bringing claims to FOS should also, we hope, drive out claims without merit.
For accountants and tax advisers, significant numbers of claims may yet arise as a result of HMRC's ongoing investigations into the misuse of Research and Development Tax Credits. The changes in the most recent budget may lead to claims against accountants – particularly in relation to non-dom status, IHT and CGT reliefs. However, the budget is also good news in that some budgetary changes, particularly in relation to tax, may have the effect of reducing the value of some claims against professionals.
For construction professionals, cladding remains a critical issue, both ongoing cladding claims generally, and developing of arguments based on the Final Report from the Grenfell Inquiry. The Supreme Court will be considering the extent of duties owed under the Defective Premises Act 1972 between the project team, and the accrual of a cause of action in tort. We expect to see further claims brought under the DPA in light of the extended limitation provisions for such claims introduced by the Building Safety Act 2022 and in light of Vainker v Marbank decision which confirmed that contractual limitations will not impact on liability under the DPA. We also expect to see further actions brought under the new provisions of the Building Safety Act 2022 – in particular applications for Building Liability Orders and how the courts will interpret the criteria as to whether a proposed claim under the extended retrospective limitation period would infringe the rights of the potential defendant and be "unfair".
There remains significant confusion/lack of awareness across the construction professions as to the mechanics of the new dutyholder regime under the BSA and, in particular, we can foresee claims for project delay arising if insufficient/inaccurate information is provided to the Building Safety Regulator with the result that the project does not make it through the Building Regulations approval "gateway" to allow it to progress.
Finally, the Civil Liability (Contribution) Act 1978 and the Third Party (Rights Against Insurers) Act 2010 continue to give rise to difficult and perhaps counterintuitive authorities when applied to claims against professionals.
The decision in Riedweg v HCC International [2024] EWHC 2805 has caused significant concerns for insurers as it challenges their ability to seek contribution from third parties when they are sued under the Third Parties (Rights Against Insurers) Act 2010. The court ruled that insurers are not liable for the “same damage” as their insured, complicating the process of apportioning liability and recovering costs from other potentially responsible parties. This decision limits insurers’ options for mitigating their financial exposure in cases involving insolvent insureds.
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