Lawcovernotes March 2015

Do I have the necessary expertise? A client commenced proceedings against its solicitor alleging a failure to advise on the consequences of entering into a commercial contract related to the purchase of commodities by a government department. The solicitor commonly undertook work of a different nature for the department and accepted the instructions with slight reluctance since the commercial commodity market was not within his expertise. In a falling market the price increased exposing the department to a higher than anticipated purchase price. The contract prepared by the solicitor failed to include a provision which entitled the department to adjust the price downwards to reflect market changes. The proceedings involvedmultiple parties. Amediation was arranged in order to avoid the necessity of proceeding to a lengthy hearing. At the mediation the plaintiff resolved its action against all of the defendants with the exception of its claim against the former solicitor. The solicitor took the view that he was not at fault due to the limited instructions provided to him and argued that he should not be responsible for including commercial matters in the contract which, arguably, were outside his expertise and which were not the subject of instructions from the department. Lawcover and its external panel solicitor expressed the view that the proceedings should be resolved but in the face of strong opposition from the solicitor, accepted the solicitor’s refusal to offer more than a modest contribution towards a global settlement. The proceedings were listed for hearing and the principal of the firm gave evidence. Ultimately the court found the solicitor liable as a result of his failure to make proper enquiries of his client as to the operation of the market, so as to protect the interests of the client. The damages awarded exceeded the primary layer of indemnity. The solicitor did not have Top Up insurance and was compelled to pay part of the judgment from his own pocket. The risk for the solicitor occurred due to his accepting instructions in an area in which he lacked specialist knowledge, his failure to ask appropriate questions of his client or of counsel prior to sending the contract to the supplier, and ultimately his refusal to adopt a commercial approach during the mediation and the trial. Rosemary Workman Solicitor, Claims