Division D: Pre action Protocol in Professional Negligence Cases
1. Introduction and purpose of voluntary protocol
1.1 This Voluntary Protocol applies where a claimant wishes to claim against a professional as a result of that professional's alleged negligence or equivalent breach of contract or breach of fiduciary duty.
1.2 Unlike in England and Wales, there is no statutory basis for a Pre-Action Protocol. The Protocol therefore will require to be entered into voluntarily on an individual case by case basis by mutual agreement.
1.3 The Voluntary Protocol has been kept deliberately simple to promote ease of use and general acceptability.
1.4 The aims of the Voluntary Protocol are:
To establish a framework in which there is an early exchange of information so that the claim can be fully investigated and meaningful discussions entered into regarding liability and quantum, so that, if possible, the claim can be resolved without the need for litigation;
To enable appropriate offers to be made either before or after litigation commences;
To set out good practice making it easier for the parties to obtain and rely upon information required.
1.5 The standards within the Voluntary Protocol are to be regarded as the normal, reasonable approach to pre-action conduct in relation to Voluntary Protocol cases.
1.6 The Voluntary Protocol is intended to apply to all professional negligence claims where the value of the claim is up to £20,000. The parties may by mutual agreement use the Voluntary Protocol for claims of higher value.
1.7 Where proceedings are raised in a Voluntary Protocol case, it shall be open to any party to lodge Voluntary Protocol communications for the sole purpose of assisting the court in any determination of expenses.
1.8 In interpreting this agreement, words importing the singular include the plural (and vice versa) and words importing a particular gender shall include all genders.
2. The protocol
2.1 Preliminary notice
2.1.1 As soon as the claimant decides there is a reasonable chance that he will bring a claim against a professional, the claimant's agent is encouraged to issue a letter to the professional providing details of:
the identity of the claimant and any other parties;
a brief outline of the claimant's grievance against the professional;
if possible, an indication of the financial value of the potential claim.
2.1.2 The letter should be addressed to the professional and should ask the professional to inform his professional indemnity insurers, if any, immediately. Such a letter does not bind the claimant in any way and if after further enquiry the claimant's letter of claim (see 2.2) sets out a different case the insurer may not found upon the preliminary notice.
2.1.3 Professional indemnity insurers receiving preliminary notice letters from their insureds are encouraged to arrange for acknowledgment to the claimant's agent within 14 days of the insurer receiving the letter.
2.2 Letter of claim
2.2.1 As soon as the claimant decides there are grounds for a claim against the professional, the claimant's agent should write a detailed letter of claim to the professional, or to the insurer if a preliminary notice letter has already been acknowledged by the insurer.
2.2.2 The letter of claim should include the following:
a) the identity of the claimant;
b) a clear chronological summary (including key dates) of the facts on which the claim is based. Key documents to be relied upon should be identified, copied and enclosed, although there is no requirement at this stage to produce a copy of a report by an expert (see 2.3.2);
c) the allegations against the professional. What has he done wrong? What has he failed to do?
d) an explanation of how the alleged fault has caused the loss claimed;
e) an estimate of the financial loss suffered by the claimant and how it is calculated. Supporting documents should be identified, copied and enclosed. If details of the financial loss cannot be supplied, the claimant should explain why and should state when he will be in a position to provide the details. This information should be sent to the professional or as appropriate his insurers as soon as possible. If the claimant is seeking some form of non-financial redress this should be made clear;
f) confirmation whether or not an expert has been instructed, and if so the identity and discipline of the expert should be provided;
g) where relevant, the letter of claim should contain a request that it is forwarded immediately to the professional's insurers;
h) if the terms of this Voluntary Protocol are intended to apply, the letter of claim should include the following paragraph:
"This is a claim which we propose should be handled by reference to and in accordance with the Voluntary Professional Negligence Pre-Action Protocol as agreed between the Law Society of Scotland and the Forum of Scottish Claims Managers."
2.3 Letter of acknowledgment
2.3.1 Within 14 days of receiving the letter of claim from his insured, the insurer should acknowledge receipt to the claimant's agent. The insurer should make clear in his letter of acknowledgment whether or not it is agreed that the Voluntary Protocol should apply.
2.3.2 Within 14 days of receiving a letter of acknowledgment confirming that the Voluntary Protocol should apply, a copy of any expert report already obtained upon which the claimant intends to rely should be provided by the claimant's agent.
2.4.1 If the Voluntary Protocol is to apply, the insurer will have three months from the date of the letter of acknowledgment to investigate the claim.
2.4.2 If the insurer is in difficulty in complying with the three month time period, the problem should be explained to the claimant's agent as soon as possible. The insurer should explain what is being done to resolve the problem and when the insurer expects to complete the investigations. The claimant's agent should agree to any reasonable request for an extension of the three month period.
2.5 Letter of response and letter of settlement
2.5.1 As soon as the insurer has completed his investigations, the insurer should send to the claimant's agent:
a) a letter of response; or
b) a letter of settlement; or
c) both (whether contained in a single letter or not).
2.5.2 The letter of response will normally be an open letter (as opposed to being without prejudice) and should be a reasoned answer to the claimant's allegations:
a) if the claim is admitted the insurer should say so in clear terms;
b) if only part of the claim is admitted then the insurer should make clear which parts are admitted and which parts are denied;
c) if the claim is denied in whole or in part then a detailed response on each allegation should be included and the insurer should provide his insured's version of events, together with expert report(s) on which reliance is intended;
d) if the insurer is unable to admit or deny the claim, the insurer should identify any further information that is required;
e) if the value of the claim is disputed, the letter of response should set out the insurer's valuation. If a valuation cannot be provided, the insurer should explain why and should state when he will be in a position to provide a valuation. This information should be sent to the claimant's agent as soon as reasonably possible.
2.5.3 The letter of settlement should be a "without prejudice" letter and should be issued if it is intended to make settlement proposals. The letter should:
a) set out the insurer's views to date on the aspects which remain in dispute and those which are not disputed;
b) make a settlement proposal or identify what further information is required to enable a settlement proposal to be made;
c) where additional documents are relied upon, copies should be provided;
d) include reference to fees etc payable in accordance with section 2.8.
2.5.4 Unless the letter of response denies the claim in its entirety and there is no letter of settlement, the insurer and the claimant's agent should commence negotiations with the aim of concluding these within six months of the date of the letter of acknowledgment.
2.5.5 If the claim cannot be resolved within this period:
a) the parties should agree within 14 days of the end of this period whether the period should be extended and, if so, by how long;
b) the parties should seek to identify those issues which are still in dispute and those which can be agreed;
c) if an extension of time is not agreed then this Voluntary Protocol will cease to apply.
2.6.1 The claimant's agent will advise insurers whether or not their offer is to be accepted or rejected, prior to the raising of proceedings and in any event within five weeks of receipt of the letter of settlement.
2.6.2 Where a Voluntary Protocol case settles, cheques for both damages and agreed expenses must be paid within five weeks of the settlement. The date of settlement will be the date when the insurer receives notification of settlement. Thereafter, interest will be payable on both damages and expenses due and payable in accordance with the agreed settlement terms at the prevailing judicial rate from the date of settlement until payment is made in full.
2.7 Alternative dispute resolution
2.7.1 The parties should consider whether some form of alternative dispute resolution (ADR) procedure would be more suitable than litigation and, if so, endeavour to agree which form to adopt. The parties can agree at any stage to take the dispute (or any part of the dispute) to mediation or some other form of ADR.
2.8 Entitlement to fees
In claims which are resolved without the need for litigation the claimant's agent will be entitled to recover fees from the professional or his insurers as follows:
2.8.1 Instruction fee: on and after 1st January 2011
On all settlements: £1041
2.8.2 Instruction fee; on and after 1st July 2009
On all settlements : £ 1006
2.8.3 Instruction fee: prior to 1st July 2009
On all settlements: £900
2.8.4 Completion fee:
a) On settlements up to £2,500 25%
b) On the excess over £2,500 up to £5,000 15%
c) On the excess over £5,000 up to £10,000 7.5%
d) On the excess over £10,000 up to £20,000 5%
e) On the excess over £20,000 2.5%
VAT will be payable in addition on all elements of the fee except where the claimant is VAT registered.
Disbursements reasonably incurred will be payable in addition.