“Doors of court” settlement offers require a big decision in very limited time. What risk management steps can solicitors take against a settlement later being the subject of a complaint or claim?

Most, if not all, practitioners involved in litigation will have given advice on settlement while under extreme time pressure. The legal and factual matters informing the advice are complex enough, but the difficulty of assessing them and documenting the advice is further magnified when that advice is given literally at the door of the court.

From a risk management perspective, the need for clarity is crucial and that will generally require a number of steps to have already been taken before arriving at the courthouse. A 2016 judgment of the High Court of England & Wales, Dunhill v W Brook & Co [2016] EWHC 165 (QB), provides a useful case study from which to extrapolate some general lessons.

Case study

The claimant in Dunhill alleged that the defendant solicitors and counsel had negligently managed her claim and settled it for too little. Some 13 years had passed between the settlement and Mrs Justice Laing’s decision this year in the professional negligence claim, by which time the same settlement had already made its way to the Supreme Court on the separate issue of whether the claimant had capacity to conduct the original claim (she did not).

Briefly, the original claim was a personal injury action arising from the claimant being struck by a motorcycle, which caused a head injury. Her solicitors obtained medical reports and opinions from counsel, who thought it likely that while some liability would attach to the motorcyclist, there was also contributory negligence. Counsel gave a provisional valuation of £40,000 on a full liability basis. A split trial was ordered with liability to be determined first.

A few weeks before the liability hearing, the solicitors became aware of a further medical report, which they had not seen but thought related to the claimant’s fitness to attend trial. However, it actually described the injuries as being much more serious than previously thought, with obvious consequences for quantum. While the report was faxed to the solicitors the day before the hearing, it was never given to the trainee solicitor, who had everyday conduct of the matter, or to counsel.

On the day of the hearing, the claimant attended court with the trainee solicitor, counsel and a mental health advocate. Her son was a key witness but he did not attend and his whereabouts were unknown, which counsel considered to make the case significantly weaker. Counsel advised the claimant that an adjournment would be unlikely and that, if she did not settle, there was a risk she would get nothing. Eventually a full and final settlement was agreed that morning in the sum of £12,500. This settlement was later described by Lady Hale in the Supreme Court (on the separate issue of capacity) as being a “gross undervaluation”.

In her judgment on the professional negligence claim, Mrs Justice Laing described the fact that the advice was given “at the door of the court” as being an important part of the context for assessing the alleged negligence, as it could make it “very difficult” to categorise counsel’s decision as negligent. She ultimately concluded that counsel had not been negligent to provide the advice he did on the information available to him. Although that meant the solicitors were also not negligent, the judge was critical of the firm’s conduct. She was not impressed by the decision to send a trainee solicitor, nor did she think the trainee solicitor’s attendance note was sufficient, raising four limitations in particular: his lack of experience; that he was not present during negotiations; that the note did not fully record counsel’s reasoning; and the note’s brevity (one page to cover a period of two and a half hours).

Analysis and lessons

Although the outcome in Dunhill provides some relief for solicitors, including as regards reasonable reliance on counsel’s strategic advice, it also illustrates some of the ways in which a solicitor’s conduct may lead to subsequent criticism by a client and courts. Four risk management lessons can be taken from those criticisms.

First, Dunhill raises the importance of being prepared as far in advance of trial as practically possible, including obtaining any relevant documents in time for due consideration. Although the judge found that counsel had not been negligent in assessing the situation on the morning as being a choice between fighting and losing or agreeing a settlement, it is not difficult to imagine that getting the undisclosed report further in advance of the hearing might have altered the nature of the settlement discussions.

Secondly, it should be ensured that someone with authority on behalf of the client attends court or is available. Although this is more likely to be an issue with corporate bodies or where insurers are involved, it did arise in a way in Dunhill because the claimant lacked the required mental capacity.

Thirdly, it should be ensured that the solicitor attending court has an adequate understanding of the facts and sufficient experience to assess counsel’s advice properly. Although a solicitor is not negligent if he or she acts reasonably on the advice of appropriate counsel who has been properly instructed, the solicitor also has a duty to exercise independent judgment, which may include rejecting counsel’s advice if it is obviously or glaringly wrong. Reliance on counsel’s advice can only be reasonable if counsel is fully briefed.

Fourthly, a full and contemporaneous attendance note should be prepared by the solicitor attending. As Mrs Justice Laing observed, the contemporaneous nature of such a document can affect the weight to be given to it later on. In addition to the previously mentioned criticisms of the attendance note, she also suggested that the trainee solicitor should have submitted the note to counsel for his agreement. Doing so would prove especially beneficial where significant time has lapsed between the settlement and a later claim by an unhappy client.

The theme running through these four lessons is the connection between organisation, preparation and risk management. Mrs Justice Laing’s decision helpfully recognises the pressure created by a door-of-court settlement, but the judgment still demonstrates possible criticisms that can arise. It is suggested that the steps listed above can, at least, mitigate the risk of a future claim arising out of an otherwise settled matter.

This article is produced for general information purposes only and should not be regarded as a substitute for specific legal advice. Readers should be aware that, while Brodies LLP takes great care in publishing this material, no liability can be accepted for any loss or damage, except where the firm has been directly instructed to provide specific legal advice to a client. 

The Author
Louise Kelso is an associate at Brodies LLP. She has particular expertise in defending claims against a wide range of professionals and in alternative dispute resolution.
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