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Professional Negligence Claims “Eleventh Hour” Rush To Beat Deadline

Solicitors looking at documents
8th December 2014

The number of professional negligence cases brought against law firms in 2014 rose by nearly three times on the previous year as claimants tried to beat a six year deadline for recovering losses incurred by the 2008 financial crisis.

The majority of claims involving  property and conveyancing disputes, including subprime mortgage lenders, suddenly jumped by nearly 200 per cent from 143 in 2012/13 to 418 in 2013/14.

Legal industry observers say there had been a “delayed reaction” from a number of claimants making a “last-ditch” attempt at recovering significant losses suffered in the fallout from the credit crunch and the crash in asset values, such as property prices.

More successful in pursuing damages from professional advisers

As a result of the financial crisis and the recession revealing deep failures, and often fraudulent activity in some areas of the banking and investment system, claimants were advised they would be more successful in pursuing damages from professional advisers, and arguing that it was a solicitors “negligence”, which caused their losses.

Valuers have often been the main focus of professional negligence claims in recent years. However, those seeking a more immediate redress as the six year deadline fast approaches have been targeting solicitors suspected of negligent activities, such as poor conveyancing, failure to spot fraudulent mortgage applications or loan mis-selling.

Some claimants are seen to be taking their “eleventh hour” claim attempts straight to court without fully trying to resolve them first. However, it is believed cases are more likely to be settled out of court, once the pressure to beat the deadline has past.

Among the different examples of claims for professional negligence are the failure to:

  • Recommend buyers obtain independent financial advice.
  • Identify mis-selling of inappropriate mortgage products. 
  • Conduct checks for mortgage fraud, particularly on self-certification mortgages.
  • Carry out adequate money laundering checks on property transactions, both from individual house purchases and high-value developments.

 Whiplash Claims: Legal Firms Challenge To Medical Panel Reforms.

The proposed government reforms to the way future whiplash claims will be assessed by an independent board of medical experts are being challenged by personal injury firms.

Following on from the recommendations made by the Transport Select Committee report (TSC) 2013, the government’s desire to eliminate fraudulent claims is strongly supported by legal firms, who also hope to see an end to the practice by insurers who make claimants an offer to settle without seeking advice from a medical expert.

However, some lawyers are concerned that the system to be launched from April 2015 will block an individual’s right to select their own properly qualified and accredited medical expert. Instead, claimants will be restricted to choosing a doctor from an official list.

Justice secretary Chris Grayling has confirmed plans for the introduction of the “MedCo” system, which will randomly and automatically allocate medical experts to whiplash claims and remove any links between experts and law firms.

Insurers must cease making pre-medical settlement offers

All accreditation of doctors is to be completed by January 2016, by which time, insurers must cease making pre-medical settlement offers. Grayling has also told insurers that he expects premiums to be reduced and for insurers to use MedCo rather than settle claims without any examination.

A task force is also to be created by the Ministry of Justice, which will report back on reducing fraud across all types of insurance. The aim is to tackle the public perception that insurance fraud is a less serious crime, as well as identifying practices that ‘fail to deter’ fraud and strengthening the current legal framework for dealing with fraud.

The Association of Personal Injury Lawyers (APIL), have previously found that while around 90 per cent of car crash victims do receive medical diagnosis and confirmation of their injuries, around 40 per cent who suffer whiplash fail to make any form of claim at all.

The number of whiplash claims actually fell by 60,000 during 2012 to a five year low and continues to decline, according to figures from the Department for Work and Pension Compensation Recovery Unit (CRU).