We envisage that the issue of scope of duty is going to remain an issue for solicitors following the decision in Manchester Building Society v Grant Thornton (MBS). The MBS Judgment was handed down two and a half years ago and laid down a six stage test to ascertain the liability of a solicitor. Before MBS, we had been applying the information/advice distinction given to us in SAAMCo to determine the scope of a solicitor defendant's duty of care. However recent case law provides insight into how scope of duty will be dealt with by the Courts going forward.

- In Spire Property Development v Withers LLP [2022] which was a decision involving solicitors answering questions about power lines where the solicitors argued they owed no wider duty to advise on their clients potential remedies against a third party, the Court of Appeal found that the question of what duty the solicitor assumed had to be looked at in context and without the benefit of hindsight.

- In Lewis v Cunningtons [2023] the solicitors were instructed on a 'general retainer' in respect of both the divorce and financial matters. The Court found for the Claimant wife on the basis that it was 'reasonably incidental' to the retainer to compare the settlement proposed with what the Claimant might expect to receive if she took her husband to court and the settlement was so obviously one-sided.

These cases underline the importance of solicitors carefully scoping their work and ensuring that is agreed with their client in writing. Perhaps the best advice therefore is to ensure that retainers are kept under review as a matter progresses as these issues will continue to produce negligence claims.

Economic slumps and uncertainty have historically led to claims against solicitors and we foresee that the economy will impact on claims going into 2024 in the following areas:

Lender claims

Recessionary pressures lead to secured lending defaults, repossessions, property market falls and lender losses. Any continuous fall in property prices also brings to light dishonesty in the context of property and lending transactions, triggering the need for investigations into the activities of the Insured solicitor.

We do not expect the volume of claims that we saw between 2008 and 2012 as lending activity has been more subdued in recent years and lending has become subject to greater regulation and lenders have scrutinised transactions in more detail. With mortgage rates now unstable and forecasts of increasing defaults and a property market fall, it is the climate for increased claims vulnerability.

Liquidator claims

Adverse economic pressure will also only fuel the sharp increase already seen in claims brought by liquidators against the legal profession. Frequently, the liquidators will obtain third party funding to bring the claim adding another layer of cost and complication.

Litigants in Person (LiPs)

LiPs have always existed but against the backdrop of increased economic uncertainty and a Cost of Living Crisis, the lack of legal aid funding and the costs associated with instructing a solicitor mean we are seeing a rise in the incidence of LiPs.

We also envisage an increase in complaints to the Legal Ombudsman as LiPs look to find cheaper ways to recover their losses without bringing proceedings.

Claims arising from Lockdown/Covid

We predicted an increase in claims as a result of lockdown a few years back. Claims arising from missed SDLT holiday deadlines have not arisen as envisaged and whilst there have been claims involving missed deadlines and perhaps due to lack of supervision, the volume has not been as expected.

We predict that the complicated Building Safety Act 2022 which changes the rights and obligations of residents and homeowners, will result in claims in years to come as will the advent of AI and machine learning which is revolutionising legal research, document review, and contract analysis. While these advancements promise to streamline processes and reduce costs, they pose ethical questions and the increased reliance on technology has and will expose vulnerabilities to cyber threats and data breaches.

The SRA's increased regulation, its focus on AML breaches and toxic workplace culture are areas for all lawyers to focus on in the coming year and are also discussed further in this newsletter.