Is indemnity always a must?
28 April 1998
David Brown argues that compulsory professional indemnity insurance cover for expert witnesses may be unnecessary. David Brown is a manager in the litigation support department at Ernst & Young. Many expert witnesses choose to take out professional indemnity insurance to protect themselves against the risk of a claim for negligence, arising out of their advisory work during the course of the litigation. This may be a sensible precaution since the sums of money for which they would be liable, if they are found to have been negligent, could be substantial.
But the Academy of Expert Witnesses (AEW) and the Expert Witness Institute (EWI) both go further than merely suggesting such cover.
They have made it a requirement of membership. Both organisations include in their respective codes of conduct a requirement to maintain 'appropriate' or 'proper' cover.
At first sight, this rule seems to be a wise one - after all, it appears to protect both client and expert - but it has hidden dangers. It demands something which may be impossible to achieve, which can be unnecessarily expensive when it is possible, and provides a misleading signal to the unwary litigant.
It may also discourage reputable experts from joining these bodies, denying both themselves, and indirectly their clients, of the benefit of shared knowledge.
Large professional organisations usually maintain professional indemnity cover, which includes their expert witness work. But there are many competent individual experts who are unable to secure the additional insurance needed to meet the requirements of the AEW and/or the EWI.
An expert might be called to advise on a claim worth tens of millions of pounds and case strategy may turn on that expert's advice. The potential cost of negligent advice could be huge, the sum of which, according to a strict interpretation of the codes of practice, would have to be covered by the expert's insurance policy. As a result, the cost of paying for such cover - even if it could be obtained - would be prohibitive for many experts.
But the practical reality is that individual experts are rarely offered cover in excess of a few million pounds. Cover extending to hundreds of millions of pounds is possible only for the largest of firms. Litigants who have heard of the AEW's and the EWI's requirement to insure could easily be misled into believing that their experts have more cover than they do.
I would not want to give the impression that either body deliberately seeks to mislead the public. Both organisations are quite open, if asked, about their policy. The AEW advises (over the phone, but not in its code of practice or written advice to members) a reduced level of cover. It suggests that indemnity insurance of £500,000 is adequate in most cases. The EWI told me it suggests £250,000.
Such cover might protect an expert from the costs of a small claim, but the aims of a codes of practice are more directed to the protection of the client than the professional. Given the apparently arbitrary level of cover recommended, it might be said that the client is not being protected - at least not to the extent he or she has been led to believe by the code of practice.
Even in smaller cases, the cost of the cover may represent a significant proportion of the fee that the expert charges prior to trial. A year's insurance may not represent a major expense for experts who are frequently instructed in litigation. However, for those who take on only one or two instructions, the cost will eat up a sizeable proportion of their fees. It would hardly be surprising if an expert declined to take out the required cover and, accordingly, denied themselves the opportunity to join the AEW and/or the EWI.
As long as there are competent experts who choose not to be affiliated with either body, the status of both organisations will be diminished.
Of course, the fact that compliance with a rule costs the expert money does not make it a bad rule. However, whether professional indemnity insurance is maintained is a commercial issue and in no way affects the integrity or competence of the expert.
Many experts attempt to limit their potential liability under the terms of their engagement, perhaps to a sum no greater than the fees received for their services. Such terms, which aim to restrict liability, are of course subject to the Unfair Contract Terms Act. Where the contract is between an individual expert and a firm of solicitors, it is reasonable to suppose that the individual would have a good chance of enforcing a contract which restricted his liability in this way.
Other experts may seek to rely on the protection given to them by the law.
In Sutcliffe v Thackrah (1974), Lord Salman held that witnesses 'enjoy an absolute immunity from any civil action being brought against them, in respect of anything they say or do in court during the trial... The law takes the risk of their being negligent and confers upon them the privilege from inquiry in an action as to whether or not they have been so.'
In respect of an expert's work outside the court, it appears that, in certain circumstances, litigants can succeed in a claim of negligence. In Palmer v Durnford Ford (1992), it was held that the expert witness could not claim immunity for his work in connection with the preparation of evidence, as opposed to the giving of it. But cases where action has been taken against an allegedly negligent expert still appear to be very rare.
There can be little doubt that the AEW and the EWI have enhanced the quality and reputation of expert witnesses, but the requirement for insurance cover seems to go beyond the scope of ethical issues and, in my opinion, is unnecessary. It might even be argued that it is contrary to the aims of the two bodies.