How far do you carry the can?

Supreme Court ruling may have serious liability implications for lawyers

Why do you hire a lawyer? To give advice, sure, but how far should that go and how much can you blame them when things go wrong?

Two views on the scope of a solicitor’s duty were taken by the High Court and Court of Appeal judges, who heard a case between Cheltenham firm BPE and former client Richard Gabriel. Now both are waiting to see which side the Supreme Court comes down on.

The disgruntled client is asking the top court to decide whether firms are duty-bound to warn clients about commercial risks or just inform them of the facts. If the decision goes against BPE it could raise worrying liability issues.

The case followed a soured loan agreement by Gabriel for his friend Peter Little, ostensibly to develop an airfield site. When the £200,000 was used by Little to buy the site and pay off a debt, Gabriel argued the firm was partly to blame for his losses. 

The High Court agreed that the firm had breached its duty but a heavyweight roster including Lord Justice Maurice Kay, Lady Justice Gloster and Lord Justice Fulford said BPE could not be blamed for clients’ investment decisions.

It is not the first firm to be blamed when investments go wrong. Clifford Chance, Nabarro and Freshfields Bruckhaus Deringer have all faced similar battles recently. The most intimidating was Nabarro’s, which at £130m
was one of the highest-value professional negligence cases in recent years and tested the House of Lords’ Stone & Rolls v Moore Stephens decision. All settled.

But for BPE right now, legal advice is looking like risky business.