Making A Professional Negligence Claim As A Charity

Professional negligence can be a somewhat confusing term but essentially, it is when a professional, for example, a solicitor or barrister, surveyor, accountant, architect, or independent financial adviser, has failed to perform a job for their client/customer to the required standard and this has caused the client/customer a loss, typically a financial loss.

Bringing a professional negligence claim as a charity

In recent years, there has been a substantial rise in the number of professional negligence claims being brought. This is due to a number of factors, including an increased reliance on receiving advice from professionals, the complexity of work being undertaken in the relevant industry (law, property, financial), and the overall heightened awareness of negligence claims by individuals and organisations, such as charities.

Below, we are going to consider some of the key points of consideration for trustees of charities, and their legal advisers, who are thinking of making a professional negligence claim.

1. Duty of care and breach of duty of care

Any charity seeking to make a negligence claim will first need to establish that the professional owed them a duty of care and that this duty has been breached.

A duty of care is usually created once a professional has been formally instructed by a charity. The duty of care and level of service expected is typically outlined in the professionals’ terms of business or engagement letter. In addition to specific contractual duties, professionals are also under a general duty to act with the reasonable care and skill to be expected of someone in their position. Therefore, the absence of formal contractual terms does not necessarily mean that no duty is owed.

In terms of breach of duty, a simple error may not constitute a breach of duty. However, a professional will be deemed to have breached their duty of care to their client if they have not performed a practice accepted as being appropriate by responsible members of their chosen profession or industry.

2. Causation

One of the more difficult, however, extremely important, elements of making a professional negligence claim is proving that the breach of duty has caused the charity to suffer a loss.

A professional could have made a significant error but if it did not cause the loss complained of, then the charity client won’t be able to proceed with bringing a claim for professional negligence. An example of this is when a charity would have done something which caused them a loss even if they had been properly advised.

Generally, the starting point for establishing causation is the ‘but for’ test. This specifies that the professional will only be responsible for the loss of the charity if their loss would not have occurred ‘but for’ the negligence of the professional.

3. Loss

Another similarly complex issue when it comes to professional negligence claims is that of loss. In some instances, it will be relatively easy for a charity to quantify a loss but, in other circumstances, ascertaining a loss may require more forensic work to constitute just how much money has been lost or how much should have been gained had the professional’s advice not been negligent.

Additionally, a charity has a duty to mitigate its losses, meaning that they need to have taken reasonable action to reduce the loss caused by the negligence of the professional. A charity cannot recover damages for losses that they could have avoided or are deemed to be unreasonable.

As with litigation in general, charities face additional hurdles in bringing a professional negligence claim. It is very unlikely that the Charity Commission will need to be formally involved, as a professional negligence claim will likely not constitute charity proceedings, however, charity trustees must consider whether a professional negligence claim is in the best interests of the charity, and ideally be able to evidence that.

In practice, unless it is clear that a claim is without merits, it is reasonable for a charity to instruct solicitors to review the available material to determine whether a claim may be pursued and its likely merits. That is typically the first step in the process of bringing a professional negligence claim in any event.