Dear all,

The case noted below may be of some interest:

On 25 January 2016, the Court of Appeal delivered a significant
decision concerning the liability of solicitors for negligence in the
conduct of litigation in Emerald Isle Assurances and Investments
Limited & ors -v- Dorgan & ors

The Court of Appeal held a solicitor was negligent in permitting
delay in proceedings instituted in 1994 which continued up to 2010,
including most notably allowing the case to ‘go to sleep’ between 2003
and 2007 (after a motion in 2002 by the Defendants to have the claim
struck out for delay had been compromised). There was no dispute that
because of the very significant delay in the case, the solicitor’s
client (the Plaintiff) was advised to settle (and in fact settled) on
very disadvantageous terms in 2010, under threat of an application by
the Defendant to apply to have the claim struck out for inordinate and
inexcusable delay. The Plaintiffs received far less under the terms of
that settlement than a lodgement which the Defendants had made as far
back as 1997 and a mere fraction of the sum they claimed. The
questions for the Court were whether:
1. The solicitor had been negligent; and
2. If he had been, whether his negligence was the cause of the
disadvantageous settlement into which the Plaintiffs were obliged to
enter in 2010. In other words, the Court had to consider whether the
delay in the case could have been avoided if the solicitors had acted
differently.

Delay
The delay in the case between 2003 and 2007 (which the Court
identified as the key period) was largely due to disputes between the
Plaintiffs and the experienced forensic accountant engaged on their
behalf to give expert evidence concerning (i) the value of their claim
and (ii) the accountant’s fees.
The Court of Appeal concluded, agreeing on this point with the High
Court that the solicitor should have given the Plaintiffs explicit
warnings of the potential risks/consequences of allowing their dispute
with their accountant to delay the progression of their case. The
Court specified in great detail what the solicitor needed to address
in his warning, saying: ““That advice concerning delay following the
first motion should also have included an explicit warning to the
clients about their potential exposure to liability for [the
Defendant’s] costs as well as those of [their own solicitors].”
However, differing with the High Court on this point, the Court of
Appeal emphasized that providing a warning to his clients was not the
only duty which the solicitor had breached. The Court noted a number
of steps which it held that the solicitor could (and should) have
taken, to address the situation, in which the claim’s progression was
stalled because of the dispute between the Plaintiffs and their
forensic accountant concerning the quantum of their damages claim. The
Court was satisfied that the solicitor’s whole conduct of the matter,
as well as his failure to provide the elaborate warnings required by
the Court, had been negligent. Indeed, the Court was very critical of
the solicitor’s failure to take steps to resolve what it was clear was
an intractable dispute between the Plaintiffs and their forensic
accountant, commenting that: “What [the solicitor] did was throughout
this saga to display a woeful pattern of sporadic, ineffectual efforts
to make progress, but without any proper appreciation of the danger
that the case would become impossible and was inexorably becoming
untenable as time wore on.”
The Court stressed that the Solicitor’s obligation was to give his
client clear advice and it noted that he did not have to continue to
retain the forensic accountant or achieve agreement as to quantum
between the accountant and the Plaintiffs, since other options were
available.
In guidance that is likely to prove very significant in the future in
assessing what is reasonable professional practice for a litigation
solicitor in these circumstances, the Court continued:
“[The Solicitor] had to advise the clients by telling them in straight
terms what the situation was. He was also obliged to follow that up
with the clearest letter or letters informing them of the options and
the dangers. The biggest danger that the plaintiffs faced was by
continuing to haggle with [the accountant] and failing to reach
agreement that they would bring about a situation in which another
motion would be brought or in which they would be unable to proceed
without giving rise to another motion which would be impossible to
defend. This, unfortunately, is exactly what happened.”
The Court also commented very adversely on letters from the solicitor
to his clients and to the forensic accountant, in which the Court held
that he gave the clear impression that he had spoken to the solicitor
for the Defendant in the underlying proceedings, when in fact he had
merely left a message, to which she did not respond. The Court noted
that no correcting letters were sent and characterized the letters in
question as confirming:
“… The impression that [the solicitor] had a wholly unrealistic view
of the circumstances as they existed at the time, and it confirms my
impression that he was not on top of the situation at all. It is
evidence of poor professional practice on his part that he wrote such
a letter following a failure of communication with the other side and
gave misleading and self-serving information to his clients.”
In summary, the Court concluded that the solicitor’s negligence went:
“…far beyond the failure to give a more elaborate warning to the
plaintiffs as Kearns P. found, although I do agree that he is liable
on that head.”

Causation
The Court of Appeal reversed Kearns P’s conclusion that the
solicitor’s breach of duty caused no loss, in clear terms, holding
that: “… It seems to me that one has to approach this question [the
question whether loss was caused] on the basis of objectivity. If a
plaintiff, after an unfortunate event, is asked whether he would have
behaved differently if given certain advice, the more or less
inevitable answer is in the affirmative, but that is not the test that
the courts apply. It is very difficult to hypothesise that a person
would not have responded to a particular warning without having in
mind the nature of the warning. Obviously, the more perilous the
situation the more explicit and compelling the warning needs to be,
and if the warning was not appreciated fully or complied with or
responded to appropriately in the first instance, then it would call
for a second warning to be given by a competent professional adviser.
What the solicitor cannot do is simply to say that the client would
not have paid attention to any warning and therefore he is not
liable.”
The Court concluded that the evidence did not justify Kearns P’s
conclusion that the solicitor’s failure to advise had caused no loss.
It noted that the Plaintiffs had followed advice on other occasions
(notably in finally settling their case) and commented that the
solicitor had a duty to bring about a situation where the Plaintiffs
were enabled to continue with their case, either on the evidence which
they had originally gathered (while recognizing the dangers inherent
in that course) or on the basis of a new accountant’s report. He had
negligently failed to do so and the Court remitted the matter to the
High Court for damages to be assessed.

Comment
This judgment is important because it gives guidance on the way in
which the Court will assess a solicitor’s conduct of litigation. While
the delay in the case is extreme, the standards expected of the
reasonable practitioner by the Court are perhaps surprisingly strict,
in the context of what appears to have been a difficult
solicitor/client relationship.
The Court held that the solicitor was not only obliged to provide his
clients with an elaborate warning giving full details of the risks
they faced and to set that warning out in very clear terms in a letter
or letters but he was required to repeat that advice, if it were not
heeded by his client, when first given.
The Court’s approach to causation is also strikingly favourable to the
Plaintiffs. It is evident that there were difficulties in their
relationship with the solicitor and with their accountant and that the
Plaintiffs were committed to the quantum of their original very
substantial claim (not least because they were in dispute with their
accountant regarding quantum for more than 4 years). Nevertheless, the
Court concluded on the balance of probabilities that had the solicitor
done all that was required of him the Plaintiffs would have acted
differently and brought their case on for hearing sooner, thereby
avoiding a motion to dismiss for want of prosecution. With respect,
the evidence relied on by the Court in concluding that the clients
would have followed appropriate advice is not strong – it is one thing
to follow the advice of solicitors and counsel to settle when a motion
to dismiss for want of prosecution has actually been issued, a very
different issue to assess whether the clients would have followed that
advice, without the immediate threat of having their case struck out
that a motion which has actually been issued represents.
The relatively onerous duties which the Court has imposed on the
solicitor in the case clearly influence its analysis of causation,
since the more the solicitor had a duty to do, the more likely it must
be that the Plaintiffs would have acted differently, as the Court held
that they would.
Finally, the tone of the judgment, which is harshly critical of the
solicitor involved, is striking. The Court’s comments concerning the
solicitor’s letter suggesting that he had made contact with the
solicitor on the other side (referred to above) is particularly
telling. It suggests that the Courts will be particularly alive to any
conflict of interest, actual or perceived, between solicitors and
their clients.

http://www.courts.ie/Judgments.nsf/09859e7a3f34669680256ef3004a27de/4305f1165f93932280257f48003e1c5b?OpenDocument