A long-standing relationship between a solicitor and clients does not automatically give rise to a duty to keep the suitability of previous advice under review following a decision in Shepherd Construction Ltd v Pinsent Masons LLP.
The case provides reassurance that professionals and their insurers will not normally be held liable for claims of negligence where advice, which was accurate at the time it was given, is relied upon after the law has subsequently changed.
The case centred on construction firm, Shepherd Construction, which had retained Masons Solicitors for many years on various matters. Masons had advised Shepherd Construction on construction subcontracts in 1998. Shepherd was still using the contact in 2007 after amendments to the Insolvency Act in 2002 had rendered it ineffective. Shepherd lost over £10.6 million as a result of using the old contract. It argued that its long standing relationship with Masons implied it had a ‘general retainer’ with the firm, which obliged it to keep its previous advice under review.
In rejecting Shepherd’s claims, the judge said “there is something commercially and professionally worrying if professional people are to be held responsible for reviewing all previous advice or indeed services provided.” The judge did however indicate some circumstances where a solicitor may have a duty of care to reconsider advice given under previous retainers.
“This is good news for all professionals and their professional indemnity insurers,” says James Burgoyne, Director, Brunel Professional Risks. “Had the case gone the other way we could have been in the invidious position where professionals could be held liable for advice given under different circumstances, many years before. This is clearly a victory for common sense.”