Langsam v Beachcroft LLP & Ors

A solicitor who properly instructs leading counsel may ordinarily rely on counsel’s settlement advice. The solicitor must nevertheless exercise independent judgment and reject advice which is obviously or glaringly wrong. A specialist solicitor must perform that review using the solicitor’s specialist expertise.

Settlement advice is not negligent merely because it is cautious or omits a spectrum of possible recoveries. Its adequacy depends on the circumstances, including the uncertainties of litigation, the client’s sophistication and instructions, and whether the explanation enables an informed choice.

An appellate court will interfere with factual findings or multi-factorial evaluations only where the trial judge was plainly wrong. A non-Part 36 offer remains relevant to costs, but does not automatically attract Part 36 consequences.

The appellant had settled a professional negligence claim against his former accountants for £1 million inclusive of costs. He then sued Beachcroft LLP and two partners, alleging that excessively cautious settlement advice and failures concerning evidence had caused him to accept too little. Beachcrofts counterclaimed for unpaid fees under a conditional fee agreement.

Roth J dismissed both the claim and the counterclaim in [2011] EWHC 1451 (Ch). The claimant appealed against dismissal of his negligence claim. Beachcrofts cross-appealed against the refusal to award them the costs of their unsuccessful counterclaim, relying on a pre-action offer to abandon that counterclaim if the claimant abandoned his claim.

The central issues were the proper standard of care where a specialist solicitor relies on leading counsel’s settlement advice, the permissible scope of appellate review, and the costs effect of a non-Part 36 offer.

1. The main appeal and the costs appeal were dismissed. The respondents’ notice was allowed in part. Arden LJ gave the leading judgment; Patten LJ agreed. Longmore LJ agreed with the disposition and substantially with Arden LJ’s reasons, subject to an immaterial reservation about whether the solicitor had continued to advise jointly with counsel.

2. A solicitor does not abdicate responsibility by instructing counsel. Where counsel is properly instructed, the solicitor may generally rely on counsel’s advice but must exercise independent judgment. The solicitor must reject advice reasonably considered obviously or glaringly wrong. Where the solicitor holds specialist expertise, that expertise informs the required review. On the judge’s sustainable findings, leading counsel gave the operative settlement advice and the solicitor’s responsibility was therefore supervisory rather than an independent obligation to reproduce counsel’s valuation. Counsel’s advice was cautious, but it was not wrong or obviously wrong.

3. Settlement advice often requires assessment of numerous contingencies and permits a range of reasonable professional judgments. The law does not prescribe that a solicitor must always give a spectrum of possible recoveries. The claimant had received detailed earlier advice, was commercially sophisticated, had announced that he wished to settle, and was advised that the available figure was a reasonable compromise rather than the amount he would probably recover at trial. The advice enabled an informed decision and was not negligent.

4. The evidentiary complaints failed. Findings about the proposed witness statement and hotel valuations depended materially on credibility and factual evaluation. New complaints concerning schedules and offshore funds involved unpleaded or unexamined factual questions and could not properly be introduced on appeal. The judge was also entitled to find that litigation risks remained concerning lending, the proposed witness, domicile and the possible start date.

5. An appellate court must respect credibility findings and multi-factorial evaluations unless the trial judge was plainly wrong. The six-month delay in delivering judgment did not undermine the findings. The judge was not required to address every item of evidence, provided that the reasons adequately explained the result.

6. The offer concerning the counterclaim did not fall within Part 36 of the Civil Procedure Rules 1998 and attracted no automatic costs consequences. The judge considered the offer and permissibly treated the failed counterclaim separately. The offer was a tactical attempt to defend the principal claim without costs risk, rather than the normal genuine compromise offer considered in the authorities. The refusal to award Beachcrofts their counterclaim costs therefore disclosed no error of principle.

1. Court of Appeal (Civil Division): In [2012] EWCA Civ 1230, dismissed the claimant’s appeal against dismissal of his professional negligence claim, dismissed Beachcrofts’ costs appeal, and allowed the respondents’ notice in part.
2. High Court of Justice, Chancery Division: Roth J dismissed both the claimant’s professional negligence claim and Beachcrofts’ counterclaim for outstanding fees in [2011] EWHC 1451 (Ch). He refused to order the claimant to pay Beachcrofts’ costs of the unsuccessful counterclaim.