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A Guide to Settling Professional Negligence Claims

A Guide to Settling Professional Negligence Claims


Expert view

It is nearly always better to try to achieve a settlement of your professional negligence claim. After all, no one wants to go through the stress and expense of taking a claim to court if that can be avoided.

It’s preferable for settlement to happen before court action starts because at this point the costs start to grow. But if you can’t settle before court proceedings start, it doesn’t mean that you won’t be able to settle.

We’ve written this guide so you understand some of the key stages of the dispute resolution process and these will give you the best opportunity for settling your claim.

Before Court Action

The court rules encourage the parties involved in any professional negligence claim to try to resolve their dispute without the need to go court. These rules are laid out in a document called a pre-action protocol. The pre-action protocol lays out the timescales and behaviour expected by the court. It also makes sure that everyone involved in the dispute understands the details of the claim and the defence before court action is started.

The pre-action rules make sure that you and the other parties involved can make an informed judgement about the strengths and weaknesses of your case. This can hopefully lead to a settlement.

Once you’ve decided to make a claim and you’ve instructed as solicitor, they will get the full details of the claim from you and will send a Letter of Claim. This sets out the legal basis for the claim and the amount of your loss.

Your solicitor will advise you on the strength of your case once he or she has received the Letter of Response from the defendant. If there are arguments supporting both sides, which is quite normal, it might be more sensible to try to reach an agreement at this stage.

Your solicitor can do this by writing a letter offering to settle the claim. This is usually for an amount less than the full value of the claim. These letters are headed “without prejudice”. This means they cannot be used against either party in court if the claim cannot be settled.

Mediation

Before going forward to court proceedings, mediation is another option to try and settle your claim. Mediation involves both parties using a professional mediator (often an experienced lawyer) to try to reach a settlement. There are fees attached to the mediation process but it is much cheaper than taking a case to court.

Mediation is often successful in resolving disputes and means that you can avoid the long, drawn out and stressful process of going to court.

Normally once mediation has finished, both sides will think they could have done better, but their overwhelming feeling is relief that the dispute is over.

Factors That Can Encourage Settlement

The Letter of Claim can be a way of encouraging a settlement. Most defendants will understand how strong the case is based on the letter of claim. These include:

  • A proper analysis of the legal duties of the defendant
  • How the defendant has breached those legal duties
  • How that breach has led to a financial loss
  • The amount of the financial loss

In addition to demonstrating that you have a good claim, it’s important for you to show the ability and willingness to bring court proceedings if settlement can’t be negotiated.

Professional indemnity insurers, who provide insurance cover to professionals, will appoint experienced solicitors to defend the claim and if they think you won’t issue court proceedings, they probably won’t make a good offer to settle.

This is probably because court fees have increased to 5% of the amount of the claim, up to a maximum of £10,000. This means that many defendant solicitors will wait until you show that you’re prepared and can pay the court fees. Once this happens, they’ll probably be more likely to engage in meaningful settlement negotiations.

In addition, once court proceedings are issued, you are potentially liable to pay the defendant’s legal costs if you lose the claim or you withdraw it so again this shows that you are serious.

Settlement After Court Proceedings are Issued

Once court proceedings are issued, the next good opportunity to try to settle the claim is around the time of the first court hearing. This hearing is called a case and cost management conference and usually happens between 3-5 months after court proceedings are issued.

At this hearing, the judge will tell both parties how the case will move forward in preparation for trial. This includes when all relevant documents should be disclosed, when witness statements should be prepared and exchanged and the timing and exchange of any expert reports that are needed.

Once the judge has given his or her directions, they’ll also request that both parties spend some time in the weeks after the hearing to try to reach a settlement. If mediation has not yet happened, the judge will strongly encourage the parties to arrange mediation at this stage.

By this time, both parties know more about the claim. The defendants also know that you are serious about your professional negligence claim.

Perhaps more importantly, everyone has a better idea of the costs incurred if the case goes to trial, which could be substantial.

Settling the claim at this point avoids the risk of incurring these costs, and will be a big incentive.

Settlement before trial

If the case is not settled around the time of the case management conference, the next logical time to consider settlement is after exchange of written witness statements and expert reports. Once both parties can see the strength of the evidence against them, they could be more willing to settle.

Settlement at trial

Many years ago, cases would often settle on the first day of the trial “on the steps of the court”. This is much less common now, as all the evidence has to be exchanged in writing in advance, but it can still happen.

The advantages of achieving a settlement should be constantly under review and it’s never too late to settle a claim. You should be aware though, that nearly all the legal costs will have been incurred by the time of the trial.

Part 36 offers

A Part 36 offer is named because it refers to that part of the Civil Procedure Rules, also known as the CPR. Part 36 is there to actively encourage settlement, and both claimants and defendants can make Part 36 offers at any time.

The defendant may know they are liable, but not for the full amount stated in the claim. They can make a Part 36 offer of the amount they think is reasonable. A Part 36 offer also involves agreeing that they will pay your legal costs up to the date of the offer.

You, as the claimant, are encouraged to accept the offer because if, when you go to trial, you aren’t awarded more than the Part 36 offer, you won’t get any legal costs back from the date of that Part 36 offer. In addition, you’ll also have to pay the defendant’s legal costs from that date forwards.

You can also make Part 36 offers as the claimant. This would mean that you would accept less than your full claim. If your Part 36 offer is not accepted by the defendant and you’re awarded more than your offer at trial, the defendant will face various penalties. These include 10% added to the damages awarded, a high rate of interest on damages and more legal costs to be paid.

Part 36 offers are a great way to encourage settlement.

While it is often clear there is a liability on the defendant, the amount of damages is much more uncertain, so any Part 36 offer made by either party needs to be carefully considered.

Legal costs

This is the biggest bone of contention in any claim. Who pays the legal costs and the amount of those costs is often a very large factor in the settlement of claims. The longer a case continues, the higher the legal costs for both sides, and someone has to pay.

It is not unusual for legal costs in a low value but complex claim to exceed the amount in dispute.

You, as the claimant, will normally want a contribution to your legal costs from the defendant as part of any settlement. It’s preferable to agree the precise amount of costs payable or they will have to be assessed by the court.

The cost assessment process is itself a long, drawn out and expensive exercise. If you succeed, you can expect to recover a substantial contribution to your legal costs but it’s rare to get back all your legal costs in professional negligence claims. Typically, around 50%-80% of costs can be recovered and who pays what’s outstanding, depends on the arrangement you have with your solicitor.

It is nearly always better to settle your claim and to do so as early as possible. Mediation is an effective tool to encourage settlement, as are sensible Part 36 offers.

It is important to try to avoid legal costs building up too much, as this makes settlement even more difficult.

But it does take two to do a deal. Sometimes parties can be unreasonable in their demands and in their response to claims. If you demonstrate willingness and the ability at an early stage to take the case all the way to trial if necessary, this is ironically the best way of avoiding having to go to court.

If you need help and advice about a professional negligence claim, call our experienced team now on 0117 926 4121 or make a Free Online Enquiry.