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Court of Appeal shifts burden of proof where client went to litigation on solicitor’s advice

07 June 2010

The Court of Appeal has held that the normal inference is that a client whose solicitor advises him to fight rather than settle will generally rely upon that advice unless it is proven otherwise.

In the recent case of Levicom International Holdings BV & Another v Linklaters (A Firm) [2010] EWCA Civ 494 Levicom appealed against a first instance decision that Linklaters' negligence was not causative of their loss.

Levicom sought advice from Linklaters regarding the strength of its case against NetCom concerning a dispute over a shareholders' agreement. Linklaters advised Levicom not to accept a settlement offer from NetCom and to arbitrate instead, stating they considered Levicom had a 'not less than 70%' chance of success.

Levicom rejected the offer and proceeded to arbitration, but subsequently settled the claim on terms substantially less favourable than those originally offered by NetCom.

At first instance the judge awarded Levicom nominal damages of just £5 on the basis that Linklaters had been negligent in providing such positive advice, but that the negligence had not been causative of Levicom's loss, as Levicom was likely to have proceeded to arbitration in any event.

The Court of Appeal disagreed and overturned that decision, stating: "When a solicitor gives advice that his client has a strong case to start litigation rather than settle, and the client does just that, the normal inference is that the advice is causative.

"Of course, the inference is rebuttable - it may be possible to show that the client would have gone ahead willy-nilly. But that was certainly not shown on the evidence here. The judge should have approached the case on the basis that the evidential burden had shifted to Linklaters to prove that its advice was not causative. Such an approach would surely have led him to a different result."

What does this mean?

Linklaters now faces a potentially substantial damages claim of around £37m, but has said it is seeking leave to appeal to the Supreme Court. Watch this space for further developments.

However, as it stands, the decision will be welcomed by anyone pursuing or considering pursuing a professional negligence claim against solicitors.

It was an unhappy lot for the client, who potentially had to show that not only had their solicitor given them negligent advice, but also had to prove they relied on that advice and acted upon it.

Of course, the presumption that you have relied upon the advice is rebuttable, but common sense dictates that a client who has sought a solicitor's advice, and acted in accordance with that advice, is likely to have relied upon it in so doing.

Time will tell how this decision is interpreted in relation to claims of professional negligence against other professionals, but it seems likely that the decision will be applied across the range of professions.

There seems to be no reason why a client who receives negligent advice from, say, an architect, should not also be entitled to the presumption that they have relied on that advice unless it can be proved otherwise.

What should you do?

If you think you may have a claim against a professional you should seek independent legal advice as soon as possible.

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Linda Mattingly

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