So you’ve instructed a professional to take care of something for you, whether the sale of your business or advice on a financial transaction.  If they get it wrong and you suffer loss as a result then you can sue them and get them to pay, right?  Not necessarily.  Even if one of your advisers has made a mistake, this will not automatically mean a payout for you.

A recent case in the Supreme Court has looked at when an adviser can be liable.  It has made it clear that a Court will look very closely at what you are actually asking your adviser to do, and so you must make sure that you are clear about this and try to tell them in writing exactly what you are expecting them to do so there is no doubt.  You should receive a letter which sets out the work that your adviser has been asked to do and you should read this carefully to make sure it is correct as this will help you if things go wrong.

You should consider what it is you want your adviser to do.  The recent case sees a difference between 2 main categories of adviser.  Do you want the adviser to take into account everything which will affect your decision to do a particular thing or take a particular step or do you want the adviser to take a more limited role, for example, where you have already decided on a course of action and just want a view on the paperwork to make it work.  This is a key decision and the consequences of not properly thinking about this and communicating what you actually want your adviser to do can be serious.  If you want your adviser to take into account all of the factors, then this means if they make a mistake on something which proves to be important in your decision to do or not do something you may be entitled to claim all losses flowing from this mistake from them.

If their role is more limited, so for example, you have already decided to make a loan to a friend and just want the paperwork to be prepared for you then the commercial and other factors which influenced your decision to make the loan are laid at your door and not your adviser’s.  So if the decision ends up being a bad one, then you will not be able to sue your adviser for all of your losses but only those losses which directly flow from the actual work they were asked to do and these may be much smaller.  If you would have made losses even if the adviser had not made the mistake then you may not be able to get anything from them at all.

It is up to you to prove what you asked your adviser to do and to show that they did not do it properly.  This will be much easier if you are clear about what you are asking of your adviser and make sure that this (and all of your other instructions) are confirmed in writing if possible. You also need to check the adviser’s letter setting out what they will do and review carefully and make sure that if it is wrong, you correct it.  These steps could make a difference to whether you are able to get a payout from your adviser when things go wrong.

This blog post was written by Michelle Davies. For further information, please contact:

Michelle Davies, legal director, Commercial Dispute Resolution

T: 0121 234 0092


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This blog is intended only as a synopsis of certain recent developments. If any matter referred to in this blog is sought to be relied upon, further advice should be obtained.