On 25 May 2016, an Adjudication Pilot for Professional Negligence Claims, which was originally launched in February 2015, was re-launched (the Scheme).

There are a number of changes that have been made to the Scheme, the intention of which is to improve take up. It is understood that, previously, only a single digit number of cases have adopted the Scheme.

One of the key changes is that the previous £100,000 cap on the value of claims under the Scheme has been removed. Instead new fee bands apply.

So what is the Scheme?

The Scheme is based on the statutory adjudication scheme for construction disputes. The purpose is to enable parties to a professional negligence dispute to obtain a swift adjudication decision in respect of their dispute within a relatively short period. The adjudicator is required to provide a written, reasoned decision within 56 days of appointment. That decision will be binding, unless court or arbitral proceedings follow which alter the decision, save unless the parties to the adjudication opt for the adjudicator’s decision to be finally binding.

A number of Judges have recommended and backed the use of the Scheme.

Key Points of Note:

  • The Scheme is voluntary. In other words, both parties to the dispute will need to agree to adjudicate.
  • The Scheme is intended to apply to disputes “between professional persons such as lawyers, valuers, accountants and so forth and their clients“.
  • Unlike “normal” adjudications, which generally can only involve one claiming and one defending party, the Scheme is capable of involving more than one defending party if all parties agree. Further, related disputes can be referred to adjudication together.

There is a useful “pilot pack” which provides details of the rules and corresponding guidance. The pilot pack can be found by clicking on the following link Adjudication of Professional Negligence Claims.

Suitability of Disputes for the Scheme

The guidance notes that not every professional negligence dispute will be suitable for the Scheme. The examples of disputes which may not be suitable include those which genuinely require complex expert evidence, or witness evidence, on issues of breach of duty or causation. Interestingly, the guidance also notes that disputes involving construction professionals, who may have the availability of the statutory scheme for construction disputes, should give careful consideration to the desirability of the Scheme.

The guidance provides examples of the types of disputes which may be particularly suitable for the Scheme:

  • Disputes where the financial value of the claim is modest, so that the legal costs of taking the claim all the way to trial will be disproportionately high;
  • Disputes where one or other party lacks the financial resources to take the claim all the way to trial;
  • Disputes where mediation has failed, or has unlikely to be effective, because there is such a difference in opinion on the merits that the chances of consensual resolution are slim; and
  • Disputes where there is a difference of legal opinion as to the proper meaning of a document, or the legal significance of a series of well recorded events.

Who will the adjudicator be?

The guidance provides that the adjudicator will be a senior barrister experienced in professional negligence disputes. The adjudicator will be appointed by the chairman of the Professional Negligence Bar Association from a panel drawn up specifically for the purposes of the Scheme. The barrister may be a “senior junior” or a QC, depending on the nature of the case/value of the claim.

The guidance also notes, however, that there is nothing stopping the parties by-passing the appointment body/process altogether, if they can jointly agree on an adjudicator and that person agrees to act.

What will the adjudicator’s fees be?

The guidance sets out a fee banding.  In broad terms, low value cases provide adjudicator fees of £5,000 plus VAT.  Cases with a greater value, but where the likely legal costs of proceeding are nonetheless significant when considered as a proportion of the value of the claim, have an indicative cost ceiling of £10,000 plus VAT.  Other cases which have a greater degree of complexity/value do not have an indicative fee ceiling.

Why use it?

A key advantage of the Scheme is that, rather than waiting circa 18 months to 2 years for a court decision/arbitral decision, within 56 days of the appointment an adjudicator will provide a reasoned written decision.

For many cases, the other key advantage is that engaging in an adjudication, as opposed to court or arbitral proceedings, is likely to result in the parties incurring significantly less legal costs.

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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.