We all rely on our professional advisors from time to time, because it is impossible for any of us to be an expert in every field. We may rely on our doctor for advice on our physical ailments, our accountant for our tax obligations, our financial planner for guidance on how best to secure our financial futures, and our lawyer to protect us from legal risk. But what do we do when the advice given to us turns out to be wrong?
A skilled surgeon will not be able to help every patient, and the best financial planner will not be able to ensure the steady growth of our assets all of the time. Just because there is an adverse outcome, does not mean that there has been professional negligence. Sometimes bad things just happen.
Professional negligence only arises where a professional provides us with a level of service that clearly falls far below acceptable industry standards. In order to prove negligence, we must first establish what an acceptable level of service would look like, and compare that with the events in question, through independent expert opinion.
Not all cases of professional negligence are worth pursuing. The claimant must also be able to show loss arising from the negligent act. Sometimes mistakes can lead to unintended but beneficial outcomes, in which case there may be no loss. Or the losses may be so slight as to render court action uncommercial.
All professionals in Australia are required to hold professional indemnity (“PI”) insurance by their governing bodies. When a claim is made against a professional, that professional has a duty to report the matter immediately to their insurer, and not take any steps to compromise their claim without involving the insurer, or risk voiding their coverage. Insurers will dispassionately assess the strength of the claim and the potential damages which flow with the assistance of their own lawyers, and then make recommendations for the settlement (or contesting) of the claim.
Sometimes the interests of the professional and their PI insurer differ. The insurer may be tempted to reject indemnity under the policy if they feel that the insured has been dishonest, committed a crime, or take some other step to void the policy. Over the years we have assisted professionals in various industry groups, such as medical practitioners and accountants, when they have faced the threat of a claim. Our experience has been that the insurer’s solicitor may not provide a full explanation of the processes involved, and even keep the insured in the dark over whether ultimately the insurer will grant indemnity under the policy for the claim. In such circumstances, we can help provide support, information, and where required we can advocate on behalf of the professional to ensure that the insurer’s solicitor is properly defending the claim. We can also confidentially assist individuals who may be wondering whether they may have a claim against a professional adviser.