Lawyers' Liability: A Global Perspective

Clyde & Co now has 40 offices worldwide. In this round-up we provide snapshots of the key lawyers' liability rules around the world.

Australia

Jenni Priestley, Partner, Sydney

A key issue of concern for PI insurers generally remains the increasing prevalence of class action litigation. It is clear that the existence of insurance is a key driver in the commencement of many claims. Relative procedural simplicity combined with readily available third party funding has resulted in class actions being a major source of significant claims in Australia. In addition, there has also been a significant increase in the value of settlements achieved.

Nevertheless, there has been neither an avalanche of claims nor any radical shifts or changes in the law of liability recently, and the prevailing market conditions are currently "steady as she goes". In this regard, the High Court of Australia has provided welcome certainty in its recent (13 May 2015) judgment in the long running case of Selig v Wealthsure Pty Ltd [2015] HCA 18. The case concerned claims of negligent financial advice and the consequential application of the proportionate liability regime to various sections of the Corporations Act. The High Court found that an "apportionable claim" was limited to the specific sections of the Corporations Act providing for the apportionment of damage and did not extend to breaches of other sections simply because the damage claimed was based upon the same underlying conduct and resulted in the same loss. The decision provides clarity in relation to the application of the proportionate liability regime following on from a number of previously conflicting decisions at the appellate level.

The case is also of interest to the wider PI market because the High Court held that the circumstances justified an award of costs against the Respondent's PI insurer (a non-party to the proceedings). The Court found that the decision to appeal the first instance judgment in circumstances where the respondent's cover under its policy was capped meant that monies that it would otherwise have been required to pay to the appellants were diverted to the insurer's litigation costs. The High Court held that as the insurer had acted in its own interest in appealing there was no reason it should be immune from a costs order. This will no doubt be cause for concern going forward for PI and other insurers funding the cost of appeals in Australia.

Finally, a further issue to watch is the rise of litigation concerning the scope of professional indemnity policies and professional exclusion clauses in other policies.

Canada

Trevor McCann, Partner, Montreal

Canadian law firms are increasingly facing class action claims framed in negligence rather than as negligent misrepresentation, an important distinction since it allows such claims to pass through the scrutiny of class action certification. Such claims are especially brought in relation to allegedly negligent advice on tax strategies, on the basis that the advice assisted in bringing the strategy to market, even though the class members do not allege reliance on its terms and are not the lawyers' clients. This has led to large settlements in some instances and an increased appetite on the part of the class action plaintiffs' bar to bring these claims.

Another area of rapid development is conflict of interest law. The law surrounding legal conflicts, confidential information, and presumptions of communication absent ethical screens is 25 years old. However, the scope of the lawyer's duty of loyalty to clients and former clients has been the object of three Supreme Court decisions, each of which has nuanced the law set out in earlier ones, and numerous lower court decisions across Canada. One branch in which this has developed, illustrated in the McKercher...