Have you suffered a ‘loss of chance’ when engaging a solicitor to act for you in a commercial transaction?
The Loss of Chance Principle
Recent caselaw, Richards v Speechly Bircham LLP (2022), has established that where Mr X’s solicitor failed to identify and advise him of certain risks in a private equity transaction, which then resulted in a significant financial consequence to Mr X, he was entitled to damages flowing from his solicitors’ negligence.
In this case, the solicitors were found to have breached their duty of care by failing to warn the claimants about the financial risks associated with the leaver provisions in the company’s articles of association. These provisions dictated how shares would be treated if an employee left the business, and the solicitors did not adequately flag the harsh consequences of being classified as a “bad leaver.”
This omission exposed the claimants to the risk of receiving nominal or no value for their shareholdings if they were wrongfully dismissed from their employment. The court concluded that a reasonably competent solicitor practising in private equity would have identified this risk and proposed measures to mitigate it, such as renegotiating the terms or obtaining additional contractual protection.
Importantly, the court recognised the concept of ‘loss of chance’ – not awarding damages for what would have happened, but for the lost opportunity to negotiate an alternative agreement that would have avoided such exposure.
This principle is increasingly significant in professional negligence claims, especially in complex financial or commercial contexts where exact outcomes are uncertain.
Seek Specialist Advice With Howell Jones
This case highlights the importance of thorough legal advice in corporate transactions, particularly where significant investments, shareholdings, or employment arrangements are at stake. It also reinforces the expectation that legal professionals must exercise proactive diligence when reviewing company documents and advising clients on risk exposure.
Loss of chance claims can be complex, involving detailed analysis of what might have happened had the solicitor acted competently. Legal experts carefully consider the evidence to assess the likelihood of a better outcome, ensuring that damages awarded are fair and proportionate. This makes it all the more important to seek specialist advice if you believe you have suffered such a loss.
If you believe your solicitor failed to highlight key risks or you suffered financially due to poor or incomplete advice, you may have a valid claim for loss of chance. Even if the outcome was uncertain, the law recognises the value of a lost opportunity to make a better-informed decision.
If you consider this applies to you, or you would like information about a possible case involving a loss of chance, please contact our specialist litigation solicitors in Surrey. Our Surrey solicitors at Howell Jones can assess your situation and advise on the next steps to protect your position.
