In this practice area
Claims against and for professionals, including accountants, lawyers, valuers, engineers, architects, auditors and financial advisers, where advice or services fall short.
What professional negligence claims involve
Professional negligence claims arise when a client or third party suffers loss because a professional failed to exercise the care and skill expected of them. Examples include a valuation that overstated the security for a loan, tax or structuring advice that produced an unexpected liability, a solicitor who missed a limitation date or failed to protect a client in a transaction, an engineer's design error, or an auditor who failed to detect material misstatements.
The same facts often give rise to claims in contract, in negligence and, in some cases, for misleading or deceptive conduct. Professionals facing a claim will usually need to notify their professional indemnity insurer promptly.
The legal framework
The Civil Liability Act 2002 (NSW) governs most negligence claims in NSW. Section 5B sets out when a person is negligent for failing to take precautions against a risk of harm, and section 5D sets out the two elements of causation: factual causation and the scope of liability. Under section 5O, a professional is not negligent if they acted in a manner that, at the time, was widely accepted in Australia by peer professional opinion as competent professional practice, unless the court considers that opinion irrational. That defence does not apply to a failure to give a warning or information about a risk.
Part 4 of the Act introduces proportionate liability for apportionable claims, which include claims for economic loss or property damage arising from a failure to take reasonable care. Where more than one person caused the loss, each defendant is liable only for its share, so a claimant may need to sue every responsible party to recover in full. Liability may also be capped under a professional standards scheme approved under the Professional Standards Act 1994 (NSW). Negligence claims for economic loss generally must be brought within six years of the date the loss was first suffered.
How these matters typically run
The central evidence in most cases is expert opinion from a member of the same profession about the standard of care, together with evidence of what would have happened had competent advice been given. Quantifying loss can be complex, especially where the claimant would have made a different investment or transaction decision.
Early steps include obtaining the file, identifying all potentially responsible parties, checking insurance and professional standards scheme limits, and confirming limitation dates. Many claims resolve at mediation once expert reports are exchanged.
How we act
We act for clients who have suffered loss and for professionals and their insurers defending claims. We identify the correct defendants early, deal with proportionate liability from the outset, and test the expert evidence before costs escalate.