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objection is seen to the principle of a lwyer avoiding
liability by agreement or disclaimer, and. on the other
hand, that it is unheard of and would not be approved.
The need of a lawyer for protection against loss
through an action for negligence brought against him
by a client must be related to the area of practice in
which it arises. Having regard to the basis of the law-
yer's liability for negligence—the failure to exercise
reasonable care and skill—one would not expect a
lawyer to seek exoneration from that obligation in
respect of any work done in his regular field of practice,
which does not involve novel or doubtful questions of
law. The difficulty is to know when he is being led into
terra incognita
and so rendered more vulnerable to the
risk of error. Specialisation reduces the risk, but the
specialist, known as such, might be regarded as owing a
higher duty of care to his client because he impliedly
professes a greater knowledge of the law in the parti-
cular field of his specialisation. In most cases of profes-
sional negligence against lawyers the cause of action
arises without the lawyer's knowledge of his negligence
having occurred, or even that there was any particular
likelihood of it occurring. Only a general form of agree-
ment would have saved him. Perhaps a written retainer,
taken as a matter of course from all clients, with the
exemption clause in small print, would meet the case.
Whether small print were used or not, one can imagine,
in some countries, the righteous indignation of a judge
before whom such an agreement was pleaded as a
defence to an action by the client against the lawyer
for negligence. There will be considerable agreement
with the view expressed by Mr. J. Fontana (Federal
Bar Association U.S.A.).
I do not believe that, with respect to actionable negli-
gence, an indemnity by the client, exonerating the
lawyer from the liability for his negligence in acting
for the client would be acceptable. The lawyer's duty
is to handle his client's affairs with reasonableness
and diligence. If he is negligent in not doing so, he
should be held liable for his actions.
General Agreement to Practise with Limitation of
Liability
Apart from the ethical question, general agreement
by members of the profession in a particular place to
practise with limitation of liability to their clients would
be a practical prerequisite to the success of the method,
since there would always be lawyers
(i) to whom the idea of offering their clients less than
a reasonable standard of skill and competence would
lie repugnant, or
(ii) whose confidence in their own skill and compe-
tence would brook no such negation of it, or
(iii) who would use their acceptance of liability as a
means of gaining clients from those who disclaimed
liability.
Special agreements might be considered by lawyers to
protect them against the risks inherent in
(a) very large transactions taking them out of their
insurance depth and involving obviously difficult or
uncertain question of law,
(b) matters raising novel or doubtful questions even
without the element of magnitude,
(c) matters in which they acknowledge a lack of
experience but act because of the client's insistence.
Lawyer not Necessarily Liable for Mistake
The competent lawyer's awareness of the particular
risks of error under (a) and (b) would indicate that he
would not necessarily be liable to his client for the
consequences of a mistake or for having followed a
course of conduct later proved to have been wrong. This
theoretical exemption from liability would give him
small comfort if he were forced to contest the issue in
Court and possibly have it decided against him by an
unsympathetic jury.
A barrister, having no contractual relationship with
his client, and being now concerned in the matter of his
professional negligence only with the Hedley Byrne
principle, would have little difficulty in securing him-
self against claims for negligence in respect of some
"paper work", by a unliateral disclaimer in general
terms, related to the doubtful state of the law on which
his opinion is given. However, when called upon to
advise on a course of action, one way or another, he
would possibly need his client's agreement in order to
avoid liability, if his advice were held to have been
given negligently—i.e. without exercising the care and
skill which should be possessed by a barrister of reason-
able competence. A barrister who became known for
his practice of disclaiming responsibility for his opinions
would hardly be the first choice of a solicitor seeking
positive direction in his client's cause.
The conclusion to be drawn from the discussion of
this division of the topic is that avoidance of liability
by agreement or disclaimer is not a practicable method
of resolving the lawyer's difficulties in the matter of
professional negligence.
PART III : POSSIBLE INSURANCE COVER
Division 1—The nature of Professional Indemnity
Insurance
According to many correspondents, it is of an ill
nature. Most insurance contracts are hedged about with
conditions unpalatable to the insured, and professional
negligence insurance for the lawyer is no exception.
It is a form of liability insurance "in which the event
insured against affects the assured in relation to his
financial resources by reason of his becoming liable to
pay to a third party either damages for breach of con-
tract or tort, or some other form of compensation,
restitution or reimbrusement".
19
Of comparatively recent origin, having been devel-
oped during the nineteenth century, liability insurance
was, nevertheless, very rapidly fitted into the great body
of insurance law which had grown around marine
insurance to establish the nature of an insurance con-
tract. The basic principle of this form of insurance, as
with most others, was the contract of indemnity, under
which the liability of the insurer is limited to the
amount of loss proved to have been suffered by the
insured. The requirement of
uberrima fides
applies to
this type of insurance, imposing obligations to disclose
all material facts and to avoid any misrepresentation of
a material fact, however honestly made. The conse-
quence of any breach of these obligations is that the
insurer becomes entitled to repudiate the contract.
In general, a policy of professional negligence insur-
ance indemnifies the holder against loss through claims
made against him in respect of his professional negli-
gence during the year of insurance covered by the
policy, within stated limits of amount. It is completed
on a proposal by the person seeking insurance on a
form which is probably a standard form in all countries
where this type of insurance is written. An example of
a standard form of proposal is given in the appendix.
The standard "extensions" available to an insurer
appear in the proposal.
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