The rare case of a barrister facing £22 million claim over 'negligence'

The barrister and the accountancy firm were then accused of negligence by about 75 of the investors - including Guy Hands, who founded "contrarian" investment group Terra Firma. The claimants, represented by Ted Greeno of Herbert Smith, say they did not receive the tax relief they had been advised to expect.

To establish negligence, the claimants must establish that their advisers owed them a duty of care, and that the advice they received was below the required standard. They must also show that they suffered loss through relying on what they were told.

Shipwright's solicitor, David Lancaster from Pinsent Masons, refused to comment last week. However, he was quoted by Legal Week as saying he had advised his client that the barrister had a "strong defence on all aspects of the pleaded issues of the case".

Gregory Treverton-Jones QC, who specialises in regulatory work, said that cases of this kind often turned on how much information the barrister had been given by whoever had briefed him.

Meanwhile, other lawyers were predicting that negligence claims against barristers would increase because nonsolicitor professionals were now allowed direct access to counsel.

"Barristers are only as good as their instructions," one solicitor observed. "A barrister who has not been briefed by a specialist solicitor may be at a disadvantage compared with one who has."

The £22 million claim against Shipwright - a visiting professor at King's College London who sits part-time as a tax judge - is thought to be one of the largest brought against an individual member of the Bar. But clients have no way of knowing whether barristers can meet claims of this size.

All practising barristers must be insured through the Bar Mutual Indemnity Fund for a minimum of £500,000 - while those earning more than a basic amount are required to carry at least £2.5 million insurance.

They may increase that sum to £5 million, but any insurance they choose to take above that figure must be obtained through the open market. Together with Andrew Hopper QC, a solicitor-advocate, Treverton-Jones has written a new handbook on solicitors' regulation, to be launched by the Law Society this evening.

Hopper says that claims against solicitors for negligence are much more likely to result from administrative failings than errors of law.

Zurich Insurance, one of the companies that insures solicitors, finds that missed time limits are the single largest cause of claims against that branch of the profession.

Just over half the negligence claims in personal injury cases could have been avoided if solicitors had simply lodged court papers earlier. Although the normal limitation period is three years, some solicitors do not realise that there is a two-year limit for accidents at sea or in the air.
Solicitors may have computer systems that warn them when a deadline is approaching, but Zurich quotes a case where the warning was not generated because a secretary had entered the wrong year for a child's birth.

Treverton-Jones predicts a rash of negligence cases against solicitors as property prices drop. "In a falling market, lenders are horribly exposed," he explains. "They then tend to round on the solicitors and surveyors who dealt with the transaction."

But insurance companies are not a soft touch. If your lawyers were not negligent, suing them is a waste of money.