Solicitor Negligence: Duty, Proof and Loss

Identify the Retainer and the Alleged Error

Identify the client, the agreed work and the particular act or omission alleged against the solicitor. A company’s instructions, a director’s personal instructions and a beneficiary’s interests can involve different duties. Record the capacity in which each person acted.

Read the engagement letter with later instructions and advice. Determine whether the solicitor undertook the disputed task, whether the scope changed and whether another adviser controlled the relevant step. Preserve the evidence supporting each answer.

Write the allegation as an event that can be tested. For example, the allegation might concern a failure to lodge a security document before a transaction completed. Identify the required step, who controlled it and when it could have been performed.

Keep four matters separate in the working file:

• Agreed events supported by contemporaneous documents.
• Disputed instructions or conversations requiring witness evidence.
• The professional standard alleged to apply to the identified work.
• Legal conclusions about duty, breach and responsibility for loss.

A transaction schedule can establish when money moved. It cannot establish what advice the client received or whether the solicitor breached a duty.

Test Duty, Breach and Causation

Test the alleged error against the scope of the duty and the law applying to that work. Identify the relevant jurisdiction, cause of action and statutory provisions before selecting an expert’s instructions.

The High Court’s Badenach v Calvert judgment illustrates why scope and causation need separate analysis. A solicitor’s will-drafting retainer did not establish the wider duty asserted by an intended beneficiary. The reasons also distinguish proving a lost opportunity from valuing it. Calling a loss a chance does not remove the need to prove causation.

Identify what competent performance would have changed. Would the client have accepted the advice? Could the transaction have completed on the proposed terms? Would the counterparty have performed, and could any judgment have been recovered? Support the answers with evidence beyond the client’s disappointment after the event.

For litigation work, consider advocate’s immunity before assuming the claim can proceed. In Attwells v Jackson Lalic Lawyers, the High Court retained the immunity but held that it did not protect the settlement advice at issue. The connection with a judicial determination matters. A settlement recorded in consent orders does not automatically attract the immunity. Identify the exact work and apply the authorities to that work.

A civil damages claim also differs from an in-proceeding wasted costs application concerning a representative’s conduct. The remedy sought determines the inquiry and procedure.

Reconstruct the Counterfactual and Loss

Compare the actual financial position with the supported position that would have existed without the alleged error. That second position is the counterfactual. Use the same valuation point and treatment of expenses for both positions.

Each schedule row needs an amount, source reference and explanation of its treatment. Reconcile payments against bank statements, distinguish transfers between the client’s accounts from external recoveries and record refunds or settlements once. Identify alternative causes, such as insolvency or a failed commercial assumption, that could have produced the same loss.

Fictional Missed-Transaction Example

Assume a solicitor allegedly misses the step needed to complete an agreed debt settlement. The face value of the debt is $300,000. The client says timely completion would have produced a $180,000 receipt with $15,000 of transaction costs. The actual records show a later recovery of $40,000 and $5,000 of recovery expenses.

On those fictional assumptions, the arithmetic difference is $130,000. Using the $300,000 debt face value would ignore the agreed settlement discount and the actual recovery. The schedule is an illustration, not an expert opinion or a finding of recoverable damages.

The liability assessment must still establish that the settlement would have completed and that the alleged error caused its loss. Keep a disputed counterparty’s capacity to pay visible as an assumption requiring evidence. For the broader construction of an economic loss schedule, carry those assumptions into the expert’s instructions.

Preserve the File and Choose the Correct Route

Preserve the evidence before commissioning an opinion, including the original electronic file and its document history. Retain the engagement documents, advice and instructions, correspondence, procedural records and complete bank statements. Include settlement drafts, completion records, invoices, recovery documents and evidence of the counterparty’s financial position.

Identify each proposed route by its purpose. A civil claim seeks damages for a legally recoverable loss. A disciplinary complaint concerns professional conduct under the applicable regulatory regime. An insurance notification concerns the practitioner’s policy obligations. A bill assessment determines the amount payable for legal work.

The NSW Legal Services Commissioner’s complainant guidance explains that negligence compensation usually requires private legal action. Regulatory powers can include limited compensation, so identify the particular power instead of treating every complaint as a damages claim. The broader legal ethics inquiry has a different purpose.

For NSW bills, the Supreme Court’s costs assessment guidance describes assessment of the reasonable amount payable. Use the costs assessment route when that is the issue.

Calculate time limits separately for each route. In NSW, section 14 of the Limitation Act 1969 generally sets six years from accrual for ordinary contract and tort actions. The Judicial Commission’s limitations guidance explains the provisions and exceptions. Accrual, applicable exceptions and the law governing the claim need file-specific analysis. Do not substitute the complaint deadline for the civil limitation period.

Check the relevant regulator’s complaint limits, the bill-assessment deadline and the policy’s notification requirements independently. Then instruct the financial expert with the alleged error, the legally supported counterfactual and a source-linked schedule of the claimed difference.