City law firm, Lewis Silkin has escaped a £2 million negligence award after the Court of Appeal ruled that the client’s loss was outside the solicitor’s scope of duty.

Lewis Silkin’s former client, Timothy Wright, claimed that he had missed out on a £10 million severance pay-out as a result of the firm’s failings.  Wright had been employed as Chief Executive of Deccan Chargers, which owned a cricketing franchise in the Indian Premier League.  The 2008 global financial crash hit Deccan hard and put an end to its hopes of building a major sporting venture in India.  As a result Mr Wright was dismissed in 2009.

Wright had a £10 million severance clause in his contract, which Deccan failed to pay.  He pursued his claim through the UK courts and was awarded £10 million in damages against Deccan, but was unsuccessful in enforcing his claim in the Indian courts.

As a result, Wright took action against Lewis Silkin, claiming the firm was negligent in that it had failed to ensure that English courts had exclusive jurisdiction over his claim.  He won his claim in the High Court and was awarded £2 million damages.  The sum was based on the judge’s assessment that Wright would have had a 20{0a6a65c996ed4169444354e707b897cdb00dbefc1d0429e8febb9bf11027ba53} chance of recovering his £10 million severance pay, had he been properly advised.

At appeal, the lower court’s decision was overturned.  Lord Justice Jackson decided that even though Mr Wright had suffered a loss, it was not the kind of loss either party would have had in mind when the contracts were being drafted in 2008.  As a result the claimed negligence was outside the duty of care that Lewis Silkin owed its client.  The judge did however award Mr Wright £40,000 in damages to be paid by Lewis Silkin, to cover the costs he had incurred in enforcing his claim against Deccan .

“This a useful ruling as it helps to set out the extent of lawyers’ duties to their clients,” said James Burgoyne, Director – Claims & Technical, Brunel Professions. “If the loss incurred by a client is not of a kind envisaged by lawyer or client, then it falls outside the lawyer’s duty of care as it is too remote a possibility to be considered.  In this case Lewis Silkin were not obliged to consider outcomes in the eventuality that Deccan got into significant financial difficulties in the longer term.”

Reports on the case have been published by the Law Society Gazette and law firm, RPC.