How long can professionals be held liable for negligent advice?  In the absence of a contract signed as a deed, a claim can be brought against a professional firm for up to six years after the negligent act was committed (in breach of contract) or the damage occurred (claim for negligence).  After this the claim is ‘time barred’ and the courts will not consider the case.

There is however an exception where the client is unaware that there has been a negligent act or there are hidden defects.  For example, if a solicitor has made a mistake in conveyancing which only comes to light when the property is sold on, long after the six year period.  The Latent Damage Act 1986 extends the six year limit. It gives clients three years from discovering a loss, or from the date when they should ‘reasonably to have known’ of their loss, to make a claim.

Where a client is planning to claim, there are some steps they can take to ‘stop the clock’ and extend the six year period.  One is by executing a “standstill” agreement with the other party which pauses the limitation period.  Another is to start proceedings in court.  Once a claim has been issued the limitation period stops for all elements of the claim.

“There have been numerous claims brought against professional firms, close to the six year limitation period and longer,” said James Burgoyne, Director – Claims & Technical, Brunel Professional Risks.  “This means that it is essential that all professional practices keep detailed records of their work in case a claim emerges years after the event.  We recommend that professional firms store files for a minimum of 6 years, and give serious consideration to as long a period as 15 years, so that they and their insurers can successfully defend themselves. Professionals should be aware that premature destruction of a file could prejudice the handling of a future claim. Some professional indemnity insurance policies contain conditions or even warranties relating to this.”

Guidance on limitation has been published by many law firms, including Pinsent Mason and Wright Hassall.