Professional negligence claims – adjudicate or litigate?

What does this mean for claimants?

The updated Protocol seeks to change the default dispute resolution process from traditional court proceedings to adjudication and the idea is that adjudication should be used automatically unless there are good reasons why the matter should be determined at trial in the traditional way.

Parties who unreasonably refuse to engage in adjudication can face cost sanctions, meaning that even if a claimant is successful, the court may decide to limit the amount of their costs recoverable from the defendant.

What are the benefits of adjudication?

Adjudication is likely to be cheaper than proceeding to court, particularly where a case is of low value and costs of issuing a claim would be disproportionate. Adjudication is also much quicker. The adjudicator will make a reasoned decision, based on the documents submitted to them, within 56 days of appointment, allowing parties to understand why that decision was reached. There is not usually the need to attend a hearing, although the adjudicator may wish to hear oral witness evidence in person or by telephone, particularly where there are issues of fact in dispute between the parties.

Parties will have a choice as to the adjudicator deciding their case, allowing them to pick someone with expertise in the particular field of the dispute.  This is likely to provide more confidence in the outcome of the adjudication.

Subject to the rules of the scheme, there is also flexibility within the adjudication process.  For example, parties will be able to elect whether the adjudicator’s decision will be permanently or temporarily binding. The latter allows a dissatisfied party to proceed to court, hoping to achieve a different outcome, without having to navigate the appeals process. A permanently binding decision provides the parties with finality and damages will be payable within 21 days.

Additionally, the parties will be able to widen or restrict the powers of the adjudicator to determine the extent of costs awarded to the successful party, by agreement. This can potentially afford parties with more attractive funding options, such as lower “after the event” insurance premiums.

What are the problems with the new rules?

Although adjudication can be cheaper than court proceedings, it is not without expense. Parties will still need to incur the costs of producing witness evidence and documentation in support of their case, often with the support of legal representation.  The adjudicator’s fees will also need to be paid and parties should attempt to agree if these are to be shared between them, or, if they can’t agree on that, they can allow the adjudicator to decide once he or she has made their decision on the claim.

Adjudication will not be suitable for all professional negligence claims, for example those involving complex issues or of high value. It is also not intended for use in construction related matters.

It will be difficult for claimants and their legal representatives to address the option of adjudication at such an early stage, before seeing the stance taken by defendant in their letter of response. Furthermore, there is no corresponding obligation upon defendants to consider adjudication in their reply.

Our advice

Clients, whether pursuing or defending a professional negligence claim, should be mindful of these requirements and the potential of adjudication for resolving their case.

In particular, we would advise clients to seek legal advice from our Dispute Resolution team as soon as possible.  We can help you to decide whether your case is suitable for adjudication, recommend appropriate adjudicators for your case and if not, document reasons why adjudication is unsuitable for your case in order to limit your exposure to cost sanctions.  We will also advise on settlement options and provide specialist advice and support throughout your claim.