Professional Negligence And The Quality Of Legal Services–‐An Economic Perspective
| Date | 01 November 1983 |
| Published date | 01 November 1983 |
| DOI | http://doi.org/10.1111/j.1468-2230.1983.tb02546.x |
PROFESSIONAL NEGLIGENCE AND
THE
AN
ECONOMIC
PERSPECTIVE
QUALITY
OF
LEGAL
SERVICES-
I.
INTRODUCTION
IN
recent years there have been a number of public inquiries into the
professions reflecting
a
more general and growing concern in many
countries over the quality of professional services.' Most of the reports
of
these inquirieri have ignored the role of civil liability for negligence
as a means of improving the quality of professional services.2 This
omission is unfoirtunate since civil liability for negligence
has
a
number
of advantages.
It
is
perhaps the least restrictive form of intervention; it
offers an external control on professional conduct,3 thereby avoiding the
monopolistic tendencies associated with professional self-regulation;
and by directly penalising negligence, it provides the lawyer with a
financial incentive to exercise greater care. But
of
more practical
importance is the fact that private actions are often the only means
by which negligence can be controlled. In England and Wales, negli-
gence by solicitors, who represent the largest group of legal practi-
tioners, is subject
only
to an action for civil liability (unless it
is
"
gross
"
negligence). This is because the Law Society, which operates the
disciplinary procedures, refuses to deal with complaints
of
negligence,
telling the victim that their remedy,
if
any, is
in
law.4
To
do otherwise,
they have argued, would expose the solicitor to a
"
double hazard
"h
and in any case the "judicial process
is
alone suited
"
to the complex
nature
of
such an inquiry." This article, by analysing the present law
governing the liability
of
solicitors and barristers for negligence,
attempts to
fill
the gap left by other studies. The methods used for our
analysis are both legal and economic, the latter drawing on the growing
literature on the economic analysis
of
tort and contract law.'
e.g.
the Law Reform Commissioners of New South Wales,
Complalnrs,
Discipline and
Professional
Standa,rds
(1979);
the Ontario Professional Organization Committee of the
Attorney-General,
The Report
of
the Professional Organization Committee
(1980);
Report
of
ihe
Royal
Commission
on
Legal Services in England and Wales,
Cmnd.
7648 (1980).
a
A notable exception is
The
Report
of
the
Professional Organization Committee, ibid.
Chap.
9.
It
is
''
external
"
in the sense that the victim initiates a complaint and seeks redress
for his losses.
See Law
Soeiet,y,
Evidence to the Royal Commission on Legal Services. memorandum
NO.
3,
Part
3,
Sectiion
V[
(January
1978).
Ibid.
para.
VI,
S.A.I.
8.
Ibid.
para.
Vf,
S.A.I.
9.
In two recent Annual Reports
(1980
and
1981)
the Lay
Observer has reconmended that the Law Society should act as arbitrator on small claims
from individual clients. This recommendation conflicts somewhat with the recent decision
of
Warner J. in
Turner
v.
Fenton
[I9821
1
W.L.R.
52.
He applied the rule established in
Charles
Usenton
&.
Co.
v.
Johnston
119421
A.C.
130 (that where a professional man's
reputation is at stake, he ought
to
have the benefit
of
a
High
Court
trial) and held that an
allegation
of
negligence against a solicitor precluded arbitration under the Arbitration
Act
1950.
For an introduction to this literature
see
Posner,
Economic
Analysis
of
Law
(2nd
ed.,
1977);
Veljanovski,
"
The economic approach to law-a critical introduction
"
700
Nov.
19831
PROFESSIONAL NEGLlGENCE
70
1
WALES
Empirical evidence on the extent of lawyers’ negligence and the
provision of inferior quality legal services is notoriously difficult to
obtain and interprets8
As
the
Report
of
the Royal
Commission
on Legal
Services in England and Wales
(hereinafter the Benson Report) stated,O
there are “no simple tests of the quality of legal services.”10 Here we
briefly summarise the published evidence to give the reader
a
rough
idea of the magnitude of the professional negligence problem in
England and Wales.
The Benson Report ‘Users’ Survey’ revealed that
67
per cent. of
those interviewed were completely satisfied with the services provided
by their solicitors. The major grounds for complaint among those
dissatisfied were, in order
of
importance, inefficiency, incompetence/
negligence, failure to communicate, followed by delay and costs. The
level of dissatisfaction for each type
of
work undertaken by solicitors
tended to be broadly in line with the volume of business. Interestingly,
conveyancing, which is the single largest matter requiring solicitors’
attention
(32
per cent. of all consultations), only gave rise to
25
per
cent. of matters causing dissatisfaction.” Of the reasons given for
dissatisfaction, the categories
‘*
inefficiency, incompetence, and negli-
gence
”
represented
42
per cent. and delay
24
per cent.
of
the total
causes of dissatisfaction. Those expressing dissatisfaction exhibited an
interesting though not unpredictable pattern-the professional/
managerial class had more than
a
proportionate tendency to be dis-
satisfied and to complain when dissatisfied with their solicitors.
Statistics on claims made for solicitors’ negligence under the Law
Society’s Master Policy Indemnity Insurance Scheme, provide a more
direct measure of solicitors’ negligence because such insurance is
compulsory for nearly
all
practising solicitors.12 For the initial eight
months’ run-in period beginning September
1,
1976,
most claims arose
from work related to conveyancing
(28.5
per cent.), landlord and
tenant
(17.5
per cent.) and personal injury (14.3 per cent.). The principal
item responsible for claims was the solicitor’s failure to advise or to
take correct action
(61.6
per cent. of all claims). For the first four
years’ operation of the scheme the average claim paid out was
E4,610
11.
EVIDENCE
ON
LAWYERS’
NEGLIGENCE IN
ENGLAND
AND
(1980)
I
Brit.J.
Law and Society 158; Veljanovski,
The New Law-And-Economics-A
Research Review
(1982);
A.
I.
Ogus
and
C.
G.
Veljanovski (eds.),
Readings
in
the Economics
of
Law
and Regulation
(1984).
See
Pfennigstorf,
’’
Types and causes
of
lawyers’ professional liability claims: the
search
for
facts
”
(1980) Am. Bar F0und.Res.J. 255.
Supra,
note 1, para. 22.3.
lo
See Carlson,
“
Measuring the quality of legal services:,pn idea whose time has
not
come” (1976)
11
Law and Society Rev. 287, and Rosenthal, Evaluating the competence
of
lawyers
”
(1976)
11
Law and Society Rev.
257.
l1
Other empirical studies have also shown that, by and large, clients are more satisfied
with the lawyer performance in facilitative work than in adversarial work: see an American
Bar Foundation study: Curran,
The Legal Needs
of
the Public: the
Final
Report
of
a
National
Survey
(1977),
pp.
262-263.
l2
For
a
more detailed analysis
of
this data see Veljanovski and Whelan,
‘‘
An assess-
ment of the Master Policy Indemnity Insurance Scheme
”
(1980)
131
New.L.J. 328.
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