Siem & ors v Womble Bond Dickinson: Causation and Defending Professional Negligence Claims Against Solicitors

In Siem & ors v Womble Bond Dickinson, the claimants, a Norwegian billionaire and property developer, alleged that Womble Bond Dickinson (WBD) had, in the course of advising in relation to a share purchase agreement in 2017, caused the Claimants loss of an opportunity to earn substantial profits from a proposed redevelopment of luxury flats in London. WBD successfully defended the professional negligence claim worth around £50 million.

The Claimants alleged that, had different advice been given in relation to the 2017 share purchase agreement, they would have acted differently and avoided the losses said to have followed from the failed redevelopment opportunity. The court therefore considered both the scope of the solicitors’ duties and the factual consequences of the advice given or omitted. Although breach was examined in detail, and WBD were ultimately found not to have acted in breach of duty, the case ultimately turned on causation: whether any deficiency in the solicitors’ conduct could be shown to have caused the loss claimed. The Court found that, even if WBD had acted differently, the Claimants would likely have pulled out of the proposed redevelopment anyway, due to concerns about the property market and confidence in the project.

The decision is an important reminder that identifying a shortcoming in a solicitor’s performance is not enough to establish liability. A claimant must still prove that, had competent advice been given, the relevant loss would probably have been avoided. For defendants and insurers, the case underlines the importance of analysing not only breach, but also what would likely have happened in the counterfactual scenario had different advice been provided; even if breach can be established, the claimant will need to present a compelling case in causation to achieve victory. The exercise is to identify the specific duty breached, construct a hypothetical scenario in which the defendant’s conduct is changed to the minimum extent necessary to comply with the duty (the non-negligent advice), and then consider what harm the claimant would have suffered in that scenario. Mr Justice Richards applied this rigorously. He held that, even if WBD had advised on a Non-Distribution Undertaking earlier, the underlying problem with the transaction was the Claimants’ insistence on a six-month gap between exchange and completion. That issue alone, the court found, would have caused the same impasse on the same timetable as occurred in the real world. The counterfactual could not be constructed to remove the consequences of the Claimants’ own negotiating stance.

For solicitors defending claims for lost transactions, lost profits, or lost development opportunities, the case emphasises that they should press claimants on their counterfactual case which must be constructed with precision. The court will not assume that the absence of the alleged breach would have led smoothly to a successful outcome. Other contemporaneous factors, including the claimant’s own conduct, negotiating position, and external market conditions, must form part of the analysis. Defendants should therefore examine the claimant’s hypothetical decision-making closely when assessing the counterfactual case.

If you have any questions regarding the information discussed in this article, please contact Claire Revell and Carole Foster.