Professional liability

In 2024, we saw rates in professional indemnity (PI) under significant pressure which was expected to continue through 2025. Reports for 2025 suggest that rates continued to drop and looking ahead to 2026, this trend is set to continue. 

As legal professionals, we cannot let 2025 pass without reflecting on the judgment in Mazur v Charles Russell Speechlys which dominated the last quarter of 2025, particularly given the Law Society has been granted permission to be joined as a respondent in the appeal. The case provides a reminder to firms to have clear policies and effective supervision as well as clear documentation of the steps taken. 

More generally, claims and complaints against the professional have increased from both their clients and a range of third parties. Case law has also developed, reminding us that as solicitors we have a duty to advise a client of our own negligence.

2025 saw the Court of Appeal providing clarification as to what the test for breach of duty is in valuers’ negligence cases with the Judgment in Bratt v Jones [2025] EWCA Civ 562. It was welcome news for valuers’ with claimants needing to (i) demonstrate that a valuer has conducted the valuation in a way in which no reasonably competent valuer could have done, and (ii) address in its evidence the reasonable margin for error which exists in respect of the valuation. 

There has been continued global focus on artificial intelligence (AI) in 2025, which has also impacted the PI sphere seeking to improve efficiency and reduce costs. This is likely to continue into 2026 both for insurers and the professions they insure with new coverage and liability questions driving considerations for insurers.

In the legal sector, both R (Ayinde) v London Borough of Haringey [2025] EWHC 1383 and Al-Haroun v Qatar National Bank QPS [2025] EWHC 1383 provide us with stark reminders that AI tools have the tendency to hallucinate and that nothing should replace an individual lawyer checking, and checking again. 

Looking further into 2026, we continue to wait for the publication of the Audit Reform and Governance Bill, though no timetable has been provided it is likely to be delayed until at least Autumn 2026. 

There has been an increase in claims against lettings and managing agents. With the Renters Rights Act 2025 due to come into force on 1 May 2026, the increase in professional indemnity claims in this sphere is expected to continue. 

We look back at some the developments from 2025 and dip our toe into what 2026 might hold for some professions. Articles in this section include:

• Updates in valuers’ claims: Skykomish Ltd v Gerald Eve Ltd and Bratt v Jones.
• The legal profession case reflections Evans v Hughes Fowler Carruthers and Kul v DWF Law LLP.
• AI revolution in legal practice: A cautionary tale from the High Court.
• Watford Community Housing Trust [2025] HWHC 743: Stacking of dual insurance.
• Ensuring compliance after Mazur a practical guide for law firms.
• Considerations for professionals when using AI.
• Renters Rights Act 2025 implications for insurers.

Updates in valuers’ claims: Skykomish Ltd v Gerald Eve Ltd 

Author: Francesca Townsend and Nik Carle

The facts

The claimant intended to demolish a derelict building and replace it with purpose-built student accommodation. To facilitate the project, the claimant utilised a special purpose vehicle. The vehicle was granted a 170-year lease of the building and the claimant provided mezzanine finance with a profit share to the special purpose vehicle. The finance was secured on the leasehold of the building. 

The defendant prepared a valuation of the derelict building in February 2015 which the claimant allegedly relied on when making its decision to finance the redevelopment. However, the defendant did not inspect the building for the purposes of its valuation. The claimant alleged that the failure of the defendant to inspect the building was negligent, and that as a result of said negligence, the development had to be sold for a sum significantly lower than the defendant’s valuation and the claimant could not recover anything on its investment. 

Whilst the defendant admitted that it had not carried out an inspection of the derelict building, it asserted that its failure to inspect was irrelevant to the valuation, as the building was to be demolished in any event. Additionally, it was the defendant’s position that the claimant had not relied on the defendant’s valuation when making its decision to fund the development. 

The decision 

The court found that the defendant owed a duty of care to the claimant when preparing its valuation, and that by failing to inspect the building, the defendant had failed in its duty. The court also drew on the cases of Minkin v Landsberg [2015] EWCA Civ 1152, [2016] 1 W.L.R. 1489, [2015] 11 WLUK 416 and Large v Hart [2021] EWCA Civ 24, [2021] B.L.R. 189, [2021] 1 WLUK 97, emphasised that the defendant’s failure to include warnings in its valuation regarding the degree of uncertainty of the valuation amounted to breach of duty. 

However, the court ultimately held in favour of the defendant, as the claimant could not establish the necessary causation required. 

It was the court’s view that even if the defendant’s valuation had included the necessary warnings, these warnings would not have changed the claimant’s decision to proceed with the redevelopment. Deputy Judge Farnhill stated that he did not believe that the claimant ‘would have walked away from a deal with such potential over the failure to carry out an inspection of a building that was to be demolished in any event’. 

To this extent, the claimant could not demonstrate that it was the defendant’s negligent valuation which had caused its loss, and as such the claim failed. 

Commentary 

This Skykomish case featured a host of interesting issues, including evidence from RICS surveyors in an expert witness role, the liability cap in the surveyor's terms and conditions, the sophistication and investment experience of the claimant's director and allegations of imprudent lending (i.e. contributory negligence). 

Bratt v Jones 

The facts

A developer wanted to purchase from the claimant land which had planning consent for 82 houses. However, the developer and claimant could not agree a price. Consequently, the defendant was instructed to provide a valuation for the land. 

The defendant determined that the market value of the land was £4,075,000 using two standard methods, being a comparable sales approach and a residential valuation. The land was eventually sold for £3,529,500. 

The claimant believed that the defendant’s valuation had been far too low, and that the actual market value of the land was around £8 million. To this extent, the claimant alleged that the defendant had negligently undervalued the land and had consequently caused the claimant to suffer loss (being the difference between what had actually been paid for the land and what would have been paid had the valuation been higher). 

The claimant instructed an expert valuer, who supported a much higher valuation, but who unusually did not state what range of values a reasonable valuer might have given. The defendant’s expert found that a reasonably competent valuation of the site would likely fall within +/- 15% of £4.2m. 

The claimant argued that if a valuation is found to fall outside what the court considers to be a reasonable margin of error, then that is evidence of negligence, and a claimant does not have to take any further steps to demonstrate why the valuation was not reasonably competent.

The defendant argued that the underlying requirement for liability must always be the Bolam principle. 

To this extent, a claimant must prove that the professional failed to act in accordance with the practices of a reasonably competent professional of the same profession. Additionally, to be liable, the court must find that the valuation fell outside a reasonable bracket. 

The decision 

At first instance, the Judge dismissed the claim, agreeing with the defendant’s analysis. The court found that the true value of the land was £4,764,860 +/-15% and on this basis the defendant’s valuation fell just within that bracket at 14.15% below. Consequently, the defendant was found not to be negligent. The claimant subsequently appealed. 

The appeal was dismissed fully by the Court of Appeal. The court reaffirmed the previously accepted position that it is a precondition to a valuer’s liability that the valuation falls outside the bracket determined by the court as a question of fact. 

Then, if the valuation falls outside the bracket, the claimant is required to show that the valuer acted negligently. To this extent, the court stated that “whilst a valuation outside the acceptable bracket is an indication that something may have gone wrong, a claim in negligence or breach of contract against a valuer cannot succeed unless the court is satisfied that the valuer has failed to exercise due and proper professional skill, care and diligence in undertaking the valuation”. 

Commentary 

This judgment is an affirmation of the previously accepted position. Positively for valuers and insurers, the case emphasises the need for a claimant to (i) demonstrate that a valuer has conducted the valuation in a way in which no reasonably competent valuer could have done, and (ii) address in its evidence the reasonable margin for error which exists in respect of the valuation.  

The legal profession case reflections: Duty of solicitors to advise of their own negligence

Authors: Catherine Phillips, Katie Migda and Georgia Scheer

In Evans v Hughes Fowler Carruthers [2025] EWHC 481, the Court considered the duty of solicitors to advise their client of their own negligence. 

Hughes Fowler Carruthers (HFC) were instructed to act for Ms Evans in her divorce proceedings before Mostyn J. During the same period, HFC were simultaneously acting on behalf of Lady Mostyn in her divorce proceedings against Mostyn J. 

Before the judgment was handed down in Ms Evans’ proceedings, HFC became aware of a potential bias from Mostyn J through their work for Lady Mostyn. Subsequently, HFC advised Ms Evans of their conflict of interest and ceased acting for her. 

Ms Evans instructed alternative solicitors, and the judgment of Mostyn J was successfully set aside. 

Following this, HFC stepped back in to act for Ms Evans under an agreement protecting their other client. By 2018, c. £400,000 had been paid by Ms Evans in relation to this matter. In addition to this, HFC acted for Ms Evans in a subsequent application related to the financial provision made for her. They invoiced Ms Evans £91,000 in relation to this. 

In 2021, HFC issued a claim for the unpaid monies, being £91,000. In response, Ms Evans counterclaimed for £500,000 alleging that HFC had been negligent. As part of her claim, she alleged that HFC ought to have advised her that she may be in a position to bring negligence proceedings against them. 

This counterclaim was summarily dismissed, which Ms Evans appealed.

Decision 

The High Court reinstated the counterclaim. It considered that the correct question to ask was whether the Claimant had a real prospect of establishing that HFC knew or ought to have known that there was a significant risk that their advice was negligent.

Comments

This is not the first instance of the High Court considering the issue of the duty of solicitors to advise their clients of their own negligence. However, this case serves as a helpful reminder that whilst it remains exceptional, a duty can arise where a solicitor knows or ought to have known of a significant risk that the advice they provided to their client was negligent. 

Data protection and litigation

In Kul v DWF Law LLP [2025] EWHC 1824 (KB), the courts considered whether the processing of personal data for use as evidence in separate proceedings contravened the GDPR.

Ersan & Co Solicitors (‘Ersan’) were instructed by a number of different clients, including the claimants, to bring claims of personal injury following road traffic accidents. A large number of the claims alleged psychological injury with a prognosis of long duration. 

Due to the unusually large number of claims relying on the same prognosis, DWF Law, instructed by the insurer defendants to the personal injury claims, investigated various claims issued by individuals represented by Ersan. This analysis and its conclusions were set out in a witness statement. 

As an exhibit to the witness statement, the Defendant produced a spreadsheet (‘the Spreadsheet’) containing the information of various claimants represented by Ersan. The Spreadsheet listed information such as the claimant’s name, prognosis and whether they were under the age of 16. It was not redacted or anonymised. 

DWF Law intended to rely upon this witness statement to support their applications for dismissal on grounds of fundamental dishonesty for other claims brought by Ersan.

The claimants, represented by Ersan, brought a claim for breach of the GDPR in relation to the Spreadsheet. 

Decision 

The Court dismissed the claims. It considered that the personal data was processed with the purpose of compiling evidence of a pattern of exaggerated or fraudulent claims. Given this established purpose, the Court considered that the processing was undertaken for a specified, explicit and legitimate purpose and for the public interest task of ensuring the proper administration of justice.

Comments

Although the judgment provides reassurance for insurers intending to rely on data to establish patterns of dishonest or fraudulent claims, it serves as a helpful reminder of the requirement to ensure compliance with the GDPR when dealing with personal data.

The AI revolution in legal practice: A cautionary tale from the High Court

Author: Katie Migda

The recent High Court judgment in R (Ayinde) v London Borough of Haringey [2025] EWHC 1383 (Admin) marks a watershed moment in the legal profession's relationship with artificial intelligence. This landmark decision provides crucial guidance on the use of AI in legal practice and sends a clear warning to lawyers: verify everything or face serious consequences.

The rise of AI-generated legal errors

The Court considered two cases involving the actual or suspected use by lawyers of generative artificial intelligence tools to produce written legal arguments or witness statements that were not subsequently verified, resulting in false information, typically fake citations or quotations, being placed before the Court.

The Ayinde case: A catalogue of fake citations

Mr Ayinde brought judicial review proceedings against the London Borough of Haringey concerning its failure to provide interim accommodation pending a statutory review of a decision that he did not have a priority need for housing.

In their submissions to the Court, Mr Ayinde's counsel cited five cases that did not exist. The defendant's solicitors raised concerns about the citations in writing. The claimant's solicitors requested copies of the cases from counsel, but these were not provided. Instead, counsel drafted a response describing the citation errors as "easily explained", "cosmetic errors", and capable of being "corrected on the record".

Ritchie J found that the conduct of both counsel and the solicitors acting for the claimant was improper, unreasonable and negligent.

Despite finding that the threshold for contempt proceedings against counsel was met, the Court declined to initiate such proceedings, citing unresolved factual issues, counsel's extreme inexperience, and serious concerns about the adequacy of her supervision and training. Counsel was, however, referred to the Bar Standards Board.

The claimant’s solicitor was also referred to the SRA for consideration of the steps he took in response to the defendant's solicitor's correspondence and whether he had adequately satisfied himself that counsel was competent to undertake the work.

The Al-Haroun case: An extraordinary reversal of roles

Mr Al-Haroun sought damages of £89.4 million for alleged breaches of a financing agreement.

During those proceedings, the claimant placed before the Court witness statements from both his solicitor and himself which referred to 45 citations in total. It was subsequently discovered that 18 of those cases did not exist. Many of those that did exist did not contain the quotations attributed to them and did not support the propositions for which they were cited.

Mr Al-Haroun accepted responsibility, explaining that the citations were generated using publicly available artificial intelligence tools, legal search engines and online sources. He had complete, but misplaced, confidence in the authenticity of the material. The claimant's solicitor accepted that his witness statement contained citations of non-existent authorities and that he had relied on legal research undertaken by the claimant without independently verifying the authorities, which he acknowledged was wrong.

The Court noted that it was extraordinary for the lawyer to be relying on the client for the accuracy of legal research, rather than the other way around.

Whilst there was a lamentable failure to verify the accuracy of the material placed before the Court, the Court was satisfied that the claimant's solicitor did not realise the true position. The Court noted that one fake authority was attributed to Dias J herself, which would have been bound to fail if deliberate, and therefore the threshold for contempt proceedings was not met. The Court did, however, make a referral to the SRA.

Implications for the legal profession

This judgment represents a turning point. The court has made clear that:

1. Guidance alone is insufficient: More needs to be done to ensure that the guidance is followed and lawyers comply with their duties to the Court. Further guidance from the Law Society and Bar Counsel is being requested.  
2. Verification is mandatory: Every lawyer using AI must verify all output against authoritative sources before submitting it to Court.
3. Supervision matters: Those with supervisory responsibilities (i.e. partners, managers, supervisors, Head of Chambers) will be held accountable for ensuring proper training and oversight.
4. The stakes are high: Whilst the Court showed leniency in these cases; future cases may not be treated so generously. Likely sanctions include wasted costs orders, striking out cases, referral of professionals to their regulators, contempt proceedings and referral to the police.

Conclusion

The message from the High Court is unambiguous: AI can assist legal practice, but it cannot replace the professional judgement, diligence and integrity that the administration of justice demands. Lawyers who fail to verify AI-generated content before submitting it to courts do so at their peril and at the peril of their clients, the profession, and the justice system itself.

Stacking of dual insurance: Watford Community Housing Trust 2025

Authors: Ailish Foy and Beth Chapman

Following a data breach affecting over 3,500 people, Watford Community Housing Trust recovered £6m from two insurers, but its professional indemnity insurer repudiated due to late notification by the broker. 

The court held that the three policies would have 'stacked' to provide £11m aggregate coverage rather than being limited to the highest single policy limit of £5m. 

Applying Weddell v Road Transport, where multiple policies contain 'other insurance' excess clauses without rateable proportion language, the clauses cancel each other out and both insurers are liable. 

The decision highlights the importance of insurers using the strongest form of dual insurance clause to avoid being required to pay first when multiple policies respond.

The Renters Rights Act 2025: Implications for insurers

Authors: Shannon Martin and Safeena Qurban

The Renters Rights Act 2025 received Royal Assent on 27 October 2025 and will come into force on 1 May 2026. The Act aims to enhance tenant security and stability whilst establishing a clearer regulatory framework for landlords. It is anticipated that the Act will substantially increase professional indemnity claims against letting and managing agents.

The Act will introduce the following changes that are likely to result in claims against letting and managing agents:

Abolition of fixed term tenancies

All tenancies will become periodic tenancies, and this will apply to all assured tenancies when the Act comes into force in May 2026. Periodic tenancies will allow tenants to remain in properties until they provide two months’ notice or until the landlord has gained possession via a Court Order. 

Notices to evict

The Act removes the option for landlords to serve a Section 21 notice on tenants to leave the property. Section 21 notices do not require a reason for possession of the property by a landlord (otherwise known as ‘no fault’ evictions). Under the Act, landlords will need to rely on a Section 8 notice and specify which possession ground set out under the Act they intend to rely on. Examples of possession grounds are sale of the property, anti-social behaviour, rent arrears of three months and property deterioration.

The Act introduces a mandatory 12-month protected period, which prevents landlords from evicting tenants for that initial period. 

Private rented sector landlord ombudsman service

All private landlords in England must register with the new Ombudsman service and database, which includes landlords who use a managing agent. The Ombudsman can compel landlords to issue apologies, provide information, undertake remedial action, or pay compensation. Non-compliance by a landlord failing to register for the service may face civil penalties of up to £7,000 for initial breaches, and up to £40,000 for repeated failures to register. Agents acting on behalf of a landlord may also face similar enforcement action for failing to ensure a landlord is registered.

Rent repayment orders

The Act increases the total period a tenant can claim rent repayment for from 12 months to 24 months. Whilst letting and managing agents should not ordinarily be liable for Rent Repayment Orders, shared liability may arise where agents receive rent directly from a tenant, such as their commission. 

Implications for insurers

The following claim examples are anticipated following the enforcement of the Act:

1. Landlords may experience delays in recovering possession of their property where deposits were not protected or where properties are not registered with the service, which may result in claims against agents who are instructed to fully manage the property.
2. Landlords may seek to recover from agents the costs of penalties imposed where there has been a breach of the Act or failure to comply with an Ombudsman decision.
3. Cross-referencing between the Private Rented Sector Database and selective licensing schemes may reveal landlords who are letting out their properties without a licence. Agents may face a claim for failing to ensure properties have a licence if required and failing to inform the landlord of this.
4. The period tenants can claim Rent Repayment Orders for has increased to 24 months and there is a risk that a landlord may claim any sums awarded to a tenant from the agent if they are found to have caused or contributed to not having a licence for the property.
5. Discrimination claims by tenants if they are refused a tenancy on the basis of a protected characteristic. Agents will typically inform a tenant if the landlord does not accept housing benefit, will only consider students as tenants, will not accept pets, etc and so they are exposed to these types of claims.

Letting and managing agents will need to inform their landlord clients of their responsibilities and rights under the Act and ensure they are registered with the Ombudsman Service and database registration.