Disputes Yearbook 2025: 
Professional Liability 

Claims against pension advisers

In last year's Yearbook we reported on the Court of Appeal decision in Virgin Media v NTL Pension Trustees II Ltd [2024] EWCA Civ 843, dismissing the appeal and confirming that actuarial confirmation was required for certain historic amendments to pension deeds. If no such confirmation was obtained, then the amendment would be void. The decision had potentially wide-ranging implications for pensions schemes and pension advisers.

In September 2025, the Government proposed amendments to the Pension Schemes Bill to address issues arising from the case. The proposed legislation includes provisions to facilitate retrospective actuarial confirmation, even where there may be gaps in the relevant historic data. Whilst obtaining retrospective actuarial confirmation may not always be straightforward, the proposed legislation has been broadly welcomed by the pensions industry. 

Please see our blog post for a more detailed explanation of the proposed legislation. 

Loss of Chance: Barrowfen v Patel [2025] EWCA 39

In February 2025, the Court of Appeal handed down judgment in Barrowfen v Patel [2025] EWCA 39 which grappled with a number of the complexities which can arise in calculating damages for a loss of a chance where the claimant's loss depends on matters which were not within its control – such as, in this case, whether the company would have been able to complete the relevant property development sooner if it had not been for the breaches of duty. Importantly, the Court of Appeal upheld the High Court's decision that the benefit obtained by the claimant (the increased capital value of the revised development) should be deducted from the lost revenue that resulted from the breaches before (rather than after) applying the percentage discount to reflect the lost chance.

Endorsing the approach taken by the first instance judge (Leech J),  Snowden LJ provided a helpful overview of the general principles in relation to compensation, mitigation and accounting for benefits received as a result of mitigating steps as established in the leading contract law cases British Westinghouse v Underground Electric [1912] AC 673 and The New Flamenco (Fulton Shipping v Globalia) [2017] UKSC 43. While those were breach of contract cases, Snowden LJ noted that the same approach should be taken in cases of breach of fiduciary duty and professional negligence, as here.

Snowden LJ agreed with the judge that the key question is one of causation. Summarising the principle, he said: "the benefits that must be taken into accounts are those which are caused by the breaches of duty or negligence for which compensation is sought, or which are caused by the actions reasonably taken to mitigate the losses caused by those breaches of duty or negligence."

In this case, the primary claim for damages was for loss of the chance of receiving income from the development of a property owned by the claimant. Leech J found that, as a result of the delays caused by the breach, the claimant had reasonably taken the view that the original development plan was no longer commercially desirable and it was appropriate for the claimant to incur costs in formulating and implementing a revised development plan.

In those circumstances, the implementation and completion of the revised development plan formed part of the same continuous course of conduct to deal with the situation caused by the breaches. It followed that credit must be given for the benefit received as a result, ie the increased capital value of the revised development plan as compared to the original development plan.

The Court of Appeal agreed with Leech J that, in this case, credit for the increased capital value should be applied before the loss of chance multiplier. This was because, in cases such as this, where there were multiple counterfactuals, to do otherwise would in effect give credit for the benefit even in circumstances where it was not caused by the breach.

See our more detailed article on the case here. Note that an application for permission to appeal has been lodged with the Supreme Court. 

Developments in SRA investigations and enforcement powers

There were a couple of notable developments in October concerning the breadth of the Solicitors Regulation Authority’s (SRA’s) investigation and enforcement powers.

First, HM Treasury announced its intention to transfer the SRA’s anti-money laundering (AML) enforcement powers to the Financial Conduct Authority (FCA). Whilst this will herald a significant shift in the regulatory environment, it has been on the cards for some time: it was an option shortlisted in the Government’s 2022 review of the AML regulatory and supervisory regime. The Government has since launched a consultation (closing on 24 December 2025) which seeks responses on specific aspects of the proposal.

If the proposal goes ahead, it will give rise to a range of complex considerations. For instance:

• Will regulated firms and individuals be expected to contribute towards the FCA's budget?
• How will matters be investigated which fall within the purview of both the SRA and FCA (eg where the allegations involve both AML and conduct allegations, or breaches of the Solicitors Accounts Rules)? Could there be separate investigations conducted in parallel, and will there be a risk of the SRA and FCA issuing separate/stacking sanctions in relation to the same conduct (possibly in addition to any criminal sanctions)?
• The announcement applies to “firms”, which is defined to include “individuals who carry out regulated activity.” It will be interesting to see the range of sanctions which may be open to the FCA in relation to individuals. For instance, will the FCA have an obligation, in appropriate cases, to commence proceedings before the Solicitors Disciplinary Tribunal seeking to strike off an individual solicitor for the most serious breaches of AML requirements?
• Privilege issues: as it stands, the FCA does not consider itself able to require the production of privileged material during an investigation. Indeed, Regulation 72 of the 2017 Money Laundering Regulations specifically permits a professional to refuse the production of privileged material during an AML investigation. That is a far cry from the SRA’s stated position – said to be based on the 1967 Court of Appeal decision in Parry-Jones v Law Society – that it can “see information even if it is confidential or subject to a client’s legal professional privilege.” Assuming that the FCA’s planned powers are limited by Regulation 72, the proposal may affect access by the regulator to legal advice provided to firms and by firms to clients.

That brings us to a second and related development: Carter-Ruck, a law firm specialising in libel claims, has, along with its client (Mohamed Amersi), recently issued a Part 8 claim against the SRA seeking a declaration that the SRA is not permitted to inspect privileged material in connection with a regulatory investigation under the Solicitors Act 1974. The background to the investigation apparently concerns Mr Amersi’s unsuccessful defamation claim against a Conservative Party MP. If Carter-Ruck successfully obtains the declaration sought, absent future statutory intervention, the SRA’s approach to investigations is likely to align more closely with that of the Bar Standards Board, which considers that it can only inspect privileged material in the event of waiver or a court order, and indeed other regulators such as the ICAEW.

Conduct of litigation: Mazur & Anor v CRS LLP [2025] EWHC 2341 (KB)

In May 2025, the High Court handed down a judgment which clarified that the requirement for authorisation to conduct litigation under the Legal Services Act 2007 (LSA) is personal in nature, so a non-authorised individual cannot conduct litigation (even under supervision) simply because their firm is authorised.

The dispute arose from fees allegedly owed by the appellants to the respondent, their former solicitors. Proceedings were commenced in the fee dispute by the respondent's new solicitors, with the particulars of claim signed by that firm's Head of Commercial Litigation, Mr Middleton, who was a solicitor without a current practising certificate. The appellants objected to Mr Middleton's involvement in the matter, asserting that he was not authorised to conduct litigation. They applied for directions, including an order requiring his replacement by a qualified solicitor. Acting of his own motion, Deputy District Judge Campbell ordered a stay of the proceedings, citing evidence that Mr Middleton had engaged in one of the six reserved legal activities in the LSA – namely, the conduct of litigation – without authorisation.

The respondent made an application to lift the stay, which came before His Honour Judge Simpkiss. In the interim, Mr Middleton was replaced by a qualified solicitor, and his firm submitted a self-report to the SRA. Interestingly, the SRA decided not to investigate the matter, on the basis that, in their view at that time, Mr Middleton was entitled to conduct litigation in reliance on the firm's authorisation.

In view of the SRA's letter, HH Judge Simpkiss found that there was no breach of the LSA. He therefore lifted the stay and ordered the appellants to pay the respondent's costs. The appellants appealed to the High Court and also invited the court to consider referring Mr Middleton and his supervising director to the SRA for further investigation, notwithstanding the SRA’s earlier decision not to pursue the matter.

The High Court (Sheldon J) invited submissions from the Law Society and the SRA on the circumstances in which a non-admitted person may conduct litigation. Both bodies were aligned in their interpretation: whilst non-admitted individuals may assist an authorised person in the conduct of  litigation, they are not permitted to conduct it, even under supervision. 

Sheldon J agreed and allowed the appeal. He referred to section 15(2) of the LSA, which makes it clear that an employee who carries out a reserved legal activity is treated as personally undertaking that activity, regardless of whether their employer is authorised. Indeed, section 16 of the LSA states that an employer commits an offence if a reserved legal activity is carried on by one of their employees, in their capacity as such, without that employee being appropriately authorised.

The court held that Mr Middleton was not entitled to conduct litigation, because he was not personally authorised, and he could not rely on his firm's authorisation. He found that HH Judge Simpkiss was mistaken in relying on the SRA’s earlier letter. Despite this finding, Sheldon J declined to make a referral to the SRA, on the basis that the SRA was already aware of the judgment, having been involved as an intervening party.

Unfortunately, Sheldon J did not need to consider whether Mr Middleton had in fact conducted litigation. Therefore, although the judgment provides some clarity on the type of litigation work that may be undertaken by, for example, trainee solicitors, paralegals, some employed barristers and some foreign-qualified lawyers, it leaves an important question unanswered: what test should be applied in assessing whether a fee earner has gone beyond assisting in litigation? The SRA submitted that the question is one of fact and degree, relying on an earlier decision of Cavanagh J  in Baxter v Doble [2023] EWHC 486 (KB), and the key consideration is whether the individual has assumed responsibility for the conduct of litigation and exercises professional judgement in respect of it. 

We understand that CILEX has obtained permission (as a third party) to appeal the decision to the Court of Appeal.

Misuse of AI in Court Proceedings

The High Court raised serious concerns regarding the misuse of generative AI in pleadings in its decision in Ayinde v London Borough of Haringey [2025] EWHC 1040 (Admin) and a joint decision in Ayinde and Al-Haroun v Qatar National Bank [2025] EWHC 1383 (Admin). 

In Ayinde, the court considered whether the inclusion by a barrister of fictitious case citations in pleadings justified a wasted costs order against the barrister and her instructing solicitors under Practice Direction 46. At the costs hearing, the barrister attempted to explain the errors as “minor citation mistakes,” but this explanation was firmly rejected and Ritchie J stated:

“…if she had dropped it into an important court pleading, for which she bears professional responsibility because she puts her name on it, she should not have been making the submission to a High Court Judge that this case actually ever existed, because it does not exist.”

Although the court declined to make a factual finding on whether AI was used, Ritchie J observed that reliance on AI generated material without verification would, on the balance of probabilities, constitute negligence. He stressed that professional responsibility for accuracy cannot be delegated to technology and that the legal team, including solicitors, bears ultimate responsibility for ensuring pleadings are correct. The court concluded that the use of non-existent authorities and subsequent attempts to minimise the issue warranted a wasted costs order. The matter was also referred to the Bar Standards Board and SRA. 

The President of the King’s Bench Division listed a further hearing to consider whether contempt proceedings were warranted, although they were ultimately not pursued as the court accepted that there was no deliberate wrongdoing and that the solicitors had no reason to suspect that the barrister would cite fictitious cases. 

The Al-Haroun case, although joined with these proceedings for these purposes due to similar concerns, arose in a different context. It involved witness statements incorporating fabricated or misquoted authorities, partly sourced from AI research undertaken by the litigant and adopted by the solicitor without adequate checks. The court described this as a "lamentable failure" and referred the solicitor to the SRA for investigation. 

These decisions seem to form part of a broader trend. For instance, in Bandla v SRA [2025] EWHC 1167 (Admin), the court struck out grounds of appeal relying on fabricated authorities, citing the need for decisive action to protect the integrity of judicial processes. In a separate case, Arnold LJ imposed a costs award exceeding £225,000 against a litigant, Craig Wright, which seems to have been informed (at least in part) by him having made submissions containing AI "hallucinations".

These cases underscore the judiciary’s clear expectation that, while AI tools may assist in preparing legal submissions, they do not diminish the professional duty to ensure the accuracy and integrity of all submissions. 

Please see our more detailed article on the Ayinde case here.