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Risks of providing professional advice or services to friends and family

When you’re an expert in your field and have a successful start-up business, it’s common for people to ask you for advice in an informal capacity – in other words, without a formal, professional agreement in place. But what are the risks involved in giving out that friendly advice?

In this article, we will look at a case that is well-known in the construction industry, and which has had a wider impact on the topic of providing professional advice or services to friends and family.

What’s the basic premise when it comes to providing professional advice or services?

Essentially, if you provide professional advice or services you have a duty to provide such advice or services with reasonable skill and care (known as a ‘duty of care’). If you fail in showing a duty of care, you may be liable for any financial losses suffered. These losses are ones which are unlikely to be covered by any professional indemnity insurance.

The court case example of professional negligence arising from informal advice to friends

The facts: Lejonvarn v Burgess & Anor [2017] EWCA Civ 254 (07 April 2017)

Mr and Mrs Burgess wanted to landscape the garden of their house (‘the Garden Project’). This was not a straightforward undertaking as the house was on a steep sloping plot. Mrs Lejonvarn – a neighbour – had trained as an architect and had gained experience as a project manager during her career. The Burgesses had formally engaged her services in the past when she was employed, and all had gone reasonably well.

Mr and Mrs Burgess obtained a quote from a well-known garden designer with a view to starting the Garden Project. Mrs Lejonvarn expressed the view that whilst the design was good, the quote was excessive and should be half the price. In light of this, the Burgesses asked Mrs Lejonvarn and her team to help with the garden.

The Court of Appeal said that Mrs Lejonvarn provided the professional service of acting as an architect and project manager by:

  • project managing the Garden Project and directing, inspecting and supervising the contractors’ work, its timing and progress
  • preparing designs to enable the Garden Project to be priced sufficiently for a fairly firm budget estimate to be prepared
  • preparing designs to enable the Garden Project to be constructed
  • receiving applications for payment from the contractor, and advising and directing the Burgesses in respect of their payment
  • exercising cost control by preparing a budget for the works, and overseeing actual expenditure against it

What if you give advice to friends you’ve known for many years?

It’s important to know that the period of time you have known the person for is irrelevant to whether a duty of care is created.

The above principle is illustrated by the fact that the Lejonvarn case involved a dispute between people who had been friends and neighbours for over 10 years. They frequently socialised together and were very trusting of each other. For example, Mr Burgess lent £67,000 to Mr Lejonvarn towards the purchase price of a house for a period of six weeks whilst Mr Lejonvarn waited for a bonus to be paid, and that loan was repaid within the agreed period.

Does there have to be a contract (written or verbal) before any duty of care arises?

The short answer to this question is no.

In Lejonvarn, the defence raised the argument that there needs to be a contract in existence before any duty of care arises. This argument was rejected on the basis that if you have a special skill and you apply that skill for the benefit of another then, even without a contract, a duty to carry out any advice or service with reasonable skill and care arises.

The Burgesses in this case unsuccessfully argued that a contract existed through conduct. They lost on this point because whilst the services to be carried out were clear, the terms on which they were to be carried out were not clear.

What if you give the advice for free?

Free advice will still give rise to a duty of care.

There was no fee arrangement agreed in this case. Indeed, there was simply no discussion about payment at all. The fact that the services were gratuitously provided did not mean there were informal or social in context: they were still regarded as being in a professional setting.

Can you give your professional opinion or advice at a social event?

Yes, but you do need to be very careful and exercise caution.

What Mrs Lejonvarn undertook in relation to the Garden Project went further than a chat in a pub or at a party. In this case, Mr and Mrs Burgess had thrown a party to celebrate the London Olympics and Mrs Lejonvarn asked to see the garden design plans whilst at the party. She was ‘holding court’ and expressed the opinion that whilst the design was good, the quote was excessive and could be done for half the price. The court concluded that given the informal setting, it would not have been reasonable for the Burgesses to have relied on such a casual remark.

Despite this comfort provided by the court, many professionals have since expressed the view that they would not offer a professional opinion on anything unless it was in a formal, professional context, and we would agree that it’s a prudent attitude to adopt. Responding to a question that starts with 'Can I ask for your opinion on … ?' with 'My working hours are 9-5, my hourly rate is £x, here is my card for you to contact me tomorrow' may be the wisest thing to do.

With that said, you do not need to believe that you must always be on your guard at every social event to fend off accidentally creating a duty of care. The court was clear in Lejonvarn: this was not a case of ad hoc advice in an informal context; it was advice and services carried out over a period of time and involved considerable input.

Should you ever find yourself drawn on expressing a professional opinion in an informal setting, remember to use terms such as 'don’t rely on this' or 'you need to take formal advice' – never be definitive.

What if you do help family or friends with a problem?

If you’re doing more than simply providing a generic or broad principles piece of advice, you are likely to create a duty of care. This means that if you do agree to provide advice or services, you must do so with reasonable skill and care. If you are negligent in how you carry out that advice or service, or if you fail to carry out the advice or service agreed, you could be responsible for financial loss that the other party suffers as a result.

The court did say in Lejonvarn that if there is no contract, it’s important to distinguish between social and professional relationships with greater care. This is definitely something worth bearing in mind.

For more information on professional negligence, see our article Professional negligence: claiming a breach of contract, a breach of duty, or both.

In what other circumstances could this case be relevant?

Professionals are often asked to provide advice to prospective new clients without a contract in place and without charging a fee. The Lejonvarn case could easily be applied to such a situation, so you would have a duty of care and therefore it’s best avoided.

If this is a method you use to secure new work and you want to continue in this vein, then make sure that you record any such advice or services in writing. Be very clear that the other party is not to rely or act on it and that any advice is given without liability.

What could you be liable for?

If you have caused someone financial loss because you did (or failed to do) something, then it is unlikely to be covered by your professional indemnity insurance. You would therefore be personally responsible for such financial loss.

The way the court will calculate the loss you are responsible for will be to compare the financial position the person you gave advice to is actually in, against the financial position they would have been in had you performed your professional advice or services with reasonable skill and care.

What should I do if I’m concerned about a claim being brought against me?

If you’re worried about professional advice that you have given to someone in an informal capacity, our experienced business dispute solicitors are on hand to provide you with help and support. Call us today on 0800 689 1700.

About our expert

Barik Haider

Barik Haider

Senior Dispute Resolution Solicitor
Barik is a dispute resolution solicitor with over 15 years’ experience in litigation and dispute resolution. Having qualified in 2005, he trained and progressed at large national firms and has also worked at smaller specialist litigation firms. Barik has acted for a variety of clients including large companies, SMEs and individuals and is often involved in complex high value disputes. He is a Recommended Lawyer in the Legal 500.

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