Reforming the Professional Negligence Pre-Action Protocol: Why penalties for non-engagement with ADR are so important

The Professional Negligence Pre-Action Protocol (PAP) was initially introduced in July 2001 to provide a framework for parties involved in claims of professional negligence to engage in early discussions before starting formal legal proceedings. It applies to negligence claims against various professionals, such as solicitors, accountants, barristers, and financial advisors, and sets out the steps to be followed before starting court action.

The aim of the PAP is to encourage the early exchange of information, narrow the issues in dispute, and explore the possibility of resolving the matter out of court to ultimately reduce the need for costly litigation.

Recent welcome recommendations from the Civil Justice Council (CJC) have highlighted the potential for reform in this area, particularly in encouraging parties to engage meaningfully in alternative dispute resolution (ADR) processes, such as mediation. Among the recommendations is a proposal to revise the Professional Negligence PAP to refer to the court’s power to impose penalties on parties who refuse to mediate or otherwise engage in ADR.

The proposed reforms include expanding the explanation of the nature of the available ADR mechanisms. Alongside this, it is proposed that the revised Professional Negligence PAP should set out the penalties parties may face if they refuse to engage in a dispute resolution procedure. These penalties include the court’s power to impose adverse costs orders against a defaulting party and the court’s power to stay proceedings, requiring the parties to engage with the PAP.

This proposal is particularly important in professional negligence claims. There is often an imbalance in negotiating power between the parties. Defendants, typically insured professionals or large organisations, often have considerable resources at their disposal. In contrast, Claimants, who may be individuals or small businesses, may face significant difficulties in funding lengthy litigation.

Defendants with greater resources can seek to avoid ADR for strategic reasons. It can be a deliberate and powerful tactic to force a Claimant to issue proceedings or abandon their case. This imbalance can often create a barrier to justice and undermines the goal of the PAP. By reminding the parties of the possibility of adverse costs orders and the court’s powers, parties will be incentivised to engage meaningfully in a dispute resolution process.

Proposed reforms

This proposed reform reflects the general shift we have seen recently that places additional emphasis on the court’s power to order the parties to take part in ADR. The Court of Appeal ruling in Churchill v Merthyr Tydfil County Borough Council and changes to the Civil Procedure Rules have emphasised the court’s ability to compel parties to engage in ADR. For those involved in complex professional negligence cases, the opportunity to resolve matters through mediation or other ADR processes can be invaluable. Mediation allows both parties to work towards a mutually agreeable solution in a flexible environment. This can save significant time and reduce legal costs.

Alongside the proposed reforms in the PAP regarding ADR, the CJC also recommends:

• The existing three-month deadline for responding to a pre-action letter of claim should remain unchanged. This period allows sufficient time for investigating detailed and complex allegations and obtaining necessary input from multiple parties, including the insured and insurers.
• Currently, the PAP requires the parties to review their respective positions, consider the papers and evidence, and assess whether proceedings can be avoided (a “stocktake procedure”). The CJC views this process as too vague and recommends a more structured stocktake procedure. Under the revised protocol, there would be a clear obligation for parties to cooperate in narrowing the issues and to complete and file a stocktake report. This structured process would assist the courts in managing disputes more efficiently and ensure that both sides engage meaningfully in the pre-action phase.

The Civil Procedure Rule Committee will now decide how the recommendations are implemented. This will take some time, but we may see these reforms adopted into the court rules during 2025.

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