The law relating to the possibility of limiting the liability of a solicitor changed with the introduction of the Civil Law (Miscellaneous Provisions) Act 2008 (the “2008 Act”). Section 44 of the 2008 Act, which came into force on 20 July 2008, amended the Solicitors (Amendment) Act 1994 so as to permit a solicitor to limit his liability by contract, and repealed the existing prohibition on such a limitation, which was contained in the Attorney and Solicitors Act 1870.
Under the 2008 Act, a limitation of liability is permitted in contracts between:
a) A solicitor and client,
b) A partner, clerk or servant of the solicitor and the client, and
c) A former partner, clerk or servant of the solicitor and the client.
A solicitor may, by contract, limit his liability to a client to "an amount specified or referred to" in the contract with the client. That amount must not be less than the minimum level of professional indemnity insurance cover required by the Solicitors (Amendment) Act 1994 and associated regulations; this is currently €1,500,000. In the event that the amount specified or referred to in the contract is less than that minimum level of cover, the 2008 Act operates to increase the limitation up to that level.
The current statutory instrument regarding professional indemnity insurance comprises the Solicitors Acts 1954 to 2008 (Professional Indemnity Insurance) Regulations 2011, the Solicitors Acts 1954 to 2011 (Professional Indemnity Insurance) (Amendment) Regulations 2012 and the Solicitors Acts 1954 to 2011 (Professional Indemnity Insurance) (Amendment) Regulations 2013.
The 2008 Act expressly preserved the client's rights as a consumer under section 30 of the Sale of Goods and Supply of Services Act 1980 (as amended) and also his rights under regulation 6 of the European Communities (Unfair Terms in Consumer Contracts) Regulations 1995, which prevents a consumer being bound to a contract containing an unfair term (that is, a clause that causes a significant imbalance in the parties' rights and obligations to the detriment of the consumer, taking into account the nature of the services for which the contract was concluded).
In light of the amendments introduced by Section 44 of the 2008 Act, a solicitor may consider including in any letter of engagement a provision limiting his liability, such as the following:
"Limitation of our liability”
Our liability (and that of our present and former partners and employees) to you arising out of, or in connection with, our engagement (whether for breach of contract or of statutory duty, negligence, or otherwise) will be limited to [the higher of (a) the minimum amount of the professional indemnity insurance cover from time to time required to be maintained by us under applicable law; or (b) €[ insert amount ]]. Nothing in this letter shall limit our liability to you(a) for fraud or fraudulent concealment or(b) to the extent that under any applicable law liability may not be limited."
See also the regulations on the PII section of the site.
This practice note was updated in 2014.