Lawyers and law students alike will be familiar with the concept of the standard of care. The test laid down in 1957 in the Bolam v Friern Barnet Hospital Management Committee decision has been the standard of care applied in professional negligence claims against professionals, which states “whether the defendants, in acting in the way they did, were acting in accordance with a practice of competent respected professional opinion.” A recent decision may now have heralded a new dawn in the Bolam test, which begs the question, is the Bolam test still applicable? Deian Benjamin, a specialist in professional negligence from our litigation department explains more and how the principles in this decision may well have changed in light of recent case law on negligence claims. The end of Bolam? The recent decision in the case of O’Hare and anor v Coutts & Co [2016] EWHC 2224 (QB) held, finding for the Defendant bank in this claim, that the Bolam test did not apply to certain aspects of providing financial advice. What makes this a noteworthy decision for professional advisers and lawyers is the decision that provided the financial investments have been properly recommended, “the required extent of communication between financial adviser and client to ensure the client understands the advice and risks attendant on a recommended investment” will not be subject to the Bolam test in respect of standard of care. This recent decision involved financial advice provided by the well-known bank, Coutts & Co, to Mr and Mrs O’Hare, both of whom were classed as high net worth individuals. The allegations stemmed from the fact Mr and Mrs O’Hare both alleged Coutts had breached its duty of care when advise was given to them in respect of particular investments. As set out in the Court judgment, Mr Justice Kerr assessed the question of the overall suitability of the investments; he was of the view that the Bolam test applied. But, when considering the required level of communication in respect of the likely risks of such investments, Mr Justice Kerr was of the view it was inappropriate to determine this by reference to industry standards and practice, preferring the approach taken by the Supreme Court in Montgomery v Lanarkshire Health Board [2015] AC 1430, a case relating to the duty of a doctor towards his patient in advising on the risks of treatment. The relevant test, according to the Montgomery decision, was to: “take reasonable care to ensure that the patient is aware of any material risks involved in any recommended treatment, and of any reasonable alternative or variant treatments.” In the same judgment, the test for materiality of the risk involved was whether “in the circumstances of the particular case, a reasonable person in the [client’s] position would be likely to attach significance to the risk, or the [adviser] is or should reasonably be aware that the particular [client] would be likely to attach significance to it.” In O’Hare, Mr Justice Kerr was of the view the test laid out by the Supreme Court in Montgomery was to be preferred over the test applied in Bolam. The Judge’s reasoning for such a stance was based on the following issues: • There is little consensus in the financial services sector about how risk appetite of a client should be managed by an adviser; and • The Financial Conduct Authority’s Conduct of Business Sourcebook (COBS) makes no reference to a responsible body of opinion, but suggest obligations on advisers similar to what was set out in the Montgomery decision. In O’Hare, the Judge found that Coutts had not failed to fully inform Mr and Mrs O’Hare about their investments. Crucially for Coutts, the Judge found that the Bank had not breached any of its duties by engaging in salesmanship which could have resulted in their clients taking on far riskier investments than they would have otherwise. The judgment makes it clear that “there is nothing intrinsically wrong with a private banker using persuasive techniques to induce a client to take risks the client would not take but for the banker’s powers of persuasion, provided the client can afford to take the risks and shows himself willing to take them, and provided the risks are not – avoiding the temptation to use hindsight – so high as to be foolhardy”. What now of Bolam and the Test for standard of care? The O’Hare decision is not a wholesale rejection of the Bolam principles – in fact, Bolam is and will continue to be ‘good law’ for the future when assessing future standard of care claims in the context of professional negligence claims. What the O’Hare and Montgomery decisions highlight is the common theme that exists when clients and patients are called upon to exercise an element of discretion or autonomy within their decision making, for example, in choosing investments and in making decisions on treatment in light of the risks that are associated with a particular form of treatment. This approach is likely to erode the Bolam principle, but will not dismiss the long established and enshrined principles that have been in place for nearly 60 years. What appears to be more of an issue in professional negligence claims, is that the two recent decisions may well have more scope to be applied in the context of other professional negligence claims, such as claims against solicitors. The Court of Appeal in Northern Ireland in the decision of Baird v Hastings made no reference to the Bolam standard of care test in the context of a solicitor negligence claim, preferring to refer to the decision of Montgomery. The decision made the analogy of a solicitor/client relationship with a doctor/patient relationship, noting that “as in the medical context, the advisory role of the solicitor must involve prop communication and dialogue with the client”. Bolam will, for the foreseeable future, remain the key case in the context of a professional and client/patient relationship. What will happen is that future decisions in specific relationships and context will dilute the Bolam test, but at the same time, clarify the law in respect of a specific relationship and context between advisors and their clients/patients. This, one can hope, will only clarify and apply the age-old principles that have been used over a number of years in making the law more applicable and relevant in the future. Please contact our specialist to discuss any potential professional negligence claim you may have and see how we could assist you with your claim and to obtain the best outcomes for you. Call our litigation team on 02920 706444 for an informal discussion or fill in the web enquiry form on the contact us page above.