Lawyers Covered - April 2026

It can be tough for busy lawyers to find enough time to service clients, make it safely through the regulation obstacle course, win new work and keep up-to-date with developments, but we've got you covered! Welcome to our April 2026 edition of our Lawyers Liability & Regulatory Update, in which we highlight the last month's key developments affecting lawyers and the professional risks they face.

Court finds privilege lost when data inputted to public genAI model

The rapid rise of Generative AI in legal disputes is indisputable.  The technology brings with it endless opportunities for litigators, as well as increased judicial and regulatory scrutiny.

Emphasis has been placed on the risk of hallucinations, which refers to the propensity of generative AI tools to 'make things up' – i.e. cite fictional authorities or give incorrect answers. Guidance from the Law Society provides that law firms should therefore "carefully factcheck its [i.e. the Generative AI Model's] products and authenticate the outputs" .

Despite this, in 2025 several instances of 'hallucinated' (false) case authorities wound up before the Upper Tribunal (Immigration and Asylum Chamber). 

In Munir v Secretary of State for the Home Department [2026] UKUT 81 (IAC) the Tribunal found itself on a "fools errand" - tracking down citations for cases that did not exist. The Judgment laments the waste of court time and further warned of potential regulatory fallout for those solicitors who delegate without taking responsibility for the accuracy of a work product.  Framing the issue as one of inadequate supervision, the Upper Tribunal warned that:

"Supervisors must ensure that fee-earners under their supervision are aware of the dangers of using non-specialist Artificial Intelligence (AI) for legal research and drafting.  Failures to do so, or to underake appropriate checks on the drafting of fee-earners is likely to result in a referral to the Solicitors Regulation Authority (SRA) ..  A supervisor who fails to ensure that the work of a more junior fee-earner does not contain false cases or citations is likely to be more culpable than a lawyer who fails to ensure that his own work is free from such "hallucinations". 

Significantly, the Tribunal went further and commented that confidential and privileged material uploaded to open-source AI platforms such as ChatGPT "is to place this information on the internet in the public domain, and thus to breach client confidentiality and waive legal privilege". 

Further, the Tribunal specifically highlighted the potential regulatory implications: "Uploading confidential documents into an open-source AI tool… might itself warrant referral to the SRA and should, in any event, be referred to the Information Commissioner's Office."

This is the first time an English court has explicitly linked the use of public AI platforms with the loss of privilege. The ramifications are profound as privilege – once lost – cannot be recovered. 

Law firms must therefore take care to ensure that appropriate closed-enterprise AI systems are adopted and that staff (legal and non-legal) receive appropriate training on their use and on confidentiality and privilege. 

LeO consultation on Model Complaints Resolution Procedure: respond by 19 May 2026

The Legal Ombudsman (LeO) has recently launched a call for input on its draft Model Complaints Resolution Procedure (MCRP). The MCRP attempts to streamline and standardise law firms' response to complaints made by clients, following research conducted by LeO that found that 49% of complaints referred to it in 2024–25 were poorly managed in the initial stages. It is hoped that by using the MCRP, law firms can resolve complaints earlier more effectively at the first-tier stage without the need for matters to be escalated to the LeO, an approach reinforced by a successful three-month pilot across different law firms and legal service providers.

The MCRP sets out a process for complaints management within the 8-week regulatory deadline that includes opportunity for early resolution within 10 days and requires engagement in the process within 5 working days of receiving a complaint. Under the pilot of the procedure, 57% of all complaints were resolved at the early resolution stage without requiring a full investigation within the 8-week deadline.

LeO is now seeking further input from law firms (and consumers) so that the current model can be adapted before the MCRP is launched to ensure widespread adoption of the procedure across the market.

Constructive input from law firms can help ensure that the eventual product is fit for purpose and can help complaints to be resolved earlier with better outcomes. This is particularly important when it would not be unsurprising if the LeO looked more favourably on providers who had implemented their own procedure before a complaint is escalated to them.

The call for input is open until midday on 19 May 2026, in preparation for the expected launch of the MCRP in summer 2026.

Does the failure to pay the correct fee for issue of the claim form mean that an “action” is not “brought” for limitation purposes when the claim form is received in the court office? 

According to the Court of Appeal in Hassan-Soudey (aka Hamilton) v Siniakovich the answer is no, the Claimant's failure to pay the correct issue fee did not prevent a claim being "brought" in time.

This decision has finally clarified the law in this area in which there were several competing authorities concerning the incorrect payment of issue fees. In this case, the Claimant paid an issue fee of £10,000 but failed to pay a further £626 to reflect the fee for an injunction she sought. The Claimant's solicitor immediately paid the £626 and resubmitted the pleadings when the court office returned the pleadings, but by then, limitation had already passed.

The Claimant's solicitor made an application for relief from sanctions and asked the Court to treat the claim as having been issued on the original submission date, or, alternatively, to permit retrospective issue, broadly on the basis that the failure to pay the extra £626 and supporting documents, was an administrative oversight. The Defendants opposed the application.

At first instance, the Judge found that the claims had been "brought" in time. The Defendants appealed.

The Court of Appeal held that the Claimant's failure to pay the correct issue fee does not prevent an action being "brought" when the claim form is received by the Court in time, irrespective of whether there was a shortfall in the court fee.

The Court warned any prospective claimant against deliberately undervaluing their claim to pay a lower fee, or to try and buy time by delaying payment of any shortfall, which can amount to abuse of process and attract sanctions accordingly.

Increasing risk of private prosecutions in the SDT

The latest reporting from the Solicitors Disciplinary Tribunal highlights a notable uptick in private prosecutions brought directly by members of the public against solicitors. Recent figures indicate that such applications have more than doubled year-on-year, signalling a shift in how grievances against solicitors are being pursued.

This trend reflects growing public awareness of the SDT's jurisdiction, and possibly a perception that direct access offers a more immediate route to redress than referral to the SRA. However, the rise also raises questions around the risk of unmeritorious and tactical claims being advanced with only one out of the forty private applications made in the last year being allowed to progress to a hearing.

There are clear implications for law firms and their insurers alike. First, there is increased potential that a law firm could face SDT proceedings, potentially with less filtering of claims than if the "traditional" route through the SRA had been followed. Secondly, both costs and reputational risks may increase where firms need to respond to less structured (potentially AI-driven), privately initiated disciplinary actions.

Law firms should be conscious of this developing landscape and consider whether their existing internal complaints handling structures adequately deal with regulatory complaints. They should also consider whether they have adequate insurance cover for regulatory prosecutions (whether private or SRA led) in a world of evolving regulatory risk.

Bill of costs not invalidated by procedural defect

In Duffy v Birmingham City Council [2026] EWCA Civ 146 the Court of Appeal considered whether a bill of costs was automatically invalidated if it did not contain express certification that the indemnity principle had been complied with.

The background to the judgment was the local authority's agreement to pay the claimant's costs following settlement of a housing repair claim. The claimant commenced detailed assessment proceedings with a bill of costs which breached the CPR requirement that the receiving party's solicitors confirm compliance with the indemnity principle (ie that the costs claimed in the bill of costs do not exceed the costs recoverable from the client). The local authority argued that detailed assessment could not proceed as the bill of costs was invalid, and the court agreed. The claimant successfully appealed. Permission to appeal further to the Court of Appeal was granted due to the significance of the indemnity principle.

Lord Justice Phillips held that the failure to tick the relevant box did not automatically invalidate the bill of costs and therefore the detailed assessment proceedings were capable of being commenced. It was considered that the signature of a solicitor (as an officer of the court) on a bill of costs implicitly certifies that the indemnity principle has been complied with. The Court of Appeal considered that the defect could be characterised as a procedural error rather than an automatic invalidation of a procedural step. Accordingly, the error should be treated as a breach of a rule or practice direction within CPR 3.10.

Ultimately, in Duffy v Birmingham City Council, as the local authority had not filed a points of dispute to the original bill of costs, judgment was entered in default. In light of the outcome of this case, paying parties should not assume that they can treat such a defect as fatal and should engage with the detailed assessment process. Any procedural breaches should be raised in the points of dispute.

Claimant's impecuniosity and competing priorities not enough to justify 14 year delay under s14A

In Ellen Kay v Martineau Johnson (A firm) [2026] EWCA Civ 224, the Court of Appeal dismissed a professional negligence claim against a firm of solicitors in respect of advice given almost 17 years ago in divorce proceedings as time barred. This included a useful in-depth analysis of constructive knowledge under section 14(A)(10) of the Limitation Act 1980.

A financial settlement had been reached in an Order dated September 2008. Shortly afterwards Ms Kay sought advice on re-opening the settlement and was advised there was no basis to set aside the settlement. The firm ceased acting in June 2009.

Ms Kay requested her file in April 2018 and was duly provided with this in May 2018. In March 2020 she was advised by a Barrister that she may have a claim against the firm. Ms Kay issued proceedings in March 2023, but this claim was dismissed at first instance as statute barred.

The primary limitation period of 6 years had clearly expired by the time proceedings were issued in 2023. The question was whether proceedings has been commenced within 3 years of Ms Kay's "date of knowledge" for the purposes of section 14A of the Limitation Act 1980. The arguments therefore focussed on "constructive" knowledge for this purpose.

It was noted that Ms Kay received a copy of her file in May 2018 and there was no reason why the advice sought in March 2020 could not have been sought at an earlier date – in accordance with the requirements of section 14 A(10)(b) of the LA 1980.

Ms Kay's argument was that she had insufficient funds during this period to pay for such advice and was loaned the money by her new partner. Interestingly this argument suggests "the relevant facts would have been ascertainable with the help of appropriate expert advice, but….that it was reasonable for Ms Kay not to seek such advice because she could not afford to do so[1]."

The court explored whether Ms Kay was in fact impecunious during this period and determined that instead she simply had competing priorities, such that there was no urgency in her approach to pursuing the claim. Nevertheless, the court stated "it is questionable whether a claimant’s impecuniosity can ever matter for the purposes of section 14A(10) of the 1980 Act[2]" - which requires an objective assessment. Even if it could, "it must be incumbent on a claimant who wishes to rely on impecuniosity to provide detailed evidence as to his financial circumstances and how they prevented him from obtaining appropriate advice[3]" and such evidence was not provided by Ms Kay.

In light of this analysis, the court held that Ms Kay had constructive knowledge more than 3 years before the issue of proceedings in March 2023. This was likely in 2018 / 2019 - when expert advice should reasonably have been obtained – as arguably accepted by Ms Kay. Further, she was likely to have had constructive knowledge as early as 2009, on the basis that she knew by then that she was stuck with the financial settlement which gave cause for her to investigate why that was the case and therefore to question her solicitor's advice.

Accordingly, the claim was therefore statute-barred and the appeal dismissed.  

With additional contributors: Aimee Talbot and Sally Lord

Disclaimer: The information in this publication is for guidance purposes only and does not constitute legal advice. We attempt to ensure that the content is current as at the date of publication, but we do not guarantee that it remains up to date. You should seek legal or other professional advice before acting or relying on any of the content.

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