Lawyers Covered - July 2025

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 Lawyers Liability & Regulatory Update, in which we highlight the last month's key developments affecting lawyers and the professional risks they face.

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Suit yourself: firm ordered to pay wasted costs after suing wrong defendant

Claimant solicitors have been the subject of a wasted costs order for pursuing a claim against two defendants when, even "merely basic research" would have shown there was no basis for concluding that they were the correct defendants.

Tilly Baker & Irvine acted for the daughter of a deceased former worker (the Deceased) who brought claims against three defendants for alleged asbestos exposure.  The claim was issued in April 2021 and pleaded in very general terms.  When faced with applications for strike out/summary judgment from the Defendants in February 2023 (on the basis that none of the Defendants employed the Deceased), the Claimant made an application to add or substitute a party.  The claim against the First Defendant was successfully struck out in July 2023, but the issue as to the correct corporate identity in respect of the other Defendants was adjourned until May 2024.

Despite this apparent reprieve for the Claimant, little further action to clarify her claim was taken.  Instead, at the 11th hour before the re-listed hearing, the Claimant agreed to dismiss the claims against the Second and Third Defendants (and pay costs) in exchange for a new party being added.  The Second and Third Defendants argued suing them only to consent to dismiss the claim against them very shortly before a hearing over three years later should result in a wasted costs order.

In granting the order for wasted costs against Tilly Baker & Irvine, the Court concluded that the decision to continue the claim against the Second and Third Defendants was "without either expressed explanation or justification".  The Claimant never attempted to properly justify retaining those Defendants in the claim, it was plain that inadequate research had been undertaken by her solicitors and the sudden discontinuance shortly before the hearing was "telling".  Placing considerable emphasis on the lengthy delay, the Court concluded that the litigation "amounted to an abuse of process" that "unnecessarily increased" those Defendants' costs.  The fact that the Defendants already had the benefit of a costs order against the Claimant, did not save Tilly Baker & Irvine.

Given how scathing the Court was of Tilly Baker & Irvine's conduct in this claim, this ruling is unlikely to cause shock waves across the profession.  This case perhaps better serves as a useful reminder for litigators to always keep in mind when wasted costs could be deployed against opponents acting improperly. 

A drive towards improving law firms' in-house responses to client complaints

The Legal Ombudsman is developing a new complaint handling procedure for law firms, called the 'Model Complaints Resolution Procedure', in an effort to help improve consistency across all firms in the way that complaints are handled in-house.

The aim is to help firms to reach the expected standard of "first-tier" in-house complaints handling, which in turn will improve client trust and satisfaction with the way that client complaints are dealt with.

This development derives from the Legal Ombudsman's concerns around how firms are responding to complaints. In particular, the Legal Ombudsman has found that last year nearly half of complaints had evidence of unreasonable first-tier complaint handling, and a substantial number of complaints are going straight to the Legal Ombudsman without going through the firms' in-house procedure in the first instance.

The new procedure has been developed with regulators and will provide a standardised template to be used by law firms.  The Legal Ombudsman says the focus of the model is early resolution of complaints, meaning encouraging parties to work together to understand what went wrong and how it can be put right. The LO will also provide guidance materials, letter templates and toolkits to support firms.

The model is being tested this summer and will subsequently be assessed and updated to reflect lessons learnt. There will then be a full consultation next year.

Strengthening, Not Replacing: Judges’ Views on the Role of AI in Legal Decision-Making

AI remains at the forefront of discussion. The latest being an academic study exploring how judges across the UK judiciary perceive the integration of artificial intelligence into their daily work, focusing on opportunities, hesitations, and requirements for effective adoption. Through three focus groups involving 12 judges (including five from the UK Supreme Court) the research investigates the current judicial workflow, the perceived value of human judgement, and the potential and risks of AI in legal contexts.

Whilst the study acknowledged the many benefits and opportunities of AI and identified the areas where it could add value for judges, the key concerns remain reliability, privacy, bias and the de-skilling of those in the profession.

It is clear that the 'human factor' remains critical in all judicial work and the study confirmed this should not be ignored when developing any AI support tools. The study quoted one judge who said 'law is not a matter of pure logic. It's a matter of practical reasoning'. They also emphasised the importance and value of the emotional and psychological closure that a judge brings to a trial and the final decision. The use of AI by the judiciary will offer significant opportunities to augment judicial work, however, its integration must be carefully designed to preserve human judgement, oversight, and public trust. It will be essential for empirical testing and robust safeguards to be in place prior to any widespread adoption. This will mean that judges, policymakers and those developing the tools must collaborate effectively.

In case you missed it last month, here is our deeper analysis of AI hallucinations and the professional obligations of legal representatives when using AI.

It's been an absolute Privilege!

Proposals by HMRC to limit the effect of privilege have been met with dismay and opposition from solicitors.

In its March 2025 consultation entitled "Closing in on Promoters of Marketed Tax Avoidance", HMRC proposed that in circumstances where a promoter marketed a tax avoidance scheme, and highlighted that the scheme was supported by a legal opinion (usually from Leading Counsel), there would be a "deemed waiver" of legal professional privilege ("LPP") in the advice concerned. As a result the promoter would be obliged to disclose the advice to HMRC if this was sought.

The Law Society unsurprisingly stated that it was strongly opposed to the concept of a waiver of LPP, referring to LPP's status as a fundamental right and key component of the UK's legal system, consistently protected by the Courts. The Law Society felt that there was in any event no need for any deemed waiver, given that LPP did not extend to communications furthering wrongdoing (the "iniquity exemption") and that regulators could override LPP in their investigations. Regulation was the way to address misconduct in this sphere it said.

Solicitors have always guarded privilege fiercely, and it will be interesting to see how far HMRC presses its proposals in the face of this opposition: with the country's finances under pressure, it will want to be seen to be doing all it can to clamp down on tax evasion and those involved in it.

Hong Kong – Update from "Sports Correspondent"

Sport is having a major moment in Hong Kong – an international financial centre with traditional trade sectors such as financial services, transport, logistics, insurance and real estate. The city also serves as a gateway to Mainland China, south-east Asia and, increasingly, Middle East Gulf States. There has been a long tradition of sports in Hong Kong – often associated with certain events, some of which took a step back during the "pandemic years" (2020-2022). However, major international and national sporting and entertainment events have returned to Hong Kong; for example, golf, snooker, soccer, rugby and more. Hong Kong is also home to two world-class horse racing venues. A state of the art "Kai Tak Sports Park" opened in March 2025. With all this come the development of sports law in Hong Kong, with more dispute resolution initiatives and, therefore, a need for lawyers.

In May 2024 the Hong Kong government prepared a paper for the Legislative Council – titled "Development of Sports Dispute Resolution in Hong Kong" – and, further to the Chief Executive of Hong Kong's policy address that year, an "Advisory Committee on Sports Dispute Resolution" was set up in January 2025 to advise on the implementation of a suitable pilot scheme. While there is no uniform "sports law" or dispute resolution mechanism in Hong Kong, top judges and the legal profession have called on lawyers to raise their game when it comes to the development of sports-related laws and dispute resolution. The Law Society of Hong Kong has established a Sports Law Committee, held a major Sports Law Conference in February 2025 and is establishing a cooperation mechanism with the General Administration of Sport of China. Books on "Sports Law in Hong Kong" are being published. 

Furthermore, in May 2025 the Convention on the Establishment of the International Organisation for Mediation (IOM) was signed at a major ceremony in Hong Kong and the IOM headquarters will be housed in a landmark building in Hong Kong. The Convention has been signed by at least 33 countries and is likely to attain a status for mediation that is comparable to the New York Convention for foreign arbitral awards.

The government also looks likely to legalise betting for professional basketball matches not staged in Hong Kong through the only lawful bookmaker in Hong Kong, the Hong Kong Jockey Club. With estimates of illegal betting syndicates turning over between HK$70-90 billion last year (approximately £7-9 billion) – an astonishing amount – a betting duty of (say) 50% of net stakes would raise significant revenue. Hong Kong has healthy public finances and reserves but is running an annual budget deficit of HK$ billions.