This case study is an anonymised composite based on publicly reported PI claim patterns. It is not actual Apex client data and does not constitute legal or insurance advice. Names, locations and identifying details have been changed. Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority, FRN 724952.
A six-partner regional firm, fee income around £4.6m, with strong real estate and corporate practices serving local developer clients, family offices and a panel of regional banks and challenger lenders. Conveyancing, development-stage real estate and lender-side security work each generate meaningful revenue.
A long-standing developer client of the firm was acquiring a brownfield site for a residential-led mixed-use scheme. The acquisition was to be funded by senior development debt from a specialist lender — a lender with whom the firm had also done meaningful panel work, including instructions from the lender’s regional director on other matters. The developer asked the firm to “do both sides” on the financing, citing the lender’s confirmation that it was content for the firm to act jointly to save cost. The firm accepted the joint instruction. The matter ran in the corporate-real-estate department under a senior partner.
The issue arose during pre-completion due diligence. The site had a complicated title with an issue around a defective overage deed and a strip of land owned by a third party that bisected a key access point. The firm identified the access issue and advised the developer that the overage and access matters created residual risk that could affect future development value. The advice to the developer was, on the documentary record, accurate and reasonably full.
The advice to the lender was thinner. The lender’s certificate of title (in standard CLLS form) was completed with the access issue disclosed but characterised more conservatively than the firm had explained it to the developer; the overage issue was disclosed but in a form that did not flag the prospect of a future deduction in a development valuation. The fee-earner had — without making an explicit conflict assessment on the file — chosen wording that emphasised the developer’s mitigations and was less likely to spook the lender’s credit committee. The developer was a known and trusted client; the lender’s relationship was important but not at the same depth.
The loan completed. Two years later the development stalled when the access issue produced an actual restriction on a planning condition. The developer became unable to service the loan. On enforcement, the lender’s valuer attributed a meaningful portion of the loss to the title issues that had not been brought to the credit committee’s attention with sufficient clarity. The lender took the firm’s certificate of title off the shelf and instructed solicitors.
The claim was framed as breach of duty owed by the firm to the lender as a separate client, breach of the lender’s certificate of title, and breach of the fiduciary duties associated with joint representation as analysed in Bristol & West Building Society v Mothew [1998] Ch 1. The principle in Hilton v Barker Booth and Eastwood [2005] UKHL 8 was central: where a firm acts for two clients with conflicting interests, the firm cannot escape liability to one client by reference to its obligations to the other.
The pleaded loss was the lender’s net enforcement shortfall plus interest plus its costs in dealing with the planning condition issue post-enforcement. Quantum was approximately £1.45m.
The developer client did not advance a claim, but the firm’s continuing relationship with the developer became materially difficult; the developer’s view was that the firm had compromised on the lender disclosure and had thereby left the developer exposed to a more aggressive enforcement than would otherwise have followed.
Section 5 notification was made within seven days of receipt of the lender’s pre-action letter. The MTC responded — there is no exclusion for “acting for both parties” in the MTC and joint-instruction claims are a familiar pattern for solicitors’ PI underwriters. The £4m limit was sufficient.
A more interesting question was the dishonesty exclusion. The MTC excludes cover for individual partners and employees who have committed dishonest acts (the cover continues for innocent partners and the firm itself). On a careful claims-handling review there was no dishonesty — the fee-earner had made a poor judgement about how to characterise the title issues, but had not deliberately misled. The exclusion was not engaged. The firm’s defence solicitors and the insurer’s coverage team were aligned on this conclusion early.
A second question was aggregation. The lender argued (correctly) that this was a single unifying matter — a single transaction, a single certificate. The firm’s per-claim limit applied without need to consider series-loss wording.
The matter settled after a contested mediation at approximately £980,000 plus a contribution to the lender’s reasonable costs.
The settlement was paid. The firm reported the matter to the SRA; the SRA conducted a thorough investigation focused on the conflict of interest framework under the SRA Code of Conduct. The matter resolved at the regulatory level with a Letter of Advice rather than disciplinary action, conditional on the firm undertaking an external review of its conflict-management procedures. At renewal, the firm faced a rate-on-fees increase of approximately 41% and a doubled excess. The firm tightened its policy on joint instructions: a documented conflict assessment with an independent partner sign-off is now required before any joint instruction on lender-side work, and the firm declines a meaningful number of joint-instruction requests it would previously have accepted.
Conflicts claims share certain features that are worth setting out. First, the most dangerous conflicts are those that arise quietly within a single transaction rather than the textbook two-client conflicts that everyone recognises. A subtle pull towards the relationship client is the most common pathway. Second, joint-instruction conveyancing for borrower and lender is permissible under the SRA framework only in narrow circumstances; the conflict assessment and the client engagement letter should evidence the firm’s reasoning carefully, with sign-off by a partner who is not on the matter. Third, the language of the lender’s certificate of title is not a commercial drafting exercise — it is a contractual document with onerous consequences if it understates risk. Fourth, the regulatory and insurance touchpoints should be sequenced; the SRA referral should not run ahead of the insurer notification, and both should be advised by the same coverage counsel where possible to avoid conflicting narratives. Fifth, the renewal year is a hard one and the firm’s renewal pack should be prepared early.
A claim of this character is one where the broker’s primary value is not in the pricing but in the handling. We would have engaged with the firm on day one to frame the notification with care, ensuring the wording captured the matter without prejudicing the dishonesty-exclusion analysis. We would have introduced a defence team with deep experience of joint-representation claims rather than accepting the insurer’s first-on-rota choice. At the regulatory level, we would have coordinated the SRA narrative with the insurer’s preferred coverage counsel. And at renewal, we would have approached a specifically broader market than the firm’s incumbent panel, with a focused presentation around the firm’s revised conflict-management framework supported by the external review report — which in our experience is the difference between a 41% rate movement and one closer to 25%.
Apex Insurance Brokers serves UK professional services firms and commercial businesses. Call 0117 325 0027, email hello@apexinsurancebrokers.co.uk, or request a quotation.
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