The SAAMCO scope-of-duty principle limits a solicitor's liability for negligence to losses falling within the scope of the duty actually undertaken. For an SRA-regulated firm working under the Minimum Terms and Conditions, that line shapes how a claim sizes up.
BPE Solicitors v Hughes-Holland [2017] UKSC 21 was itself a solicitor case. A solicitor had been instructed to document a loan that the lender believed would fund the development of a property. The borrower used the money to discharge an existing loan instead, the development never happened, and the lender lost most of the advance. The Supreme Court restated the SAAMCO principle and applied it to the solicitor: BPE had a duty to record the transaction accurately, not a duty to advise on the commercial wisdom of the loan or the use to which funds would be put. The loss flowed from a bad commercial decision, not from the solicitor's narrower duty.
The case confirms that the SAAMCO cap applies to solicitors just as it does to valuers and accountants. The narrower the retainer, the narrower the recoverable loss.
Lord Sumption's framing in Hughes-Holland draws the line that most solicitor work sits behind:
Most day-to-day solicitor work falls within the information category, so the SAAMCO cap is in play on most files.
The Minimum Terms and Conditions set the floor for what an SRA-regulated firm's PI policy must cover: compulsory wording, a minimum limit of GBP 2 million (or GBP 3 million for incorporated practices), and constraints on aggregation and exclusions. They do not alter the underlying tort. The cap on liability flows from the common-law scope-of-duty principle, not from the policy. A claimant cannot recover from the solicitor (and therefore from the insurer) more than the law of negligence allows.
Manchester Building Society v Grant Thornton [2021] UKSC 20 restated the SAAMCO analysis as a structured set of questions: is the claim actionable; what is the purpose of the duty; what is the nature of the loss; is there factual causation; is the loss within the scope of the duty; and is there legal causation. For solicitor claims the fifth question is usually decisive - does the loss being claimed sit inside the duty the retainer actually defined. See Manchester Building Society v Grant Thornton for the full analysis.
Worked example - illustrative only. A solicitor acts for both buyer and lender on a residential purchase and fails to raise an enquiry about a structural defect that standard searches would have disclosed. The buyer pays GBP 400,000 for a property that, with the defect known, would have been valued at GBP 320,000 - an overpayment of GBP 80,000. Two years later the buyer defaults; after sale costs and falling prices the lender recovers GBP 40,000 less than the outstanding balance. The combined claimed loss is GBP 120,000.
On the SAAMCO analysis the solicitor's duty was to provide information about the property's condition and title. The recoverable loss is the GBP 80,000 overpayment attributable to the missing information. The further GBP 40,000 flows from the borrower's default and movement in the market, outside the scope of the solicitor's duty. The cap restricts indemnifiable liability to GBP 80,000.
The underlying principle is summarised in SAAMCO principle and scope of duty. The solicitor-specific authority is set out in Hughes-Holland v BPE Solicitors. Sector context sits in the Apex guide to solicitors' PI insurance, with comparable analysis in the accountants' PI guide and the property managers' PI guide.
Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Firm reference number 724952. This entry is general information, not advice on any particular policy.