Claims Consultants: Proceed With Caution

There is an increasing tendency in the construction industry to use claims consultants and claims management companies as a cost-effective alternative to instructing lawyers, either in a project management function, or as a precursor to litigation being commenced.

The judgment of Akenhead J in the Technology and Construction Court1 in Walter Lilly & Company v Mackay and Ors [2012] EWHC 649 will probably come as quite a surprise to many employers, developers, contractors and subcontractors who may have given very little thought to the question of whether advice given by claims consultants and claims management companies is confidential and can be withheld from an opponent if a dispute reaches court.

This fourteenth issue of Insight Examines:

the practical impact of the decision in Walter Lilly and the way in which the courts might differentiate between the role played by claims consultants and lawyers in private practice now, and in the future. Factual background to the Walter Lilly case

A contractor, Walter Lilly, was engaged to build a large house in The Boltons, Chelsea, by Mr Mackay (who was to own and occupy the house) and DMW Developments Limited ("DMW"), of which Mr Mackay was a director. There were substantial delays, as a result of which Mr Mackay became increasingly demoralised with the project architect and he engaged Knowles claims consultants to provide what was described in the written retainer as "contractual and adjudication" advice. For the most part, Knowles were to monitor the architect and adopt a management role in relation to the conduct of the project.

During 2010, Walter Lilly issued proceedings against Mr Mackay. Part of Walter Lilly's case was that Mr Mackay had retained Knowles in order to examine and ultimately undermine the architect's authority such that Walter Lilly could be held liable for the delays. In the course of the proceedings, some of the correspondence between Knowles and DMW was inadvertently disclosed by DMW's solicitors who asserted at the time that the remainder of the Knowles documents could not be disclosed.

Walter Lilly subsequently asked for disclosure of the remaining documents on the basis that they related to the issue of responsibility for the delays. Walter Lilly's request was effectively an attempt for all legal and tactical advice that had been provided by Knowles to Mr Mackay on the issue of delay to be made available. It is likely these documents would have been prejudicial to the...