RICS establishes Members' Support Service and is to issue Guidance to reduce an employee's personal liability

The Court of Appeal in Merrett v Babb held that, following the insolvency of his former employer, a valuer was personally liable to meet a claim for damages in respect of a mortgage valuation he had carried out over 7 years earlier.

The decision will continue to have far reaching implications for all employees who provide professional or other specialist advice, leaving them vulnerable where the employer is under-insured and cannot otherwise meet the claim in full.

Whilst the Court of Appeal in Merrett emphasised that prudent employees - whether professional, or otherwise - may need to take steps to obtain their own insurance if their employers insurance did not cover them personally, as a matter of practicality such insurance is often difficult to obtain and the cost disproportionate to the remuneration that the employee receives.

In recognition of this, The Royal Institution of Chartered Surveyors (RICS) is now leading the way by this week (2 July 2002) voting for the establishment of a members support service that will provide employees with:

• Access to free information on how to minimise their personal liability
• Advice on professional liability issues
• At the services discretion, payment (in whole or in part) of claims and legal representation where professional indemnity insurance is not available

CMS Cameron McKenna have been retained by the RICS on the legal, regulatory and insurance issues involved in setting up the service, along with RICS’ adviser IMS.

RICS will also offer practical advice to its members by publishing, in conjunction with CMS Cameron McKenna, general guidance that explains the potential liabilities of the employee and the steps that may be taken by an individual to limit his personal exposure by;

• Identifying the main areas of risk
• Examining the limitations and potential pitfalls in relying solely upon the employer and its insurers to meet any claim
• Examining alternative forms of protection that may be available, such as employer indemnities and limitations and/or contractual exclusions of liability

The guidance, to be issued shortly, includes a checklist, specimen clauses for retainer letters/contracts of engagement as well as contract of employment clauses, incorporating an indemnity, exclusion of liability and an agreement by the employer to maintain run-off insurance.

Peter Maguire, partner, and solicitor Martin Davis, of CMS Cameron McKenna originally handled the appeal on behalf of Mr Babb with the support of the RICS and have assisted them in the preparation of the guidance and on the establishment of the Members’ Support Service.

For further information please contact Martin Davis by e-mail at [email protected] or by telephone on +44 (0)20 7367 2888.