Background
In this case our client was a business consultant who provided mentoring services to some of the highest paid individuals in the world. He only worked with a few clients because the work that he did meant that he was highly paid. Most of his clients had come to regard the business consultant as a trusted friend as well as advisor and the consultant felt the same way about many of his clients too.

Circumstances
One of the business advisors American clients asked for some off the cuff advice. This was by telephone on Easter Sunday when the business advisor was relaxing with his family. The advice was outside the scope of the business advisors normal consulting relationship, but he told his client what he would do under the same circumstances, without the benefit of notes or consulting his client file. He suggested that the client should phone back on Tuesday morning when he would be back at work for further counsel.

The business advisor heard no more from his client on the matter. He assumed that, as he had not phoned back on the Tuesday, that the matter had not materialised into an issue. Some months later, a claim was filed in the US courts by his client who alleged that the advice, based on knowledge that was contained on the business advisors file, was inappropriate.

How PI Expert helped
Against our advice, the Business Advisor had chosen a professional indemnity policy, which whilst based on worldwide territorial limits, was restricted to UK jurisdiction. Although such a policy cover might be appropriate in some circumstances, in this case the Business Advisor had significant interests in the US and we had therefore advised him that he should buy full US cover.

As the business Advisor had not taken our advice, the cost of defending the US court action was not covered by the policy and he did not have the resources to defend the US claim. In the absence of a defence a judgement was awarded against the business advisor in the US courts and the claimant then sought to have the judgement enforced under UK law.

The Business Advisors Professional Indemnity Insurers successfully rebutted the enforcement action by drawing the UK courts attention to the limits that applied to the Business Advisors contract with his US client (these were based on UK law).

Result
A mixed result. The legal fees for defending the UK aspect of this case ran in to hundreds of thousands of pounds and these were covered by the PI policy, however this was a mixed result because the client had not taken the full cover recommended by PI Expert at the outset of the policy and this meant that the client had been undefended in the US courts. The US judgement, whilst not applied by the UK courts, did stand in the US which prevented the Business Advisor from working in the US.