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How to make a directors’ negligence compensation claim
Get in touch with TLW Solicitors’ experienced professional negligence team, email info@tlwsolicitors.co.uk or call 0191 293 1500, and a member of our team will have a confidential and no-obligation discussion with you about your case.
Here’s what the claims process typically involves:
- Initial no-obligation discussion.
- Once the initial relevant information is gathered, we will investigate, where appropriate with the input of expert evidence, the alleged negligence and /or breach of duty and work on calculating the actual (or expected) financial loss caused by the director’s actions.
- Proving your claim, which has several elements:
a) Establishing that the director had a duty of care and/or falls within the strict obligations of the Companies Act.
b) Establishing that the director breached that duty of care by failing to act within the reasonable or expected standards of a competent director or breached the strict obligations under the Companies Act.
c) Demonstrating that you and/or your business suffered a substantial financial loss through financial records and accounts. Gathering this often-complex evidence is likely to need an independent expert opinion. We only work with highly qualified experts experienced in preparing detailed and forensic reports, including giving evidence in Court where necessary. - Preparing and putting forward a letter of claim to the director/s and then dealing with their representatives.
- Resolution: This may be directly negotiated with the director/s, through a range of Alternative Dispute Resolution (ADR) options, such as mediation. If settlement cannot be achieved, preparing the case for the issue of Court proceedings, case management in line with Court directions, and ultimately trial if settlement is not achieved.
The issue of time limits is very complex, so if you think that you or your business may have the basis of a claim against a director, it is important to get specialist legal advice as soon as possible.
In the UK, company directors are bound by duties set out in the Companies Act 2006 and by fiduciary principles developed to protect companies and their shareholders.
These include duties for directors to act:
- Within their powers
- In good faith and in the company’s best interests
- With reasonable care, skill and diligence
- To avoid conflicts of interest
- Not to accept benefits from third parties
- To declare any interest in proposed transactions
When a company director’s conduct falls short of these duties, they may be held personally liable for the loss suffered by the company.
Examples of director negligence or misconduct can include:
- Professional negligence: if a director’s conduct falls below their required standard.
- Breach of fiduciary duty: where a director uses their position for personal gain, at the expense of the company, including making decisions or acting for their own benefit, rather than for the benefit of the company.
- Contractual: where directors’ actions breach their contracts.
- Employment Law related claims: for example, breaches of restrictive covenants, data privacy or intellectual property.
- Abuse of power: including taking more remuneration or benefits than their agreement allows.
- Director fraud: where directors engage in dishonest and even criminal conduct.
- Derivative claims: where shareholders bring a claim against directors for the benefit of the company.
If your company and/or its shareholders have suffered financial loss due to a director’s negligence or breach of duty, it’s important to seek expert legal advice as soon as possible.
TLW Solicitors’ specialist team deals with complex company litigation, including professional negligence and breach of fiduciary duty claims.
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Company Directors’ negligence claims – frequently asked questions (FAQs)
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I’m not sure if I have a claim against a company director. Can you help?
Yes. If you believe a director’s conduct has caused financial harm to your company, other directors or shareholders, get in touch for a no-obligation and confidential consultation. We will assess the circumstances, consider the timescales and financial losses, review key documents, and advise you on whether you have a valid basis of a claim, including the best route forward.
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What evidence is needed to support a directors’ negligence claim?
As a minimum, you will need to provide:
- Articles of Association
- Memorandum of Association
- Shareholders Agreement
- Minutes of any relevant meetings
Our team will guide you through the evidence required to prove your case.
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Who can bring a claim against a company director?
In most cases, the company itself or other directors bring the claim; however, shareholders may be able to get what’s called a derivative claim on the company’s behalf, particularly where wrongdoing directors remain in control of the company.
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Are there time limits for bringing a claim against a director?
Yes. The time limit will very much depend on what type of claim is made. For example, a claim for breach of a fiduciary duty must be brought within 6 years. However, there are exceptions to this.
The circumstances of each case are unique, so if you think that you may have the basis of a claim, it is important to get specialist legal advice as soon as possible.
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Will my claim have to go to Court?
Not necessarily, many director negligence or breach of fiduciary duty claims are resolved through negotiation or mediation before Court proceedings are necessary.
Our specialist litigation lawyers will aim to resolve your claim efficiently and cost-effectively through Alternative Dispute Resolution (ADR), but if Court proceedings are required, we will rigorously represent you at every stage and ensure you are fully supported throughout.
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How do your fees work?
Our fees will depend on the complexity of the case. We charge an hourly rate for these types of cases – full details of which will be discussed with you before you enter into a contract with us.
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I’m not sure if I have a claim against a company director. Can you help?
TLW Solicitors can help
If your company or shareholders have suffered financial loss due to a company director’s negligence, breach of duty, or misconduct, contact the litigation team at TLW Solicitors today for a no-obligation consultation about possible remedies, including compensation.
