What's the standard liability you limit yourself to your clients? I have a new client at £425 a day and it's been advised that I should limit my liability to 3 x the day rate. Is this acceptable or too little?
Replies (10)
Please login or register to join the discussion.
It has to be "fair and reasonable" as well as agreed with the client. I would think three times the day rate would struggle to meet that definition. I would at least expect it to be greater than the total fee for the engagement and by a factor.
The ICAEW, if you are a member, has quite a lot of good guidance on this subject (except for actual quantum!).
Edit: Actually it may be accessible even if you are not a member. Try this: https://www.icaew.com/membership/regulations-standards-and-guidance/prac...
Look at it from the other way around. Say you do a week's work for £2,125 and your liability is limited to £1,275. I don't think the client would be impressed.
Or have I misunderstood and you are proposing 3 x the day rate x the number of days? Which I would imagine would be considered more reasonable but then you are on an open ever growing exposure so the days would need to be reset to zero periodically. Can the work be broken down into discrete elements or time periods?
I would be amazed if a court held that to be a reasonable limit! PII policies set the limit well into six figures, as do most model engagement letters. I am sure they would set it much lower if they they could.
The big four seem to limited it to 4-5 times their fee in my experience.
I’m surprised they get away with that
I limit it to the amount of my PII cover, so therefore high relative to the fee. Difficult for a court to say that's unreasonable, I think.