It's a fair cap, Ann

Her principal argument seems to be that caps lead to clients having to bear their own losses arising from the consultant's negligence, and that this is somehow unacceptable. How are we to square this with reports in the legal press that her firm, Linklaters, has agreed liability caps on certain commissions? Perhaps there is something we are missing? Ann should address the real issues. The nature of risks involved in many projects has changed dramatically from the traditional professional liability risks. Many of these changed risks relate to external factors, effectively outside the professional's direct control, such as contractor insolvency or the client's chosen procurement method. Many consultants recognise that the more onerous the contract conditions imposed on the contractor by the client, the more likely there will be a claim for so-called negligence, irrespective of performance.

Professional indemnity insurance was never intended to cover these wide commercial risks, nor are professional consultants' margins able to cope. Engineers now face claims that far exceed the amount of PI insurance available to them. The cost of PI insurance already dwarfs training and development budgets and will continue to increase. That cost will ultimately fall back on the client, while their professional consultants will operate more and more defensively.

Such a preoccupation with liability adds nothing to the quality of the project and simply pushes up costs – but this is where the industry is heading unless the players decide for themselves that a more equitable way of sharing risk is appropriate.

For many years, tax advisers, accountants, corporate financiers, IT suppliers and the oil industry, recognising that unlimited liability is unrealistic, have routinely agreed contract caps and it is interesting to note that growing numbers of law firms (including, as I said, Ann's own) are reported to adopt caps for negligence claims in their terms of engagement.