Limitation of liability clauses: law firm outsourcing
Limitation of liability clauses: law firm outsourcing

The following Practice Compliance guidance note provides comprehensive and up to date legal information covering:

  • Limitation of liability clauses: law firm outsourcing
  • The importance of getting it right
  • Approaches to agreeing liability clauses
  • Heads of losses
  • Specific provisions in the outsourcing agreement

This Practice Note identifies and explains key considerations when negotiating and drafting limitation of liability clauses with your outsourcing provider. For guidance on limiting liability between you and any clients affected by the outsourcing arrangements see Practice Note: Outsourcing and the SRA—Liability for the acts or omissions of the outsourcing provider.

The importance of getting it right

There are two elements to limit of liability clauses:

  1. your supplier's liability to you for breach of the outsourcing agreement

  2. your own potential liability to the supplier under the agreement

The limitation of liability provisions are generally the most heavily negotiated in the outsourcing agreement. Should litigation ever arise, the courts will scrutinise those clause to decide on the amount of any damages a party can recover for breach of the agreement.

It is paramount that these clauses are drafted:

  1. so as to be enforceable

  2. in a way that represents an acceptable liability position for your firm

You should seriously consider obtaining specialist legal advice if the outsourcing arrangements in question are high-value or business critical or could expose your firm to serious consequences in the event of a breach by your provider.

Approaches to agreeing liability clauses

Your approach to negotiating limitation of liability with your outsourcing provider will depend very much on factors such as the:

  1. type(s) and scope of services—in particular,