Yes, another story of a patent attorney who would have been better advised to cooperate with IPReg’s investigation.  John Hardwick came to IPReg’s attention by letting his professional indemnity insurance lapse, which seems to be a very common route to the IPReg Disciplinary Panel. 

He had previously explained to the PI provider (some years before) that he had very few cases and had been trying to retire for quite some time, having shown a loss on his tax return for two years running.  Now, his tax affairs are of course private so we do not know how he made that loss, but if we assume that he was working from home on a small number of cases then it’s a fair bet that the overheads pushing him into the red were mainly in the form of PI insurance and practising fees.  It’s not a huge surprise, therefore, that his next annual PI premium went unpaid, as did the following annual practising fee.  Enquiries from IPReg prompted by non-payment of the practise fee revealed that he had in fact stopped working as a patent attorney about three years previously.

You might wonder what the problem is here – yes, he has no PI cover and is no longer licensed to practise, but he is not actually practising?  The issue is the potential run-off liability from when he was previously practising – UK law on limitations allows a claim to be brought up to six years after the event, whereas PI insurance covers us for claims made during the period of cover.  So if you did some work last year while you had PI cover, then let the cover lapse this year, and then the client realises that the work you did last year was below par and sues you, you’re not covered. 

The solution is “run-off cover”, a one-off policy that can be purchased when a practice ceases and which covers all claims made thereafter in respect of work done prior to the cessation.  We are required to purchase this if we close a practice. 

IPReg therefore started asking questions about why no run-off cover was obtained, and other matters around the apparent closure of the practice.  Mr Hardwick did not respond. 

The matter was referred to the Disciplinary Panel on the basis of his lack of PI cover, lack of run-off cover, and failure to respond to IPReg’s enquiries.  The Panel did not uphold the allegation of lack of PI cover as there was no clear evidence that he had been practising after the last year of PI cover had expired.  However, they did find that he had failed to secure run-off cover and had failed to cooperate with IPReg’s enquiries. 

The Panel then needed to decide on an appropriate sanction.  They could see mitigating factors, that Mr Hardwick had no previous disciplinary history, there was no evidence of any actual harm to clients, and that his retirement meant there was a minimal risk of him repeating the misconduct.  They also identified several aggravating factors, the first of which was that he “did not engage or co-operate with IPReg”, and the rest of which were variations on this theme. This seems a little harsh, that the aggravating factor is one of the offences for which he was found to be at fault, which may be why the Panel decided not to impose a separate or additional sanction for that offence.  Finding that that the aggravating factors outweighed the mitigating factors, the Panel decided to permanently remove Mr Hardwick from the Register. 

That may not sound a serious problem for someone who claimed he had been trying to retire for some years.  However, there is a sting in the tail – IPReg sought (and was awarded) costs of over £8,000.  Given that Mr Hardwick had been lossmaking for some years and was dependent on his pension, that was probably an unwelcome surprise. 

It’s possible to feel some sympathy for Mr Hardwick – his practice had no doubt wound down slowly until the point where the regulatory overheads outweighed the practice’s income.  At that point, there is an invidious choice between carrying on making a loss, or closing the practice & coughing up for run-off cover.  In (apparently) trying to avoid that choice, Mr Hardwick created a hole for himself. 

It goes to show, though, that we have to be pro-active in these matters.  That unwelcome choice was created by letting things drift to the point where he was in the position of having essentially no live cases – that would have eliminated the option of selling or transferring the practice to another firm.  Mr Hardwick seems to have been practising from Feltham in Middlesex, near London, close to several other firms (including the author’s) who might well have considered taking over the practice if the potential income from the caseload and client list looked like outweighing the potential professional indemnity risk.  Mr Hardwick might not have made much from a sale of such a small business, but he would have stopped the losses and avoided IPReg’s costs order. 

Having reached the point he did, though, it might have been wiser to cooperate with IPReg – maybe give them some detail as to the scale of the practice, and the amount of work that had actually been done in the previous six years.  There was an argument waiting to be run there that although no run-off cover had been obtained as such, there had been PI cover for six years after any substantial work had been done – if the work done in the previous six years was truly de minimis then either IPReg could have reviewed the work to assess whether there was any serious risk, or a PI provider could have agreed a one-off rate for a run-off cover.  If less than £8k, that would have been good value.    

But like all insurance matters, it’s no use being wise after the event.  So we wish Mr Hardwick a peaceful retirement, and hope that the close of his career does not sour the memories of what we understand to have been over four decades in the profession. 

Photo by Andrey Tikhonovskiy on Unsplash, thank you Andrey