Shanghai Jianwei Law Office, which was the first law firm in China to insure against liability for professional negligence some 7 years ago, has recently faced a professional negligence claim in excess of RMB20 million, by some margin the largest such claim in China to date.
The claim originated from the firm’s involvement as lawyers for a real estate development project. The firm gave advice in relation to Pre-Rental Contracts and Lease Back Contracts, which were subsequently held to be void for illegality.
On 31 August 2001, final Judgment was given by the Higher People’s Court of Shanghai. The Court found that Jianwei Law Office had not only failed to give proper advice to its client but also participated in the drafting of the illegal contracts. This meant there were obvious defects in the legal service provided by the firm, in breach of the terms of their contract with their clients regarding the legality and validity of all contracts and documentation. The Court awarded
