Gomes v AMG Financial Management: When Does an In-House Solicitor Owe a Personal Duty to a Third-Party Lender?

Key Takeaways

1. In-house or transaction-drafting solicitors usually do not owe a duty of care to third party lenders or investors unless they clearly assume personal responsibility to them.
2. Courts require clear evidence that a solicitor made statements or took actions, directly or through someone acting on their behalf, that “cross the line” and signal a personal commitment to advise the third party.
3. Simply paying a solicitor’s fee or seeing a loan agreement labelled “lender’s legal costs” does not prove a professional duty exists unless there is other evidence of direct or indirect responsibility.
4. Claimants who have relied only on a financial adviser or broker, without any direct dealings with the solicitor, are unlikely to succeed in a negligence claim against that solicitor.
5. Failing to get independent legal advice before entering into a loan or investment agreement could leave a lender or investor with no recourse if the deal goes wrong.
6. Lenders should always instruct their own solicitor and obtain independent legal advice to protect themselves from both financial loss and legal technicalities.
7. Solicitors and in-house lawyers can defend against third-party negligence claims by ensuring their engagement is only with their client, warning third parties when no duty is assumed, and keeping clear records of payments and instructions.
8. The time limit for most professional negligence claims against solicitors is six years from when the damage occurred, or three years from when you first knew enough to bring the claim, whichever is later.
9. Ignoring potential errors or negligence could result in losing your chance to claim compensation entirely because limitation periods run out quickly.
10. If you are unsure whether a solicitor owes you a duty, practical evidence like correspondence, retainer letters, and payment instructions are vital to your case.

If you need tailored advice on solicitor duty of care to third parties, book a free consultation with our expert team or call 0207 459 4037.

When Does a Solicitor Owe a Duty of Care to a Third Party?

If you are a lender or investor relying on documents prepared by someone else’s solicitor, you may assume the law offers protection if the deal turns sour. The reality in England & Wales is that courts maintain a high threshold before finding that a solicitor owes a duty of care to a non-client. Most solicitors owe no duty to third parties unless they have specifically and clearly assumed personal responsibility through words or conduct directed at that third party. Paying a solicitor’s fee or designating costs as “lender’s legal costs” in a loan agreement does not, in itself, create such a relationship.

This analysis breaks down the boundary lines between solicitors and non-clients, explores the legal requirements to establish a duty of care, and warns of common traps for lenders, investors, and advisers in complex transactions. Drawing directly from the High Court’s decision in Gomes v AMG Financial Management [2026] EWHC 2284 (Comm), we explain the law, critical evidence the courts will examine, and practical precautions for both sides.

If you need a clear, case-specific assessment—whether you are approaching a claim or want to manage risk as a solicitor—our litigation team can provide straightforward answers on your position and your legal options.

The Facts: Unsecured Bridging Loans, a “One-Stop Shop” Adviser, and a £3,000 Payment

The Lending Arrangement

Mrs Gomes advanced £1.1 million to a property developer, Mr Bowdery, through a series of bridging loans between September 2015 and April 2016. These loans were consolidated into a written Facility Agreement dated 20 April 2016. The loan carried interest and was repayable on demand, but in any event not later than 24 months after issue. It was unsecured, and despite two further extensions in 2018 and 2020, it ultimately became irrecoverable. A judgment against Bowdery for over £4.5 million could not be enforced, as he was insolvent with a pending bankruptcy petition and no assets.

AMG, Grey, and the “One-Stop Shop”

Mrs and Mr Gomes dealt only with AMG Financial Management, an FCA-regulated financial adviser, and its managing director, Martin Grey. Grey had previously introduced Mrs Gomes to bridging loans, promising a simple process in which he would “run everything,” using lenders like Mrs Gomes as the “Bank.” Grey continually described first-charge security as “the most important protection” and assured them legal matters were “handled” so lenders were “covered.” The claimants argued that Grey arranged multiple previous secured bridging loans and that they relied on him for due diligence, documentation, and protection.

Mandelli’s Involvement

Marco Mandelli, a qualified solicitor and part-time consultant to AMG, drafted the April 2016 Facility Agreement on Grey’s instructions. The agreement stated under clause 7.1 that “the Borrower will pay £3,000 to cover the Lender’s legal costs in respect of preparing this agreement.” On 9 May 2016, Mr Gomes paid £3,000 directly into Mandelli’s personal account, per the instructions of Grey. Notably, Mandelli never met, spoke with, or corresponded with Mrs or Mr Gomes, and there was no client-care letter, retainer, or written warning to seek independent legal advice.

The Professional Negligence Claims

After Bowdery’s default, Mrs and Mr Gomes sued AMG, Grey, and Mandelli. They alleged breaches of duty to advise on security and claimed that Mandelli, by preparing loan documents for their benefit and being paid “lender’s legal costs,” had assumed responsibility, or at the very least negligently failed to clarify he was not acting for them, or to warn them to get independent advice. Mandelli applied for strike-out or summary judgment. The claimants resisted, also applying (late) to extend time for serving their Particulars of Claim in a case complicated by multiple procedural stays.

Our litigation team at Go Legal routinely reviews these arrangements for lenders, providing clarity before costly disputes arise.

The Law: Assumption of Responsibility in Tort – Williams, Spire and the “Crossing the Line” Test

The Hedley Byrne Extended Principle

Where there is no contract or formal retainer between solicitor and third party, a claim in negligence for professional advice or services depends on proving that the solicitor voluntarily assumed responsibility toward the third party. This principle, established in Hedley Byrne v Heller, requires:

1. The defendant assumed responsibility for a task
2. The claimant relied on that assumption
3. Loss resulted, subject to proving causation and that the loss was within the scope of the duty

Williams v Natural Life Health Foods [1998] 1 WLR 830 (HL)

This case involved a franchisee suing a company director personally for negligent statements in a franchise prospectus, after the company became insolvent. Lord Steyn held the real test is objective: the focus must be on “exchanges (statements and conduct) which cross the line between the defendant and the plaintiff.” Internal arrangements between company and director are irrelevant. The question is whether the director, or anyone on his behalf, conveyed to the claimant—directly or indirectly—that he was personally assuming responsibility.

This approach is equally applicable to solicitors and in-house lawyers who work for companies or other principals.

Spire Property Development LLP v Withers LLP [2022] EWCA Civ 970; [2023] 4 WLR 56

The Court of Appeal confirmed that the contractual duty of a solicitor follows the instructions they are retained to undertake, and only extends to advice “reasonably incidental” to that retainer. In tort, the court must ask whether the solicitor assumed responsibility to the third party, applying the Williams test—objectively, based on the exchanges or conduct alleged. The case clarified that the Bolam standard (reasonableness of advice) only applies if and after a duty has already been established.

Application in Gomes

Applying the above principles, the High Court in Gomes held that the critical point is whether there were exchanges—direct or indirect—between the party claiming and the solicitor (or on the solicitor’s behalf) that could objectively evidence the solicitor assuming responsibility. Indirect dealings could in theory create liability, but only if an intermediary genuinely acted on behalf of the defendant solicitor in dealings with the claimant.

The Judgment: No Exchanges Crossing the Line – No Duty – Claim Dismissed

The Claimants’ Case

The claimants argued that Mandelli assumed responsibility by:

• Drafting the loan facility with the lender (Mrs Gomes) clearly identified
• Including a clause for “lender’s legal costs”
• Receiving £3,000 from the lender, via Mr Gomes
• Knowing or ought to have known that the document was for the lender’s benefit
• Failing to clarify whose client he was or to warn the lender to seek independent legal advice

Alternatively, they argued that, if Mandelli was not acting for the lender, he had a duty to make this clear.

Mandelli’s Defence

Mandelli denied any assumption of responsibility, stating:

• He never met or communicated with the claimants
• He was engaged by AMG and took instructions from Grey
• The £3,000 payment was arranged internally via AMG and did not create a retainer with the lender
• There was no retainer, so no duty of care

Mandelli also pleaded that, even if a duty existed, the claim was time-barred—any loss was suffered in April 2016, but the claim was issued more than six years later.

The High Court’s Analysis

Step 1: Core Facts Not Disputed

Mandelli was the solicitor who drafted the 2016 loan, on instructions from AMG/Grey. He received the £3,000 in May 2016, and the signed agreement was sent to him by the borrowers’ solicitors.

Step 2: The Critical Question

The issue was not whether Mandelli delivered services from which the claimants ultimately benefited, but whether he personally assumed legal responsibility to them.

Step 3: Applying the “Crossing the Line” Test

• The claimants admitted they never communicated directly with Mandelli.
• For indirect responsibility to be established, the intermediary (Grey/AMG) must have acted as Mandelli’s agent for the purpose of dealings with the claimants—it was clear AMG acted as principal, not agent.
• The payment of £3,000 was made at AMG’s direction; while it generated an appearance, this was just a shortcut in the payment chain, not evidence of a solicitor–client relationship.
• Claimants’ new arguments about the payment only emerged late in the litigation and were not included in pre-action correspondence.
• The claimants’ case on duty in relation to the 2016 loan would have illogically failed to extend to Mandelli’s later work on the 2020 restatement if their analysis were right.

Step 4: Conclusion on Duty

There was no reasonable basis to find that Mandelli assumed responsibility to Mrs Gomes. The claim was bound to fail under both CPR 3.4 and CPR 24, and further disclosure would not have assisted.

Limitation (Obiter)

• Mandelli’s duties would have related to the 2016 loan only.
• The loss accrued at contract, not on later default.
• Claim was issued in 2022, more than six years later.
• Claimants could not rely on later discovery of Mandelli’s role as the payment formed the heart of their case from May 2016.
• There was no deliberate concealment by Mandelli pleaded.

Procedural Outcomes

• Application to extend time refused.
• Delay and lack of merits weighed against the claim proceeding.
• No finding of abuse of process, as previous delays were consensual and justified.
• Claim against Mandelli dismissed with costs reserved.

If you are in doubt about your position as lender, investor, adviser, or professional, our solicitors can help you map the relevant legal exposures and options early.

Key Principles from Gomes

1. The legal foundation for a duty of care where no contract or retainer exists is a voluntary assumption of responsibility, plus reliance.
2. This test is entirely objective—it is judged by what passes between the parties, not by internal thoughts or beliefs.
3. The focus is on “crossing the line”: exchanges, statements, or conduct that move the solicitor from acting only for their client to taking on a responsibility to a third party.
4. Dealings that are direct (e.g., a letter, email, or meeting) can establish a duty. Indirect dealings are only enough if the intermediary is an agent for the solicitor, not the other way around.

5. Internal arrangements between a principal (such as an employer or instructing adviser) and their agent or employee (the solicitor) cannot alone create personal liability to a third party.
6. The decisive question is always: did the agent (solicitor) convey, directly or indirectly, that they personally assumed legal responsibility to the third party?
7. It is not enough that the solicitor simply performed their task for the benefit of the third party; real and objective assumption of responsibility is key.

8. Payment to the defendant is legally neutral if it is made at the direction of a principal or as part of an internal payment arrangement—this does not equal a retainer with the payer.
9. Provisions in an agreement designating costs as “lender’s legal costs” are about commercial allocation, not about who bears responsibility for the legal work or owes duties.

10. Damage in professional negligence relating to loans is normally suffered when the loan is entered into, not when the borrower defaults.
11. For section 14A of the Limitation Act 1980, if the claimant knew the key facts from the outset (e.g., that they paid the solicitor), later “discovery” cannot extend time.

12. A response to a summary judgment application cannot just say that further evidence might be found with disclosure; the specifics are needed, or the court will reject what the judge called “Micawberism.”

Practical Implications for Go Legal Clients

For Claimants (Lenders, Investors, Businesses)

• The hurdle set by Williams and Gomes is high: where you never interacted personally with the defendant professional, only with their employer or principal, you will face significant difficulty proving that the individual assumed personal responsibility.
• Merely paying fees—even if labelled as “lender’s legal costs” and paid by you directly to the solicitor on the instruction of your adviser—does not by itself show a retainer or duty.
• Arguments such as “the solicitor should have warned me to get independent advice” are circular: there is no duty to warn unless the duty already exists, which must be proven first.
• The safest course is always to instruct your own solicitor, ensure a client-care letter is issued, and insist on clear, written advice about risk and security.
• Limitation should not be ignored; the time to bring a claim often starts when a transaction is first entered, not when problems are later discovered. You may not have six years from default—assess your position without delay.

For Defendants (Solicitors, In-House Lawyers, Consultants)

• Engagement letters should be explicit about who is (and is not) the client. Non-engagement letters to third parties are best practice, though failure to send one won’t by itself create liability.
• Keep clear accounts and ensure payment comes from or via the client, not from third parties, unless expressly agreed and documented—a direct payment does not prove a retainer, but may give an opponent an argument for one.
• The protection of Williams is robust—use that defence early where the facts support it. Strike-out and summary judgment may be achievable in suitable cases.
• Limitation can be decisive; where substantial time has passed and the claimant knew of the key facts, this defence can be fatal to stale claims.

For Lenders, Bridging-Finance Investors, Property Developers

• If your financial adviser tells you “the legal work is handled,” do not assume this means you have your own solicitor acting. There is a regulatory gap: FCA-regulated adviser does not equal SRA-regulated law firm.
• Always insist on first-charge security, independent legal advice, and written advice on your individual risks.
• Ask your solicitor for confirmation that all necessary steps have been taken to register and protect your interests—do not rely solely on documents or assurances from the borrower’s solicitor or another party’s in-house lawyer.

If you need a clear assessment of your merits or defences in a similar scenario, our solicitors at Go Legal can review your documentation and advise on your next steps.

How Go Legal Can Help

Our specialist litigation and professional negligence team advises on all stages of solicitor duty of care and third-party claims:

• For claimants, we assess limitation issues and issue protective proceedings if your claim is close to time expiry. We examine, in detail, who you dealt with, what was said or written, whether the solicitor personally assumed responsibility, and the prospects of avoiding or surviving a strike-out or summary judgment application.
• We offer a fixed-fee case review and may consider conditional fee agreements on strong cases, subject to funding criteria.
• For defendant professionals, we move quickly to build a robust summary judgment or strike-out application, supported by clear evidence and tested legal authority.
• We also act for professionals who need coverage advice or to liaise with their professional indemnity insurers.
• Our transactional solicitors act for lenders and investors, offering thorough due diligence (including Land Registry and Companies House searches), first-legal-charge documentation, and clear, bespoke client-care letters. We also provide “second pair of eyes” reviews on loan documentation, security, guarantees, and subordination provisions.

If you require strategic input on duty of care issues or professional negligence exposure—or assistance with reviewing or drafting lending documentation—book a free consultation with our team or call 0207 459 4037.

Frequently Asked Questions

I lent money relying on a loan agreement drafted by a solicitor. Can I sue them if the loan is not repaid?

Not automatically. You have to prove the solicitor personally assumed responsibility to you, usually through direct communication or clear, objective steps. If you never dealt with them and only had contact with your adviser or broker, with no indication the solicitor was acting for you, then you likely have no claim.

I paid the solicitor’s fee (labelled “lender’s legal costs” in the loan agreement). Does that prove they acted for me?

No. A payment made at the direction of your adviser or principal does not by itself establish a retainer or duty of care. Courts look for direct or indirect, but explicit, “crossing the line” communications or conduct.

What does “crossing the line” mean in this context?

It refers to statements or conduct, either direct or through an authorised agent, in dealings with you that objectively indicate the solicitor is acting for you or has assumed responsibility for your interests. Simply preparing documents is not enough.

The solicitor did not warn me to get independent advice. Is that negligence?

Only if a duty already existed. Courts in England & Wales do not impose a duty to warn in the absence of already-proven responsibility to the claimant.

I am an in-house solicitor. When am I at risk of being sued by a third party?

Risk arises only if you or someone on your behalf makes clear to the third party that you are assuming responsibility for them—i.e., direct letters, emails, meetings, or advice. Working in the background for your employer, with no communication to the other side, does not usually create a personal duty.

How long do I have to bring a professional negligence claim against a solicitor?

Most claims must be issued within six years of the loss being suffered (generally when the deal or transaction is entered, not when loss is later discovered), or, in some situations, up to three years from when you first discovered the facts necessary for a claim. There is a hard stop at 15 years. Gomes confirms that delay can be fatal; limitation is fact-sensitive, so seek advice promptly.

Are there exceptions for disappointed beneficiaries?

While there are rare exceptions for disappointed beneficiaries (such as in some lost-probate claims), these are tightly restricted and fact-specific. They cannot be presumed or readily extended to commercial or lending situations.

Does SRA or FCA regulation mean a solicitor or financial adviser owes me a duty as a third party?

No. Regulation sets professional and insurance standards but does not alter the common-law principles of duty of care to non-clients.

Get Specialist Advice on Solicitor Duty of Care to Third Parties Today

Understanding whether a solicitor owes a duty to someone who is not their direct client is crucial in managing risk and bringing or defending claims. The courts require clear, objective evidence of a personal assumption of responsibility, as confirmed in recent decisions such as Gomes v AMG. Payment arrangements or labels like “lender’s legal costs” will not normally suffice—what matters is real communication and conduct.

If you are considering a professional negligence claim, or you are a professional concerned about liability to third parties, act quickly. Our solicitors at Go Legal can review your documentation, assess your prospects, and guide you through the next procedural steps.