Big fall in firms heading for closure after failing to find indemnity insurance
Philip: Remaining firms have been reminded of responsibilities
A total of 49 firms are heading for closure after failing to secure indemnity insurance, the Solicitors Regulation Authority (SRA) has said. This compares with 138 which were forced to shut for the same reason last year.
Paul Philip, chief executive of the SRA, said in his report for this week’s board meeting that 12 of the 49 firms had “already filed notice of closure and have largely completed the winding-down process”.
However, the status of all of the remaining 37 is not clear. Having failed to find insurance in October last year, they would have passed through their period of grace or ‘extended policy period’ of a month.
This was followed by a ‘cessation period’ of two months, during which law firms can only deal with existing instructions, which expired at the beginning of this month.
“We are engaging with the remaining 37 in relation to information obtained during the process,” Mr Philip said. “All have been written to formally outlining their responsibilities.”
Mr Philip said that, as last year, the regulator intended to publish a list of firms which did not have indemnity insurance. This would be done by the end of January, “subject to us being fully satisfied by the data”.
The SRA e-mailed 1,863 law firms in November last year, warning them that their apparent lack of indemnity insurance meant they would have to enter the cessation period. The SRA blamed a range of factors for the lack of proper information.
Meanwhile, the board will also hear that 3,658 practising certificates (PCs) were revoked on 11 December 2014 for failing to renew, while 272 firms are being investigated for failing to submit a renewal form with fee, made up of 12 alternative business structures, 175 law firms (mainly subsidiary companies for which only a periodic fee is required) and 83 sole practitioners.
All individuals who had their PCs revoked have been contacted to request an explanation as to why they did not renew, and to clarify whether they have continued to provide reserved legal activities.
Firms and individuals will be investigated if, after contact, they choose not to renew but continue to provide legal services.
In a separate development, Liberal Democrat MP and former justice select committee member David Heath has been appointed to the SRA board, replacing Sara Nathan.
Mr Heath is standing down as MP for Somerset and Frome at the May general election after 18 years. He is a former minister of state for agriculture and food.
The appointment of senior City lawyers David Willis and Elaine Williams to the SRA board was announced earlier this month.
Tags: cessation period, Indemnity insurance, Solicitors Regulation Authority, SRA board
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