Consumer panel calls into question barristers’ £500,000 indemnity limit

Print This Post

17 September 2014


Elisabeth Davies

Davies: BSB must conduct further research

The Legal Services Consumer Panel has called into question the existing minimum indemnity cover limit of £500,000 for barristers and called for more research before the limit is extended to firms regulated by the Bar Standards Board (BSB).

Responding to the BSB consultation on entity regulation, Elisabeth Davies, chair of the consumer panel, said that with the arrival of public access and litigation work, the risk profile of barristers had changed.

This, she argued, makes it “hard for us to assess if £500,000 is right for self-employed barristers, let alone entities”. Ms Davies complained of a lack of claims data, saying it understood that BSB “still do not have access to data” collected by the barristers’ indemnity insurer Bar Mutual.

“Of course such information may be commercially sensitive and insurers would not want it to be widely disseminated,” Ms Davies said.

Error, group does not exist! Check your syntax! (ID: 14)

“Yet surely, some arrangement must be possible to allow the regulator to have access to data which would allow it to make informed decisions on the right levels of cover.”

Ms Davies noted the possible future requirement for both the self-employed bar and entities to carry whichever is the higher of a minimum level of insurance or a multiple of turnover.

“This is one way of ensuring that small firms carrying out low risk activities obtain an appropriate level of cover, whilst at the same time making sure that large firms or those carrying out high-risk work (with potentially high levels of financial risk) hold an amount of cover which adequately protects consumers.

“We urge the BSB to conduct further research into the costs and benefits of this proposal, as it may provide a better way of identifying the optimum levels of cover.”

The consumer panel disagreed that the minimum cover terms for BSB-regulated firms should apply to all clients. Ms Davies suggested that “corporates and other large buyers” should not need to rely on minimum terms.

“Although there may be some practical difficulties, these should not be insurmountable. Experienced or wealthy clients should be capable of negotiating the terms of cover they require. Furthermore, we believe scarce regulatory resources should be directed towards those who are less able to protect themselves.”

Launching its consultation on entity regulation in July, the BSB said it did not want to set a cover limit that would “overburden the smallest/lowest risk structures”.

The BSB went on: “As a matter of principle, any minimum that avoids imposing excessive burdens on those at the low end of the scale is unlikely to be adequate for those at the other end of the scale.”

Tags: , ,



Leave a comment

* Denotes required field

All comments will be moderated before posting. Please see our Terms and Conditions

Legal Futures Blog

Lawyers must now draw on the data and drive change

Chris Marston 2014

The results from this year’s legal services consumer tracker survey make for interesting reading. In its sixth year, the research finds that a firm’s reputation continues to grow in importance, holding its top slot as the number one factor influencing choice of lawyer, with price remaining a strong second, reflected in a shift towards higher numbers of fixed-fee transactions. Alongside, it reports that trust in lawyers has declined to 42%, from 47% in 2012. It’s useful information as far as it goes, but what is the sector going to do with it?

September 26th, 2016