The Solicitors Regulation Authority has launched “forensic investigations” into 10 law firms that may have breached the personal injury referral fee ban, in a move that will be seen as a warning to the profession. Meanwhile, 141 firms without indemnity insurance are heading for closure.
The Solicitors Regulation Authority does not know the insurance position of at least 50 law firms, but there may be even more out there uninsured, it admitted yesterday. Those yet to inform the regulator that they do not yet have insurance face enforcement action, it warned.
Some 153 law firms today entered the last-chance saloon after failing to secure professional indemnity insurance (PII) during the last 30 days. Under the new PII arrangements, they are now in the second stage 60-day ‘cessation period’.
The possibility of clients buying ‘top-up’ cover to fill the gaps in compulsory professional indemnity insurance has been floated by the Legal Services Board as it set the scene for a significant shake-up of current financial protection arrangements.
The number of law firms that failed to find professional indemnity insurance by 1 October has continued to climb, Legal Futures can report. It has also emerged that law firms are responding slowly to the next deadline facing them – practising certificate renewal by 31 October.
The vast majority of personal injury law firms appear to have renewed their indemnity insurance on acceptable terms despite the instability in the sector, according to a survey of nearly 500 law firms conducted last week.
A total of 185 law firms have applied to the Solicitors Regulation Authority for the extended indemnity period of insurance, having failed to secure cover by 1 October – although 10 have already secured a policy.
Predictions of a professional indemnity insurance apocalypse appear to have been well wide of the mark, with just 69 firms so far notifying the Solicitors Regulation Authority that they have triggered the new extended indemnity period.
The risk of as many as 1,000 law firms having to shut down because they cannot find professional indemnity insurance means it is time to narrow the scope of the cover solicitors are required to have, a leading adviser has argued.
Professional indemnity insurance brokers have again had to calm fears just three weeks before the renewals deadline, as the unrated insurer Berliner appeared “uncertain” it could cover any solicitors’ risk this year.