Indemnity insurance

The Solicitors Regulation Authority (SRA) is investigating two law firms which it said should have closed at the end of last year, having failed to find indemnity insurance.

Solicitors are not under a general duty to check the credit status of parties in a commercial transaction unless instructed to, the High Court has ruled. Who to trust in a business situation is “a commercial decision for the client to take and not the solicitor”.

The High Court last week threw out a £71m claim against trade union practice Thompsons which sought to blame it for the collapse of a law firm which had tried to bring group litigation on behalf of thousands of miners.

A total of 49 firms are heading for closure after failing to secure indemnity insurance, the Solicitors Regulation Authority has said. This compares with 138 which were forced to shut for the same reason last year.

The Solicitors Regulation Authority (SRA) has rejected a proposal by the Law Society to extend the additional indemnity run-off cover provided by the Solicitors Indemnity Fund (SIF) for a further three years until 2023.

The Bar Standards Board has doubled its prediction of how many entities it expects to be overseeing by the end of 2015 after receiving Legal Services Board approval to regulate businesses.

The Supreme Court has backed a law firm’s arguments that, following a breach of trust, it should have to pay in damages only the amount which the lender would have lost if the breach had not occurred.

Many of the 1,863 law firms e-mailed by the Solicitors Regulation Authority last Thursday that their apparent lack of professional indemnity insurance meant they would have to move into a period of shut-down had cover after all, it emerged.

Nearly half of law firms – 47% – secured cheaper indemnity insurance this year, a survey has suggested. Half of these obtained “significant” reductions. It also indicated a move by firms from unrated to rated insurers.

Firms that have not secured professional indemnity insurance have until tomorrow to notify the Solicitors Regulation Authority. Despite the abolition of the single indemnity renewal date last year, 1 October remained the deadline for more than 90% of law firms.