Specialists have warned of problems for solicitors arising from the new Standards & Regulations being introduced by the Solicitors Regulation Authority (SRA) in November.
Frank Maher, partner at Liverpool firm Legal Risk, called for “clear guidance” for law firms on indemnity insurance.
He said the new SRA code of conduct for firms was silent on whether law firms could cap their indemnity liability to clients below the minimum level of £2m for partnerships and £3m for incorporated firms and alternative business structures.
He said that although guidance made it clear that firms could not reduce their cover below the limits set out in the SRA’s minimum terms and conditions (MTC), there was no longer an “express provision” saying this, similar to the one set out in outcome 1.8 of the current SRA Code of Conduct 2011.
The same result could only now be achieved by applying the new SRA principles, such as principle 7 (best interests of clients).
He said: “That raises the spectre of what else may be hidden from view in the new codes – invisible, but still applicable through the principles.”
As a result, Mr Maher said there should be “clear guidance” for all solicitors and firms “explicitly setting out the SRA’s view on limiting liability”.
The SRA has recently published guidance on what amounts to ‘adequate and appropriate’ insurance  for the new breed of freelance solicitors – as well as non-commercial bodies that are providing reserved legal services to the public – who need not comply with the MTC.
Mr Maher said there was no mention of aggregation clauses, under which multiple claims could be subject to one policy limit, or of “many other consumer protection provisions” applying to firms under the MTC.
These included the need for ‘any one claim cover’, where there is a policy limit of either £2m or £3m per claim, rather than a single limit in total/aggregate for the policy year.
Other issues Mr Maher said had not been addressed were the prohibition on avoiding claims for non-disclosure or misrepresentation, and whether defence costs cover should be subject to the excess.
Separately, Brian Rogers, director of regulation and compliance at the IT firm Riliance, raised further queries over how the new regime on reporting rule breaches to the SRA would operate.
He said one issue would be what benchmark should be used where a breach could not be determined one way or the other but the firm was obliged to report it to the SRA, so the regulator could investigate.
Another problem was the “unenviable position” of employees at law firms who failed to report an incident because they reasonably believed their COLP or COFA would report it to the regulator.
Mr Rogers warned that employees who reported the matter directly to the SRA because they did not believe it would be reported by the compliance officer faced the “wrath of their firm” or alternatively the “wrath of the SRA” if they did not report it.
He said the latter scenario applied to Emily Scott, a young solicitor who was struck off in January this year for failing to report misconduct at her law firm until she had finished her training contract.
Mr Rogers concluded: “The management and reporting of breaches after 25 November will be much more complicated so you need to plan now for how it will impact on you and your firm.”