Insurance woes ground freelance solicitor network

Lock: Going freelance is currently an aspiration, not a reality

A network for freelance solicitors that is “ready to launch immediately” cannot get off the ground because it cannot secure professional indemnity insurance, it has emerged.

Iain Lock said he had spent the past year planning the Solo Legal Network but a lack of guidance to insurers from the Solicitors Regulation (SRA) had frustrated his efforts.

“I don’t know of any freelance solicitors who are actually practising,” he said. “It’s an aspiration, not a reality. The SRA has left insurers in a void, and that has grounded us.”

The SRA opened the way for freelance solicitors in November last year by introducing the Standards and Regulations (STaRs).

They are self-employed solicitors who practise on their own and do not employ anyone else in connection with the services they provide; practise in their own name, rather than under a trading name or through a service company; and are engaged directly by clients with fees payable directly to them.

We reported concerns about the appetite among insurers for covering them well in advance of the change.

Mr Lock, who runs an unregulated employment and commercial advice service for SMEs called Q&A Law, said a few insurers were thinking about covering freelance solicitors but none of them were doing it. He said he had spoken to three major indemnity insurers and a large broker.

He said freelance solicitors were required to have “adequate and appropriate” indemnity insurance but there was insufficient guidance as to what this meant, making it “dangerous” for insurers to enter the market.

Mr Lock said that if indemnity insurers did move into the freelance solicitor market, they would be much more likely to offer cover to networks of solicitors than individuals, whose relatively low income made insurance unaffordable.

The solicitor said his network aimed to offer freelancers benefits beyond cheaper indemnity insurance. Most of them – such as cheaper training, case management, telephone answering and transcription services – would be provided by third parties.

Mr Lock said he had discussed third-party managed accounts, the only way for freelance solicitors to hold client money while carrying out conveyancing or conducting litigation, with a leading payment provider.

Other services – such as marketing, websites and practice management – could be provided in-house. Mr Lock owns a legal marketing and technology company called Onna, which he co-founded in 2017.

He said an important function of any freelance solicitor network would be referrals. The fact that freelance solicitors were specialists meant clients could be referred among themselves without the danger of losing them.

Mr Lock said he had been practice director of a law firm with a number of consultants and later owner of a firm that used consultants, giving him plenty of experience of working with self-employed lawyers.

Since then, he had been self-employed for the past four years and “enjoyed it immensely”.

He said that a dozen solicitors were ready to become freelancers and join his network, and one of three insurance companies he had spoken to had received over 50 enquiries from solicitors interested in going freelance.

Mr Lock added that solicitors who worked as self-employed consultants with their own clients typically paid 40% of their fees to law firms in return for limited benefits.

“Being part of a freelance solicitor network would not cost them anything like that.”

The STaRs and the state of the professional indemnity insurance market will both be debated at the Legal Futures Compliance and Regulation Conference on 11 March.

    Readers Comments

  • Steve Cornforth says:

    I have advised a number of solicitors who were interested in pursuing this option. The main obstacle has been that the insurers have no interest in the market. I know brokers who have been saying this for months. It is surprising that this wasn’t anticipated when before rules were changed…

  • Iain Lock says:

    It is a problem and I struggle to understand why the SRA have not taken action even since the regulations changed to assist the situation. I am however speaking with another broker, a consequence of this article, who is confident that with the correct processes put in place by a network that they can overcome this hurdle with the underwriters. The message I am hearing from the underwriters is that they are far more willing to look at this via a network than from individual solicitors applying as there are quality checks we are putting in to place that gives them some comfort, plus we will be working closely with them to find out what they want and what we can do to achieve that. I am confident that we will make some progress soon. Please feel free to contact me if you or others that you know would like to discuss further. Please message me

  • Sam says:

    There is nothing complicated or ‘dangerous’ about offering insurance cover for freelance solicitors. The only fear is the powerful insurance companies who would want to make the freelance solicitors insurance market complicated, difficult and expensive to access as it currently is for traditional solicitor firms and sole practitioners.
    The SRA has already indicated what is required and that is ‘adequate insurance’. What is difficult to understand in those two words?
    As a freelance solicitor myself, I have come across some insurance companies able to undertake the insurance cover for freelance solicitors. They see it as no different from offering professional indemnity insurance to other professionals like Claim Consultants, Employment Law Advisers, OSRC Immigration Advisers, Business Management Consultants, Architects, Engineers, etc.

  • Loureen says:

    Hello Sam, I would be interested to know the name of these insurers that you have come across, please.

  • Tracy says:

    As a law student, I have always wondered why the solicitor insurance market is so complicated. Could this be due to the stupidity of the SRA or the greed of the insurers? Otherwise, why must somebody suffered 6 or 7 years to qualify in a chosen profession, only to be deprived from practising in that profession by an ordinary insurance company!
    A similar situation, though not as extreme, occured with the Bar in the past when premiums for each barrister were entirely at the discretion of the insurers and any claim -or even the threat of a claim- resulted in very substantial (sometimes in excess of 1000%) increases in premium. Not only were premiums increasing but also there was no transparency as to how they were calculated. Moreover, insurers could accept or reject barristers without any reason. Finally, barristers were not even receiving quotations from insurers until the day before the expiry of their existing cover, which was causing huge uncertainty and rendering it impossible to obtain alternative quotations.
    This was what led the Bar Council to form the Bar Mutual as the compulsory provider of primary layer professional indemnity insurance to the self-employed Bar in England and Wales.
    The result has been the certainty and stability of P.I for the barristers in marked contrast to the turmoil that has in recent years beset the market for professional indemnity insurance for solicitors.
    Now the SRA says their P.I insurance arrangement is to ptotect the ‘consumer public.’ Is the SRA’s own consumer public different from the one also being protected by the Bar council? Or why must its own P.I. arrangement be so draconian?

  • Sam says:

    Hi Loureen, Actually they are all brokers who believed they would be able to obtain quotes from the insurers. However, it turned out that they were all focussing on the same insurers.
    At the end of the day, what transpired was that the market is not made difficult by any SRA’s lack of guidance but by the greed of the insurers because they are unwilling to quote on lower premiums that a freelance solicitor requires. And accepting their quotes effectively makes you over-insured. As for now, I am simply practising as a freelance solicitor in unreserved activities and when I get an instruction that falls under ‘reserved activities’ or having to appear in court, I take that on as a consultant.

  • Alan Brocklebank says:

    Hi Sam,

    Who was the broker you went through or the name of the company that has insured you for the unreserved work? I am guessing Inperio?

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