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Solicitors given insurance warning over freelance status

Law Society: Solicitors should think about their long-term career goals

Solicitors who take on the new freelance status may find it difficult to return to working for law firms due to insurance problems, the Law Society has warned.

It also cautioned those who may take advantage of the provisions in the Solicitors Regulation Authority’s Standards & Regulations to think of the long-term impact on their careers.

The new rulebook comes into force on 25 November and a freelance solicitor – the SRA seems to have ditched its plan to call the role an ‘independent solicitor’ – will be a self-employed solicitor who practises on their own and does not employ anyone else in connection with the services they provide; practises in their own name, rather than under a trading name or through a service company; and is engaged directly by clients with fees payable directly to them.

In a practice note [1] published this week as part of it support for solicitors to get to grips with the rules, the Law Society pointed out that by contracting with clients directly, freelance solicitors would have personal liability if any professional indemnity insurance did not cover a claim.

“This means your personal assets may be at risk. You should consider whether you are comfortable with personal liability and whether you can manage those risks…

“As with any new business model, there is a risk that freelance solicitors who want to return to practice in a law firm may find firms reluctant to take them on unless the insurance position is clearly resolved, and future liabilities are addressed.”

One expert predicted recently [2] that disgruntled clients were more likely to target law firms with “deep pockets” for negligence claims than underinsured freelance solicitors.

More broadly, the society encouraged solicitors to think about their long-term career goals and “how the freedoms offered by this practice method fit within that plan”.

It explained: “As with any new form of practice there may initially be some scepticism and reputational implications. You need to consider whether you have factored this into your long-term career plans and wider aspirations.

“If, for example, you were thinking of becoming a freelance solicitor as a transitional step after leaving a firm, until you find a new role after leaving a firm, you would want to understand what the implications might be for your potential career in the short term, the medium term and the longer term.”

The Law Society also issued a practice note on working for unregulated firms [3] under the new rules, while the SRA has launched its online resources [4] to help the profession prepare for them.