Personal Indemnity Insurance – compliance for law firms

Introduction

Professional indemnity insurance (PII) is not simply a cost of doing business; it is a condition of doing business as a law firm.

The SRA Indemnity Insurance Rules require every authorised body to take out and maintain qualifying insurance with a participating insurer, and they set out what must happen, and how quickly, when a firm cannot do so.

For partners, the difficulty is rarely the premium. It is the judgement that sits around it:

• whether the cover purchased is “adequate and appropriate” for the work the firm actually does;
• whether the proposal form enables a good law firm to show its quality;
• when a difficult file becomes a circumstance that must be notified; and
• whether fee earners will raise a concern early enough to manage the risks before a claim?

Recent renewals have favoured firms, with more participating insurers and longer policy periods now common. A soft market is an opportunity to improve terms. It is also a period in which firms grow complacent about disclosure, about aggregation, and about the risk management they have promised their insurer they carry out.

This webinar is delivered by Paul Bennett, partner at Bennett Briegal LLP and a risk and compliance solicitor acting for law firms in England and Wales. It is practical rather than theoretical, and is aimed at those who have to make these decisions and then defend them.

Topics covered include:

• What qualifying insurance means under the SRA’s Minimum Terms and Conditions, and what the Indemnity Insurance Rules require of the firm and of each partner individually
• What the obligation to have “adequate and appropriate” insurance means in practice, including but not limited to your practice area exposure, your largest individual matter values and your excess
• How the aggregation provisions in the Minimum Terms and Conditions operate, and why a firm holding a fully compliant policy can still be underinsured once related errors are treated as a single claim
• What you can and cannot exclude or cap in your retainer, and the points at which the Minimum Terms and Conditions override your own terms of business
• How to make your firm attractive to insurers: what underwriters are asking now, what a well-prepared proposal looks like, and the disclosure risk in answering badly
• When a matter becomes a circumstance, how to notify it, and why late or partial notification frequently causes more damage than the error being notified
• Your obligation to disclose your insurance details to a potential claimant on request, and how to handle that request sensibly
• What your fee earners and support staff need to understand about the firm’s insurance, and how to build the internal reporting culture that underwriters and the SRA both expect to see