Finding your way

Finding your way

In March those solicitor firms - about 15% of the market - who renew their annual professional indemnity insurance reported an uncomfortable jump in premiums as the market hardened.

At the time of writing this same situation is being played out across the 85% of firms who renew at the end of September. Most will renew cover often with the same insurer but will find the cost has increased between 25-40% depending on any increase in turnover or proportion of conveyancing. The increases are particularly steep for those with a claims record and premiums for cover in the layers above the minimum of £2m/£3m are also substantially higher. The reasons for this have not been hidden - insurers have withdrawn from the market or been unwilling to take on any new risks and decided only to consider existing clients and to avoid exposure to certain types of work.

It seems inevitable that apart from firms closing for retirement or agreed merger there will be a number of firms left without cover or forced to make the uncomfortable decision not to renew because of the steep increasing cost and the uncertainties of the Covid induced recession. For some, prepared to pay the increased cost, the availability of government backed loans will have provided the means of staying in business for another year to await recovery of the economy.

For those facing the decision to close the steps are difficult but help and support from various agencies supported by the Law Society will be of help so that the journey is not faced alone. The organisations have been briefed on the situation and are aware of the issues.

There have also been discussions between the Law Society and the SRA and the SRA guidance on requirements for closing down you practice are clear www.sra.org.uk/solicitors/ guidance/closing-down-your-practice. There is also an article on this at https://communities.lawsociety.org.uk/july-2020/ closing-down-your-firm/6001185.article.

The Law Society has produced an array of materials on various aspects of closing down a firm. www.lawsociety.org.uk/topics/ professional-indemnity-insurance/what-happens-if-youcannot-renew-your-pii and www.lawsociety.org.uk/topics/ coronavirus. ■