Solicitors no longer covered by professional indemnity insurance

In a ruling last month by the Legal Services Board, solicitors are no longer eligible for indemnity insurance cover in the event of being the subject of a disciplinary proceeding.

Despite the Law Society objecting to the new ruling, the LSB followed through on the recommendations of the Solicitors Regulation Authority to remove solicitors’ rights to make a claim against their professional liability insurance for legal defence fees during disciplinary actions.

The rule change – which will go into effect for the commercial insurance period running from October 2010 to October 2011 – was originally opposed by the Law Society, calling for their implementation to be pushed back until the 2011-2012 business insurance season to allow more deliberation and discussion.

The Legal Services Board had taken the Law Society’s position into consideration, it said, but went ahead with their plans to implement the amendments this October despite the Law Society’s concerns.

The recommendations that the Solicitors Regulation Authority made regarding changes to the assigned risks pool were also approved by the Legal Services Board.  The ARP, as a last resort measure, provides emergency insurance cover for those firms unable to afford indemnity insurance from any other commercial sources.

The Solicitors Regulation Authority had considered completely eliminating the ARP as a resource but decided that action.  Instead entry to the ARP will be restricted to new firms in addition to a reduction in a firm’s coverage by one year to a maximum of 12 months.

Chief executive for the SRA, Antony Townsend, commented that the tough strategy in relation to enforcement his organisation approved is formulated to limit the amount of time firms utilise the ARP;  to dissolve or restructure high-risk firms to reduce that risk; and to hold legal firms that neglect to pay their insurance premiums more responsible, up to and including closing coverage promptly in such cases.

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