ALCD offers warning to firms of potential professional indemnity insurance issue

The Association of Law Costs Draftsmen recently issued a warning to professional indemnity insurance companies that some law firms may be using cost advisers that are not properly qualified.

Some solicitor firms have been heightening their risks in regards to professional liability insurance claims according to the ALCD.  The problem stems from a select number of firms using unqualified workers on certain cases. The industry body has begun to discuss the issue with business insurance providers in order to address the issue of legal firms using uninsured workers to conduct costs work for them.

ALCD chairman Iain Stark stated that many legal firms have uninsured and unregulated workers draft complex costs bills for them.  Clients can and often will sue any law firm for damages if delays or mistakes were made in the delivery of the costs bill to the client’s detriment, he added.  In the event that the financial advisor has no professional liability insurance then the firm’s insurance provider is then left holding the bag in regards to compensation claims.

The ALCD has received reports of many delays and mistakes in costs bills that have led to compensation claims.  Some of these claims have numbered into six-figure compensation awards.  Both law firms and their insurance providers will be footing the bill if their costs work is carried out by unqualified and uninsured workers.

The ALCD has since taken steps to minimise the risks of claims being made on the professional indemnity insurance of any given law firm.  One such step has been to urge insurance providers to insist that their clients do not employ any unregulated and uninsured costs lawyers.

The ALCD was formed in 1977 as a regulatory and professional body for costs lawyers and law costs draftsmen in the UK.  Starting in January of 2011 the body will change its name to the Association of Costs Lawyers.

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