Business liability insurance specialists Brit Insurance commented on the legal services sector’s recent trend to consolidate, with firms merging in order to create professional practices that span the globe. After witnessing an increase in PI insurance claims from legal firms, Brit made the suggestion that some law firms would do well to carefully consider how challenging it can be to manage a multi-disciplinary practice that is comprised of new owners that may not originate from the legal profession.
Mark Figes, PI insurance underwriter for Brit, remarked that the risks these newly merged business firms face come in two distinct flavours. The first issue is that a large number of their clients have been trading in challenging conditions that have made the possibility of bankruptcy and business failure more of a reality. Mr Figes went on to explain that claimants hoping they will be successful in recovering large payouts for purportedly negligent advice has also led to rising numbers of PI insurance claims against IFAs.
The insurance underwriter also said that the second danger businesses face is that a large number of these partners may be lacking in appropriate management experience in regards to working within such a structure, or with loss adjusters, accountants, lawyers, and other such multi-disciplinary teams. Brit has since decided to work with Libra, a specialist PI insurance agency, in order to make a determination the amount of PI insurance cover needed.
As the UK and international landscape changes in regards to the evolution of legal firms, said Mr Figes, Brit has made assurance it will be at the forefront of this new frontier.