Back in 2010, the Solicitors Regulation Authority (SRA) removed defence costs from the mandatory scope of solicitors’ Professional Indemnity insurance policies.*
Minimum Terms and Conditions of such policies since then state that Insurers are no longer required to provide an indemnity against defence costs in relation to disciplinary proceedings. This omission leaves many law practices with uninsured exposure should they receive an investigation or inquiry from the SRA or a Solicitors Disciplinary Tribunal.
Worryingly, a survey by IRN Research commissioned by London law firm Leigh Day in 2019 which polled 200 firms, reported that less than 50% of interviewed firms had insurance cover that would give them ‘the possibility of affordable equality of arms with their regulator’.**
Some Qualifying Insurers are able to extend their PII policy to provide regulatory defence costs cover to protect the Compliance Officer for Legal Practice (COLP) or Compliance Officer for Finance and Administration (COFA), but this rarely extends to provide any protection for the practice.
Solicitors should also be prepared for the possibility that the regulator might bring investigations against them personally, especially following the implementation of the EU General Data Protection Regulation (GDPR) on 25th May 2018. The costs on the practice in defence of any allegations could be significant.
The rules of SDPR 2007 have also recently been updated by the new Solicitors (Disciplinary Proceedings) Rules 2019 (SDPR 2019) and it seems that significant changes have been made. This could make things even more difficult for a solicitor subject to a complaint to navigate their way through the proceedings.
Without sufficient insurance to cover the financial costs of an effective defence, firms and solicitors may have no choice but to be sanctioned by (or accept a sanction with) the SRA or at the Tribunal - even if no misconduct is found.
Directors and Officers Liability insurance can provide a much wider range of protection for the individuals and the Practice. ‘D&O’ is usually purchased by the company itself, even when it is for the sole benefit of directors and officers.
At Cox Mahon, we place D&O cover for law firms and other organisations in a diverse range of sectors. This may be as standalone policies or as part of a programme of covers that might include professional indemnity, employers’ liability, property and travel insurance.
Please contact our experienced team if you would like to find out more about how we can support you with insurance for your law firm.