Dozens of law firms close after failing to take out PI insurance
21st January 2014
Professional Indemnity Insurance is vital for personal injury solicitors and is essential for the protection of the public. This insurance ensures that both solicitors and clients are financially covered in rare events of omission and mistakes.
Solicitors are therefore not allowed to practice without PI insurance. LLPS and incorporated practices are required to have a minimum of £3,000,000 PI insurance, while Partnerships must have £2,000,000. As we are an LLP, we have the full £3,000,000 of professional indemnity insurance, although obviously we strive to avoid ever having to make a claim on it by providing our clients with the best possible service every time.
The Solicitors Regulation Authority (SRA) recently named 136 law firms that failed to take out this required insurance. These companies failed to take out this insurance before the October 1st deadline and failed to take out cover during the Extended Policy Period, which was enacted to provide companies with an extra 90 days in which they could meet this deadline. Therefore, personal injury law firms and other legal practices that failed to take out PI insurance by December 29th are not permitted to practice any longer and will have to close down. They may be allowed to continue dealing with administrative tasks but cannot progress claimants’ matters or carry on practicing – full details on what they can do are found here.
Most of the companies on the SRA’s list have closed down properly and are meeting their obligations, but some have not done so and are continuing to practice. The SRA is taking robust enforcement action against these law firms. People who believe an uninsured firm is continuing to progress their case should contact Clearwater Solicitors or another legal practice immediately and transfer the case to them.
Law Society comments on SRA closures
Commenting on these closures, President of the Law Society Nicholas Fluck said some of the firms that have closed will have done so as a result of “positive decisions” by the legal partners involved in the company, while others will have struggled due to challenging market conditions.
However, he said that the Extended Policy Period would have ensured many legal firms are able to continue practicing, commenting that the Law Society asked the SRA to manage solicitors’ closures in an orderly manner and that it provided closing firms with guidance and support.
Mr Fluck stated that the need for PI insurance is a key public protection issue. He also highlighted the importance for companies to be satisfied with the economic stability of their PI providers, noting that Balva’s failure last year “brought home” the importance of this issue.
With Clearwater Solicitors fully insured and ready to handle claims of all kinds, we’re ready and willing to take on your case today! Call us on 08000 430 430 or fill in our online enquiry form today!