Solicitors face professional indemnity challenge from insurers
Thursday 04 February 2010 by James Dean
Insurers are beginning to challenge solicitors over the terms of their professional indemnity insurance (PII) policies amid early signs that the profession is facing a wave of negligence claims.
Some 82% of major insurers predict that the number of claims on solicitors’ PII policies this year will be higher than the 2008/09 indemnity period, according to a survey of 11 insurers by insurance broker Ntegrity Insurance Solutions. Just under two-thirds predicted that the total value of these claims will increase compared with 2009.
Frank Maher, partner at Liverpool risk management and professional indemnity firm Legal Risk, said that PII insurers faced with a surge in claims are beginning to dispute the terms and conditions of PII policies. He said that insurers have recently started trying to deny cover by establishing that a sham partnership exists.
Maher also said that several large firms are experiencing significant increases in claims, some being driven by the economic climate.
None of the insurers polled by Ntegrity expected PII premiums to fall during the 2010 renewals season, with 85% forecasting premium rises. In the indemnity year 2009/10, the cost of insuring the profession was £241m – a £15m rise on 2008/09.
Gary Horswell, managing director of Ntegrity, said: ‘This picture will be a worry to solicitors already being tested by the business climate. If it transpires that claims volumes and costs increase in the way anticipated, it will have a fairly immediate impact on premiums as insurers are no longer able to rely on historic levels of investment income to balance the books. Claims will have to be covered by premiums.’
Some 18% of insurers polled by Ntegrity expected that the number of claims on solicitors’ PII policies will increase substantially, while 64% predicted a small increase in claims.
Comments
Indemnity Insurance
It could be dangerous for the reputation of the profession if PI policies become unreliable. Once insurers start wriggling out of paying claims, where does this leave a client who is owed money by a negligent solicitor/ firm that isn't good for the money without an insurance policy?
Well, who'd have thought it?
Well, who'd have thought it? Insurers trying to avoid liability-amazing (not).
What this! Solicitors are possibly facing negligent claims
Insurers are beginning to challenge solicitors over the terms of their professional indemnity insurance (PII) policies amid early signs that the profession is facing a wave of negligence claims.
I thought Solicitors were the best. See the old argument regrading Will Writing.
http://www.lawgazette.co.uk/news/consumers-think-all-will-writers-are-so...
Now i am sure there is hardly any argument about Solicitors saying that they should be the only ones writing Wills as Solicitors are not always right as this information aboves states that Insurers are increasingly worried about the amount of negligence going on.
Not here to bash but i was upset when i read the Will Writing topic and the amount of negative comments from solicitors saying Will Writers dont know what they are doing and yet i read this now.
Please as a member of the public how can i believe what you solicitors are saying when i see this.
If you're not here to bash ... then don't!
The trouble with the public is that they only see what they want to see. The article does not say that "Insurers are increasingly worried about the amount of negligence going on" but that they are concerned about the number of "claims" being brought by the public - as ever, a public wanting to get-rich-quick from an easy and over-regulated target. A claim has to be successful if negligence is to be asserted - sadly (from a waste of effort perspective only) most claims fail. If the profession did not have to provide the public with a profession-funded insurance policy, like most other work sectors don't, then the insurers' attentions would turn on fraudulent home and contents claims, or car claims (as is usally the case). Just because the insurers are commenting today on law firms (and tomorrow it could be another sector of their insurance services) does not follow that negligence amongst solicitors is rife - it is certainly more the exception than the rule. Touch wood ... I have never had a single claim brought against me and I have seen thousands of clients to date. If some chancer should try to make a fast-buck I will not consider my reputation, or that of the profession, tarnished by one from several thousands!
Finally, if you don't trust solicitors then take your chance in the unregulated and uninsured legal markets which are still in their infancy, and let us all hope that you don't need to bring a claim for negligence which will have no hope of reimbursing you!
Insurers
I think if the Insurers knew the way the Solicitors really behaved, and the shortcuts they take, the Practice Rules they ignore, and the outsourcing and untrained staff they use to carry out legal work, the premiums would be far higher. Just as well the profession closes ranks and does not police itself diligently and openly.
Maybe that explains something?
y o y o y?
Please explain your basis for your misinformed comment. Is this a comment about all firms? Or just one you are peeved about ... probably got a bill you didn't want to pay, eh??? ALL firms are audited EVERY year in the greatest detail. Very few outsource anything. I have worked in the financial sector, the accountancy profession, the public sector and the mainstream corporation sector. Other than accountants, I am not aware of any profession that is scrutinised, regulated or policed as diligently and openly as solicitors. If you are aware of a firm that ignores the Law Society's Practice Rules then I am sure you will be raising it direct with the Law Society (and presumably have already done so?). And I presume you are not an insurer otherwise you would not make them out to be so ignorant of the service they provide.
solicitors are the only ones who do not use disclaimer clauses
Solicitors wear their heart on their sleeves.
They are the only professionals not to have a disclaimer clause - agents, surveyors, will writers, doctors, dentists - they all do.
Lawyers don't.And yet they also charge the lowest of professional fees too, for deals worth hundreds of thousands of pounds.
Then when bucket shops, or factory style outfits dumb down and have the logic "for every 20 we do only 1 will claim so it is still worth doing" the majority of law firms pay the price for these ever increasing outfits.
You also have clients wanting a rock bottom price and the legal world cut their own throats and agree.
SOLUTION
The Government needs to regulate legal services to be only handled by solicitor firms employing a core minimum of solicitors. Legal Execs and Licenced conveyancers must be employed by Solicitor Firms to be able to practice.
Strict fines and criminal sanction for non-solicitors practicing law for profit.
Then solicitors can then once again know that those unqualified around them are scrutinised and they can get on doing the execllent job they do, putting up their fees to something more sensible as non-qualified will not be going in too cheap.
Along those lines.
To yoyoy
I worked at a Factory conveyancer for a number of years. They consistently broke Practice Rules, cut corners and ignored regulations. So there is nothing misinformed about my comment thank you. Their reasoning behind their actions was that if they obeyed the rules they would be at a disadvantage, they did what they did because everyone else was in their view acting likewise.
When I reported them to the SRA they were not interested, despite the fact I had three years of notes, examples and cases for them to refer to.
Res ipsa loqiteur.
Pot and Kettle spring to mind!
So why are the premiums for Solicitors PII going up?
http://www.yorkshireeveningpost.co.uk/news/Leeds-solicitor-jailed-for-st...
Perhaps it’s because some are not doing their job properly or perhaps a few dishonest ones are spoiling the party for the others.
http://www.lancashiretelegraph.co.uk/news/darwen/4886534.Darwen_solicito...
All professions have good and bad practitioners. Solicitors are no different. Perhaps if they were all good at their job there wouldn’t be any claims. I’m sure the same can be said of some Will Writers.
So, Solicitors can spend as much time bad mouthing those who ‘steal’ work from them (i.e. Will Writers, Conveyancers, other Solicitors, etc.) but in the end it all rings hollow when some of their own appear to be no better.
The answer is that PII cover
The answer is that PII cover should not be compulsory.
The Client should be advised if the firm they choose has it, so an informed choice can be made, but if the firm does not and are personally liable , surely the client should be entitled to choose to use that firm.
This would have the added bonus that claims would probably be defended more strongly than by the Insurers who usually use a large firm, which passes it to a junior inexperienced member of staff who has targets to meet and therefore makes a meal of it.
If the firms themselves were the defenders claims would be properly defended. It is also likely that,as there is no insurance pot to tempt the chancers, the number of claims would decrease.
PII insurance should not be a
PII insurance should not be a choice it needs to be compulsory. In the legal industry they must let the public have peace of mind if they have aproblem then they have an avenue to follow.
What would happen if PII was not used and 30 yrs down the line a member of the public had a problem and lets say the legal professional they used is retired etc and they cannot afford to pay any claims against them, what happens then the public are left picking up the pieces.
Also if there was no PII the public would have to get LEGAL advice to prosecute another LEGAL mess up. Now in my time i have seen and heard countless stories about one solicitor not suing another solicitor (like some kind of old boys club rule) then it makes the whole affair messy time consuming and generally make the oublic even more wary of leagal services.
Also on another note i read another comment how the government should only allow solicitors to do ANY legal work so that they could put up their charges to a more reasonable level. What the hell kind of comment is that Solicitors charge a heck of a lot of money now for services which many of the public cannot afford this leaves the LEGAL AID open to abuse from charging high rates for things covered by that.
I personally know a friend who new wife wants to adopt his children and needed legal aid to help as she couldnt afford to hire a legal person to help. I mean 2 court hearings and some research and charged Legal Aid £5000 for that.
Also on a more personal note my parents went to see a solicitor for a straightforward standard Will (you know the simple ones everything to spouse then if that failed down to children in equal shares) he wanted to charge them £450 + VAT for 45 mins consultation and to give them 2 pieces of white paper for them to sign. Luckily i heard about it before they paid it and sorted out a Will writer to do it for them for £140.
This is why there is a business out there for people who can do things cheaper and just as well and not get charged extortiante fees for it. How can a Solicitor or Barrister adequately defend charging these kind of fees.
don't use a will writer. enough!
us lawyers do so much correcting of wills due to will writers, it is annoying not profitable.
use a solicitor for all legal work. otherwise be warned as the work will be defective. you won't know until when it counts.false economy.
dont talk utter b******s
dont talk utter b******s solicitors like to think they are the only ones get over yourselves i am sure there are plenty of Will Writers better than some of you and you just dont like competition. Plus Will Writers have had to change clients wills done by solicitors and they were utter crap. Plus just search the net for cases against solicitors who screw over clients in multiple ways.
Forecast of Snow (Deep Snow)
Looks like October 2010 is going to be worse then October 2009.
The SRA needs to get in quick and remind those private firms who take on the burden of insuring solicitors that they will be bounced out of the market if they start this little game.
They also need to get some contingency plans in place. It may become neccesary to quickly return to SIF.
I think that we will find that they will move very very quickly indeed, once the City of London "big boys" are threatened with stratospheric premiums, as they may well be, if this articled is correct.
With respect to other bloggers, the position of Will Writers is not the most important point about this article. Massively hiked insurance premiums could destroy the profession. That is the point.
you are right
I agree totally with you this needs to be sorted for you guys asap. And the legal profession is more than Will writing. I work as a Willwriter and i have many friends who are solicitors who also use me to do some of thier Will Writing work (nothing wrong with that). But PII is a huge burden for solicitors and will writers and needs to be sorted out fast