For a profession that grew accustomed to alarming volatility in its indemnity costs, the solicitors’ PII market remains gratifyingly benign. Premiums are steady, capacity is plentiful and competition appears healthy. Yet this week’s Gazette roundtable heard talk that the underlying risk landscape is shifting – and in some areas, deteriorating – more rapidly than pricing reflects. Even seasoned market practitioners have been surprised by the speed and depth of recent reductions.
So what is there to be concerned about? Conveyancing conducted under pressure during the pandemic has not produced the avalanche of claims some expected. But our experts are keeping a weather eye on the perceived ‘dumbing down’ of this high-volume, low-margin sector. ‘There’s a lot of people out there who don’t necessarily know what they’re doing,’ said one, bluntly.
In wills, probate and trusts, meanwhile, asset inflation is driving costlier disputes. Folk eyeing unearned riches become more contentious as the sums in issue increase. Human nature, I suppose.
The roundtable also heard concerns about internal firm resilience, as the Gazette’s PII roundtables generally do. But two of these are relatively novel this year.
First is the worryingly high number of firms that continue to rely on interest earned on client account to buoy their finances. This is an inherently unstable income stream, and especially so now that the Ministry of Justice is consulting on seizing much of the money.
Second is the rapid but haphazard adoption of generative AI, which also has the potential to destabilise the market. A report by Clyde & Co found 72% of respondents believe AI increases professional services risk; while the Solicitors Regulation Authority warns of cyber‑exposure and confidentiality failings linked to inadequately superintended AI tools.
Against this backdrop, the current soft market begins to look less like a comfortable plateau and more like a fragile outcrop that is unlikely to endure indefinitely.
Law firms should utilise this period of respite wisely, counsel our experts. Strengthen governance and sort out succession. Scrutinise retainer management, audit AI use and tighten supervision at all levels. Engage early – and candidly – with brokers and insurers.
A soft market is not a safe market, but rather a pause before the cycle turns. Turning is what cycles do, but this one could turn sooner than expected.
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