Engagement Terms: only 9% of firms never include clause

More than a third of top law firms now routinely limit their liability contractually - with little or no resistance from clients - a survey of half the UK's top 100 firms revealed this week.


A further 51% said they sometimes limit liability, while only 9% never do so, according to research by Liverpool law firm Legal Risk.


Legal Risk partner Frank Maher said: 'We have been helping a lot of firms with terms of engagement that limit liability, from international practices to high street firms. The feedback has been that there is no problem with clients.


'The very large institutional clients may dig their heels in, but clients usually do not have unlimited liability in their own sphere, and they do not expect it of their advisers.'


The appointment of risk management experts has risen sharply in the top firms, according to the research, with 29% now employing a dedicated risk specialist, compared to 7% in 2004. There has also been a dramatic drop in the number of firms placing responsibility for risk management in the hands of one partner -from 69% in 2004 to 16% last year. A quarter of firms now have partner committees responsible for managing risk.


Firms are also more thorough in carrying out checks before taking on partner hires, the research found. Nearly 80% now check a partner's claims record before taking them on, compared to around 68% in the previous year. Four-fifths verify a solicitor's disciplinary record - a fifth more than in 2004 - while more than three-quarters check successor practice liability, compared to 55% in the previous year.


Mr Maher added that the appointment of risk management specialists could lead to a drop in premiums: 'The cost of insurance is the third largest overhead of any firm. I have recently heard of an Australian firm that has saved 40% on its insurance through risk management.'