The Solicitors Regulation Authority has urged firms in the final throes of their emergency insurance period to make immediate plans to leave the market.
Of the 277 firms that notified the SRA they had failed to secure professional indemnity insurance cover by 1 October, 136 have so far secured a new policy.
The remaining 141 now have less than five weeks – to 29 December – to obtain insurance or face closure. They are currently in the middle of a 60-day cessation period during which they can remain in business – and still seek insurance – but must not take on any new instructions.
On Friday, the SRA wrote to all firms within the extended policy period (EPP) to remind them of their obligations and responsibilities and offering help if they do want to wind down their practice.
Mike Haley, SRA director of supervision, said: ‘We’re aware of the different plans some of them have, such as merging with another firm or selling their business, but all need to know that when the EPP ends, they will no longer have insurance and therefore will not be able to undertake any reserved legal activities.
‘Of course, it could be that these firms do secure a new policy between now and 29 December, and nearly half of those who entered the EPP have done just that. But there is a danger that firms do not plan for the worst, and that could put their clients’ interest at risk, meaning we would have to step in.’
The EPP was introduced for the first time this year to replace the assigned risks pool as part of the SRA’s financial protection policy.