Desperate firms unable to secure insurance because of the pandemic can try to negotiate an extra 90-day survival window under revised guidance issued by the Solicitors Regulation Authority yesterday.
Currently firms who have not renewed must either enter a 30-day extended policy period and 60-day cessation period to arrange cover, or close down. The SRA says it will now allow firms to agree with their insurer a doubling of the 90-day period after a policy ends. If insurers agree to an extension then firms will need to apply to the SRA for a waiver in the rules.
Insurers can make it a condition of any extension that firms pay premiums up front. Firms will need to confirm to the SRA what additional premium payments have been made.
Those that cannot agree an extension will have only the prescribed periods in which to secure PII – if they cannot do so, they must notify the SRA and close.
The SRA says solicitors have reported practical difficulties in trying to arrange PII since the lockdown began. Some have not been able to contact their broker because operations have been suspended, while others need more time to get government financial support. Key personnel in some firms have been unable to complete the renewal process due to illness or caring responsibilities.
Law Society president Simon Davis said he was delighted the SRA had responded to the Society's request to provide solicitors with greater flexibility.
'The insurance market was already hardening before the before the pandemic, and the lockdown seems likely to throw up new problems for firms trying to secure the requisite cover,' he said. 'The SRA’s speedy and positive action creates space for firms to arrange extra time to resolve issues.'
Meanwhile, the SRA has reiterated that solicitors who have been furloughed can work pro bono, subject to conditions. If solicitors are employed by an SRA authorised firm, that firm may be able to organise such work and allow the work to be covered by its PII. Solicitors and their employer must ensure that arrangements are in line with the government’s job retention scheme.