As of the 6 October, many medium-large law firms in the UK will take the opportunity to break free from the shackles that have regulated the way they manage their business which hasn’t changed for hundreds of years.
Under the amendment to the Legal Services Act 2007, ownership and investment restrictions will be lifted, allowing non-lawyers to effectively have a large stake in an alternative business structure (ABS) and a seat on the board. In addition, there’s consolidation in the legal services sector where UK and international law firms have merged to create global professional practices.
Over the previous 12 months Brit Insurance has witnessed an increase in claims from corporate law firms where they have attempted to diversify the range of professional services they offer compared with the number of claims made by specialist or boutique firms.
According to Mark Figes, class underwriter for professional indemnity at Brit Insurance – leading the UK and international team - many law firms must think more carefully about the challenges they now face in managing newly merged as well as multi-disciplinary practices where new owners come from outside the legal profession.
“As a general rule of thumb, as people start dabbling, the risk goes up. And the risks that these new types of businesses face are two fold – many of their clients are trading in difficult conditions that have increased the risk of business failure and bankruptcy. This has led to an increase in PI claims against professional advisors as the claimants hope they’ll succeed in getting substantial payouts for purported negligent advice. The second business jeopardy is that many of the partners of these ABS practices may lack relevant management experience of working in such structures and with multi-disciplinary teams such as lawyers, accountants and loss adjusters, for example.
“As a result, we’ve responded to help these practices manage such risks by working closely with specialist professional indemnity agency Libra in determining the PI policies required to mitigate such exposures whilst at the same time allowing greater flexibility and freedom for solicitors practices to manage their businesses and maintain a stable environment for their premiums in the future,” he says.
Ed Pickard, managing director, Libra - a professional indemnity insurance agency - adds: “We are delighted to be working with one of the world’s most respected and experienced PI insurers who have demonstrated significant leadership in the professional advisor market segment by increasing their appetite for excess layer risks.”
The core team at Brit Insurance has increased in capability and experience with the recent hire of Patrick Ruffell as a specialist underwriter of this class who has over a decade of UK and professional services sector experience in understanding risks, procedures and protocols.
Figes concludes: “This is an exciting time in the evolution of legal firms in the UK and internationally and we are delighted to be at the forefront in assisting these practices through a combination of innovative PI products supported by a world class team to help meet the needs and requirements of the legal services sector.”
Notes to Editors
1. High quality (300 dpi) photograph of Mark Figes is available on request.
2. Mark Figes is also available for radio and TV interviews
About Brit Insurance
Brit Insurance is an international general insurance and reinsurance group specialising in commercial insurance. The Group writes a diverse portfolio of insurance and reinsurance, offering worldwide protection. The scope is wide-ranging: from small and medium sized traders to the largest multinational corporations; from manufacturers to professional services; from shops to satellites. Our distribution model is centred on brokers and intermediaries. Reflecting where our customers trade, we are organized into three strategic business units – Global Markets, UK and Reinsurance – which have access to our underwriting platforms including Brit Insurance Limited and our Lloyd’s syndicate, Brit Syndicate 2987.
Established in 2000, the company provides professional indemnity insurance claims handling, risk management and general administration services to a number of medium-large UK and international law firms. The firm has substantial experience in the professional services sector, assisting law firms to identify and manage commercial risks within a highly regulated market. Libra is a trading name of Tindall Riley Limited.