Outsourcing 'has PI issues' - Professional Indemnity Insurance for Solicitors

10/10/2008

There may be Professional Indemnity (PI) insurance issues associated with outsourcing legal work, it has been asserted.

Writing for the Times, Stephen Denyer explains that there are "interesting questions" which arise when clients are contracted out to a third party.

Should the work result in a loss being incurred, he claims that doubt may be created as to where and with whom the liability lies.

"There are interesting questions here about the allocation and extent of liability of all players involved," he tells the publication.

He adds: "Major law firms carry PI cover which may not extend to outsourcing service suppliers."

Despite this, he contends that the prospect of contracting work out to third parties is becoming "increasingly compelling" for many legal practitioners.

Robert Bass, Claims Director at PYV, comments: "The law of contract has always been very clear on the issue of sub-contracting and whilst it may be possible for a third party to bring a claim in tort directly against a sub-contractor, the primary (and easiest) route to a successful claim is via the original party with whom you contracted. Whilst a recovery from a sub-contractor may be possible thereafter, I would suggest that great care should be taken to ensure sub-contractors are of sufficient quality and integrity so as not to compromise your business and reputation."

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PYV are one of the UK's leading providers of professional indemnity insurance. This news article has been produced by Adfero in collaboration with PYV and its unauthorised use is not permitted.

(c) 2008 Adfero Ltd.

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