Acquired firm's PII claims 'could be poison pill' - Professional Indemnity for Solicitors

6/11/2008

As difficulties in the wider financial markets impact upon the legal sector, it could be the smaller firms - and the solicitors that work for them - that will particularly struggle to cope, in part due to the cost of Professional Indemnity Insurance (PII).

Such is the assertion of the Times where in a recently published article, it was reported that although law firms of all sizes are likely to develop problems in the coming months, larger institutions are likely to have the managerial background in order to battle through the credit crises.

Rather it is the smaller firms, particularly those which focus on residential and second-tier commercial property, that are said to be on track for problems due to increases in costs and the unavailability of bank lending.

Furthermore, it was claimed that such organisations entered the new PII year having to pay costlier premiums, in particular those that focus heavily on conveyancing or have a poor claims history.

And while the publication points out mergers could see law firms grow in terms of size and resources, this may still result in difficulties. It claimed that the acquiring firm will often automatically take on responsibility for the PI claims of the company it has taken over.

This is something, it was suggested, that can prove to be the "ultimate poison pill".

Meanwhile, the Law Gazette recently reported that small legal practices may be set to find PII is harder to obtain as a number of major providers have withdrawn themselves from the market.

However, Clive Sutton, secretary of the PII committee at the Sole Practitioners Group, claimed that there continues to be cover available for such legal practitioners.

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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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