Taking cover: small firms missing out
Law firms who cannot secure cover by the 1 October cut-off will be entered into the Law Society’s ‘assigned risk pool’, paying for their cover with a percentage of the firm’s turnover – a move that can severely handicap profitability.
According to funding business Syscap, insurers are looking to limit the risk of covering small law firms in the middle of a recession. In addition, law firms saw an increase in negligence claims at the start of the recession in 2009, as clients tried to recover steep falls in the value of assets by suing their legal advisers, claiming they had provided negligent advice.
‘Insurers are now scrutinising smaller law firms far more carefully...even those with clean claims history,’ explains Syscap chief executive Philip White. ‘In most cases, small firms are simply being forced to accept higher premiums.’