Firms have been destroyed by taking over other practices and accidentally taking on their insurance risk under the ‘successor practice’ provisions of the SRA Minimum Terms and Conditions of Insurance.
The ‘successor practice’ issue requires the clarity of mind that comes from deep legal expertise and experience. We have been advising on it since 2003. We continue to advise regularly on how to avoid triggering it (or occasionally, how to ensure that it is triggered).
Marry in haste, repent at leisure
A well-established niche law firm was taking over another practice with a large volume of work. They thought about instructing us but they decided the pressure to do the deal, which was time-critical, was too great.
It didn’t take long for them to discover the true nature of what they had bought: the firm found that it had become successor practice with a significant claims exposure. Although not a large firm, they found themselves with a £1 million excess.
Had they sought our advice before doing the deal, which would have cost them less than £2,000, it would have been possible for them to avoid becoming successor practice with millions of pounds of liability exposure and the future of the firm at stake.
We also advise on dispute resolution on successor practice issues.
The coverage issues on mergers and closures do not stop at the successor practice issue. And there are wider regulatory issues to take into account. Our complementary expertise in Professional Regulation enables us to advise on those wider issues: confidentiality, ownership of files, notices to be given to the SRA and how to handle the transfer of clients to the new practice.
For useful links see our Resources section here.
For specialist legal advice on Successor Practices please contact Frank.
0345 330 6791 Frank.Maher@legalrisk.co.uk