Many firms have already encountered a harder market when obtaining cover with not only significant increases in premiums and excesses, but those with significant claims issues and with exposure on conveyancing are finding it harder to obtain cover at all, or are considering going into run-off rather than risk a far higher run-off premium after renewal. Insurers have been securing personal guarantees for excesses and run off premiums.
There are many substantial claims, particularly from development and other fractional investment schemes, and concerns that a recession may result in increased claims activity. Examples may include clients blaming solicitors over difficulties extricating themselves from contracts and leases, and there may be fallout from remote working with attendant inadequate supervision and control on deadlines and timescales. Corporate failures may also lead to claims by liquidators or their assignees.
Solicitors should therefore pay attention to protecting their assets. Incorporation alone may not suffice. Many pay insufficient attention to avoiding the risk of the assumption of personal liability. Appointment as executor or trustee gives rise to personal liability, hence an increase in the number of law firms setting up trust corporations.