We shall attempt to keep this newsletter as virus-free as possible, most Covid-19 issues
having been (more than) amply covered elsewhere.
However, we do need to think about the risk landscape after the lockdown ends. With the Bank of England predicting the worst financial slump in 300 years, there will be financial stress, indeed some firms are failing already. Attention may have to be given to reporting to the Solicitors Regulation Authority (SRA), restructuring, confidentiality issues in any negotiations with other firms, transfer of files, wills and deeds, client money and Conditional Fee Agreements (CFAs) to new entities or other firms, the insurance consequences, including successor practices, run-off cover, a variety of personal liabilities (not just premiums and excesses), and excess layer cover.
Many clients will also be stretched financially, giving rise to questions of whether you risk being unpaid, or sue for fees and risk counterclaims, and we may also see litigation of the type seen after the 2008 financial crisis (particularly by lenders).
We hope we shall not see the re-emergence of unrated insurers which appeared after that and then collapsed. That said, many firms would not be in existence now if they had not bought a (worthless) piece of paper in the form of an unrated insurer’s certificate of insurance enabling them to continue in practice and fight another day; in the aftermath, we advised a number of firms on making claims on the Financial Services Compensation Scheme, finding a number of ways round the eligibility limits.
Fee earner response to pressure and stress may give rise to errors which raise issues of honesty and integrity, leading to regulatory action. Shortage of transactional work, in particular, may lead to dabbling in unfamiliar work types.
We have many years’ experience of providing advice to firms on the legal aspects of issues such as those outlined above.