Risk report for the law firm that is looking uninsurable

Just in time

Firm X’s insurer had a consistent loss ratio on this risk between 2001 and 2013: 500% (for every £1 premium received by the insurer, it paid out £5 in claims). Enough was enough, and the insurer decided to throw in its hand. No other insurer showed any appetite to step in.

The firm claimed there had just been one rotten apple in the barrel, but the insurance market had lost faith. The broker brought us in to produce a risk report which would reassure other prospective insurers. What we found was that it was not just one rotten apple: the firm was fully dysfunctional. But we could see solutions to the problems, and we gave the firm concrete recommendations.

Firm X went back to its existing insurer, armed with the clear action plan we had given it for turning itself around. On 30th September, with a £1 million excess and a large premium, the existing insurer agreed to give it another go.

Why were we able to do the necessary analysis?  Since 2003 we have specialised in advising law firms on risk issues.  We are not compliance or Lexcel consultants;  we are practising solicitors focussed on the law relating to professional liability and professional regulation.  We have many years’ experience of defending professional negligence claims: that has given us a nose for problem files.  We have been involved in the management of substantial law firms: we can sense where the cracks may be.  We have developed lines of questioning, tools and techniques that enable us to see through the ‘presenting issue’, and diagnose a law firm’s true state of health.

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