Tuesday 21 January 2014

Law Firms Fume at Being Identified as 'Uninsurable'

Late on Friday the Law Society Gazette published an article entitled ‘Mass Cull on the High Street as 136 firms closed’ It’s opening paragraph stated ‘The Solicitors Regulation Authority confirmed today that 136 firms were forced to close because they could not secure professional indemnity insurance’ 

The headline and wording has now been somewhat softened, possibly in attempt to appease some of those firms who are annoyed that the article implied that that the firms listed were forced to close down due to being unable to obtain insurance.  

Comments quickly sprung up accusing the article of being misleading. One commenter stated  ‘Grants was an organised closure with full run off agreed and paid and an organised closure. This had nothing to do with the SRA. I would say that this firm accepted the position and has organised a successful closure, not because of the inability to obtain insurance but because of legal aid cuts’ 

Grants on their own website state: ‘Please note: Our firm has been wrongly included in lists of practices that were not offered terms for Professional Indemnity Insurance, thus suggesting this as the reason for our closure.  This is abjectly not the case.  Grants Solicitors LLP were offered terms from our existing broker and one other, but Members chose to close the practice of their own volition.  We will be taking this up with the Solicitors Regulation Authority as they were well aware of the facts but disappointingly have failed to indicate this in their widespread communications.’ 

One of the commenters, Ian Keith Nelson said ‘I am furious. I notified the SRA last year that I was retiring and as a result I would not be renewing my licence to practice as a sole practitioner however my firm of Nelson Nichols still gets included in a list of firms that could not get SI cover. As usual, the SRA has decided that every firm that has closed has been forced to do so. Are solicitors  not allowed to retire without being accused of being incapable of running their business.’ 

It is probable that a good number of firms had either already made arrangements or ceased trading and entered into some form of Insolvency. The absence of interventions would also indicate that this is the case.

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