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The Solicitors' Indemnity Insurance Rules 2010 is replaced by the SRA Indemnity Insurance Rules 2011 as of 1 October 2011.

Go to SRA Handbook

The Solicitors' Indemnity Insurance Rules 2009 were replaced on 1 October 2010 by the Solicitors' Indemnity Insurance Rules 2010.

The Solicitors' Indemnity Insurance Rules 2008 were replaced on 1 October 2009 by the Solicitors' Indemnity Insurance Rules 2009.

The Solicitors' Indemnity Insurance Rules 2008 were amended on 31 March 2009 as part of a general updating of the rules to introduce firm-based regulation and legal disciplinary practices as provided for in the Legal Services Act 2007.

 
 

Introductory commentary

1 Introduction

  • 1.1

    The Law Society introduced arrangements for solicitors' professional indemnity insurance with effect from 1 September 2000 which achieved broad coverage for the profession and its clients, whilst at the same time allowing the profession access to a competitive, commercial insurance market.

  • 1.2

    At its meeting on 13 April 2000, the Council of the Law Society resolved, among other matters, that:

    1. With effect from 1 September 2000, the regulated profession in private practice will be required under the Solicitors' Indemnity Insurance Rules 2000 to secure professional indemnity insurance complying with certain Minimum Terms and Conditions, from any of the Qualifying Insurers.

    2. Each Qualifying Insurer will be required to enter into a Qualifying Insurer's Agreement with the Law Society.

  • 1.3

    The Solicitors' Indemnity Insurance Rules 200810 were approved by the Council on 22 May 2008, andBoard of the Solicitors Regulation Authority (SRA) with the concurrence of the Legal Services Board. They apply in respect of the indemnity period beginning on 1 October 200810.

2 Summary of the arrangements

  • 2.1

    Principals in private practice are free to secure professional indemnity insurance either by dealing direct with Qualifying Insurers or via their insurance brokers or other intermediaries. The Solicitors Indemnity Fund (SIF) has not underwritten new risks since 1 September 2000 but continues to run off the existing claims account. Since 1 September 2007, it has also provided cover in respect of firms which ceased to practise on or after 1 September 2000 without a successor practice (as defined in clause 8.2 of the Minimum Terms and Conditions), after the six-year run-off cover provided under their qualifying insurance has expired.

  • 2.2

    Evidence of professional indemnity insurance that complies with the Minimum Terms and Conditions is a requirement for obtaining a practising certificate. Solicitors are not permitted to practise without current professional indemnity insurance in force.

  • 2.3

    Each firm is obliged to arrange its professional indemnity insurance with one or more Qualifying Insurers, or to be admitted to the Assigned Risks Pool (see paragraph 4 below). That insurance must comply with the Minimum Terms and Conditions set out in Appendix 1 to the Rules.

  • 2.4

    The Rules require firms to take out a policy which includes cover in accordance with the Minimum Terms and Conditions for that part of their practice carried on from offices located in England and Wales. They do not apply to any part of the practice of the firm carried on from offices located outside England and Wales (although rule 15 of the Solicitors' Code of Conduct 2007 does apply in such cases). However, the cover in relation to the practice carried on from offices located in England and Wales must extend to acts or omissions wherever in the world they occur, and wherever in the world the claim is brought.

  • 2.5

    Each firm which is not a body corporate is required to secure professional indemnity insurance with Qualifying Insurer(s) to a limit of indemnity of £2,000,000 any one claim. Most bodies corporate, such as LLPs, are required to obtain such insurance with Qualifying Insurer(s) to a limit of indemnity of £3,000,000 any one claim.

  • 2.6

    Cover in excess of these amounts (top-up cover) is not subject to the Rules, and firms are free to make whatever arrangements they wish. Firms should always consider whether the minimum level of cover is adequate for their needs. Arrangements for top-up cover may be made with any insurer, not just a Qualifying Insurer.

  • 2.7

    Firms are free to negotiate with Qualifying Insurer(s) the level of excess - i.e., the amount of each claim that the firm itself would have to meet - that applies to their policy. The Minimum Terms and Conditions provide that, if a firm does not pay the part of any claim covered by the excess, the insurer will pay that part of the claim, but recover that amount from the Principals of the firm.

  • 2.8

    The Minimum Terms and Conditions require that a policy of Qualifying Insurance must provide at least 6 years' run-off cover if the firm's practice ceases during an indemnity period. However, if there is a "successor practice" (as defined in clause 8.2 of the Minimum Terms and Conditions) to that firm's practice, no run-off cover will be triggered. Instead, the Qualifying Insurance of the successor practice will be required to cover claims against the ceased practice. Under Rule 12.6, the Council may determine the eligibility of any successor firm for the purposes of the Assigned Risks Pool (see paragraph 4 below).

3 Minimum Terms and Conditions

  • 3.1

    In exercising its statutory functions the Law Society must act in such manner as it reasonably believes to be in the public interest. To this end the Council resolved on 23 June 1999 that the Society would, so far as possible, seek to replicate in the current arrangements the breadth of cover formerly provided by SIF.

  • 3.2

    The Minimum Terms and Conditions are not drafted as a policy, but rather as an expression of the scope of minimum coverage to be afforded to firms in respect of their regulated business. Qualifying Insurers are free to issue their own policy so long as they provide at least the coverage set out in the Minimum Terms and Conditions. As a safety net for both the public and for firms, Qualifying Insurers have committed that the coverage set out in the Minimum Terms and Conditions will apply as a minimum, regardless of the wording of the policy actually issued. The Minimum Terms and Conditions appear as Appendix 1 to the Rules.

4 The Assigned Risks Pool

  • 4.1

    It is recognised that some firms may not be able to secure terms from Qualifying Insurers, or may not be able reasonably to afford those terms which are available to them. This might be as a result of a poor claims record, a major claim being outstanding but not yet decided, or other risk factors. It is not the intention for such firms to be left without cover, at least in the short term. To this end, an Assigned Risks Pool (ARP) has been established to accept those risks which fall into this category.

  • 4.2

    Firms may not be insured through the ARP for more than, in aggregate, 12 a maximum of 24 months in any four consecutive indemnityfive year periods (or 25 months in the case of a firm insured through the ARP for the whole of the indemnity period from 1 September 2003 to 30 September 2004). Those firms receiving cover under the ARP will be required to pay a high premium, will be inspected and monitored (at the firm's expense), and may be required to attend approved courses and to implement specified practice management measures. It is envisaged that firms will apply for cover in the ARP only if they are unable to obtain insurance from a Qualifying Insurer in the open market. If a firm which has been insured through the ARP is unable to obtain cover with a Qualifying Insurer in the open market by the end of the maximum permitted period, the firm will have to cease practice.

  • 4.3

    The cover provided through the ARP is underwritten by each Qualifying Insurer in the same proportion as its proportion of premium income from underwriting the compulsory cover bears to the total of all premium income written by all the Qualifying Insurers for the compulsory cover in the indemnity period in question.

  • 4.4

    The premium for entry into the ARP is calculated in accordance with a formula set out in Appendix 2 to the Rules, and is based on a firm's gross fees. An additional premium is payable in the event that run-off cover is triggered.

  • 4.5

    In certain circumstances (for example, where a firm without Qualifying Insurance fails to apply to be insured through the ARP within the time period specified in the Rules), a default premium, 20% higher than the normal ARP premium, will be payable for the whole of the indemnity period in question.

  • 4.6

    In addition, in keeping with the duty to safeguard the interests of the public, the ARP will cover claims against firms which do not, for whatever reason, secure their own insurance arrangements in accordance with the Rules, including run-off cover in the case of firms which have no policy of qualifying insurance in place when they cease practice. Where firms fail to effect cover, however, the ARP Manager is entitled to recover the amount of any claims and any associated costs, plus interest, from the principals of the firm concerned.

  • 4.7

    The ARP is managed by a manager appointed by the SRASolicitors Regulation Authority. The functions of the ARP manager are currently carried out by Capita Commercial Insurance Services Limited on behalf of the SRASolicitors Regulation Authority.

5 Arrangements with St Paul Travelers

  • 5.1

    The Law Society has entered into a joint venture with St Paul Travelers. The purpose of these arrangements is to ensure that cover is offered to all sectors of the profession, alongside the commercial market. That does not mean that every firm will necessarily receive a quotation. St Paul Travelers - like any other individual Qualifying Insurer - is free to reject firms for reasons particular to that firm such as a poor premium payment recordwith unacceptable claims records. But it will not exclude firms only if their individual record is unacceptable, not because of the type of firm that they are, or the type of work that they do.

6 Changes for the 201008-201109 Indemnity Period

  • 6.1

    A number of small amendments to the Rules have been made this year. As well as the normal annual date changes, the following changes have been made:

    • 6.1.1

      The definition of "Eligible Firm" at Rule 3 has been amended to make it clear that a Firm is not eligible for cover from the Assigned Risks Pool indefinitely, to set out the new maximum time that a Firm may obtain cover in the Assigned Risks Pool and to prevent Firms which are unable to obtain cover outside of the Assigned Risks Pool from commencing business;

    • 6.1.2

      The commentary to Rule 6, in relation to the insolvency of a Qualifying Insurer, has been amended to make it clear that it ceases to be a Qualifying Insurer for the purposes of writing new policies and the Firms insured by that Insurer must seek alternative cover;

    • 6.1.3

      The Rules (in particular, Rule 10.2) relating to applying to the Assigned Risks Pool have been amended to make it clear that a Firm wishing to commence Practice may not do so without first obtaining Qualifying Insurance outside the Assigned Risks Pool;

    • 6.1.4

      The Rules and the Minimum Terms and Conditions have been updated to incorporate references to the office for Legal Complaints (including the Legal Ombudsman) where appropriate; and

    • 6.1.5

      The Minimum Terms and Conditions contained in Appendix 1 to the Rules have been amended:

      • (a)

        for the establishment of the new office of the Legal Ombudsman to provide that an Insurer is liable for certain awards made by the Legal Ombudsman but that an Insurer will have no liability in respect of a determination by the Legal Ombudsman for a Firm to refund any fees paid to an Insured;

      • (b)

        to allow Firms that would normally be the subject of a Succession to elect to be either insured under the run-off cover set out in paragraph 5.1 of the Minimum Terms and Conditions, or insured as a Prior Practice (provided there is appropriate insurance in place in relation to that Successor Practice). The definition of "Prior Practice" has been amended accordingly; and

      • (c)

        to permit the exclusion of cover in respect of Firm's legal liability arising in the course of the Firm’s practice from its use of or access to the HM Land Registry network under a Network Access Agreement (save for the payment of fees to HM Land Registry in the ordinary course).

  • 6.1

    The changes to the Rules and the Qualifying Insurer's Agreement are relatively few this year. As well as the normal annual date changes, the following changes have been made:

    • 6.1.1

      Qualifying Insurers are now required to use their best endeavours to ensure that an intermediary who acts as an agent of the Qualifying Insurer discloses that fact and whether it does so on an exclusive basis; and

    • 6.1.2

      the definition of "Policy Default" in the Rules has been amended to make it clear that being in Policy Default constitutes a failure on the part of each Principal of a Firm, as well as the Firm itself; similar changes have been made elsewhere in the Rules.

  • 6.2

    In addition, as a result of changes brought about by the Legal Services Act 2007 (the LSA), it is currently expected that, with effect from 1 March 2009, legal disciplinary practices (LDPs) will be permitted. The Rules will therefore need to be amended to take account of LDPs, and other new regulatory arrangements, such as the requirement for partnerships to become recognised bodies. A number of changes will need to be made to the Rules and the Minimum Terms and Conditions to reflect this fact. The Solicitors Regulation Board proposes to make these changes in good time before 1 March 2009, by way of amendment to the Solicitors' Indemnity Insurance Rules 2008.

  • 6.3

    The scope of the amended Rules is expected to be largely unchanged. They will apply in respect of firms which are:

    • recognised by the SRA; or
    • not recognised by the SRA, but where the SRA is the only approved regulator which could grant them recognition.

    It is thought that these changes will directly affect the indemnity insurance arrangements of few if any firms. However, firms which are considering taking advantage of the new structures permitted under the LSA will in the future need to consider the indemnity insurance implications.

7 Legal Services Act 2007

87 About the Rules

  • 87.1

    The Solicitors' Indemnity Insurance Rules 201008 were approved by the SRA Board, withCouncil on 22 May 2008, and the concurrence of the Legal Services BoardMaster of the Rolls was obtained on 18 June 2008. They apply in respect of the indemnity period beginning on 1 October 201008.

  • 87.2

    Commentary is provided after a number of provisions of the Rules where it is thought that this might be helpful, and is printed in italics. However, the commentary does not form part of the Rules, is provided for guidance only, and does not affect the meaning or interpretation of the Rules in any way. The Solicitors Regulation Authority reserves the right to amend or supplement the commentary at any time. The Appendices to the Rules appear in normal type.

  • 87.3

    References in the Rules to the Council include any committee or person to whom any of the functions of the Council may be delegated by virtue of section 79 of the Solicitors Act 1974.

98 Contact details for further information

  • 98.1

    If you are in doubt about any aspect of the indemnity insurance arrangements, you may contact the Client Protection Policy Unit of the Solicitors Regulation Authority on 01527 504487. Information about the arrangements, including a list of Qualifying Insurers, is provided on the website of the Solicitors Regulation Authority, at www.sra.org.uk.

Solicitors' Indemnity Insurance Rules 200820092010

The commentary provided with these Rules does not form part of the Rules, is provided for guidance only, and does not affect the meaning or interpretation of the Rules in any way.

PART 1: GENERAL

1 Authority and commencement

  • 1.1

    These Rules are made by the Solicitors Regulation Authority Boardby the Council with the concurrence of the Master of the Rolls under sections 31 and 3731, 37, 79 and 80 of the Solicitors Act 1974 (as amended by the Legal Services Act 2007),andsection 9 of the Administration of Justice Act 1985 (as amended by the Legal Services Act 2007) and section 89(3) of the Courts and Legal Services Act 1990with the concurrence of the Master of the Rolls under sections 31 and 37 of the Solicitors Act 1974 and paragraph 16 of Schedule 22 of the Legal Services Act 2007 and the concurrence, where requisite, of the Lord Chancellor under paragraph 16 of Schedule 22 of the Legal Services Act 2007. with the approval of the Legal Services Board under Schedule 4 Part 3 of the Legal Services Act 2007.

  • 1.2

    These Rules come into force on 1 October 2008 20092010.

  • 1.3

    These Rules require Solicitors, Registered European Lawyers, Registered Foreign Lawyers and Recognised Bodies and their Managers in Private Practice in England and Wales to take out and maintain professional indemnity insurance with Qualifying Insurers with effect from 1 October 2008 20092010.

  • Commentary:

    These Rules apply to:

    • Solicitors
    • Registered European Lawyers
    • Registered Foreign Lawyers and
    • Recognised Bodies and their Managers

    carrying on Private Practice in England and Wales as a Firm at any time after 1 October 2008 20092010. Refer to the definitions in Rule 3 for guidance on the exact meanings of these terms.

  • 1.4

    These Rules will apply to any Indemnity Period beginning on or after 1 October 2008 20092010.

  • Commentary:

    Before 1 September 2000, Firms were required to take out insurance with the Solicitors Indemnity Fund. Since 1 September 2000, Firms have been required to take out insurance in accordance with the Solicitors' Indemnity Insurance Rules. From 1 October 2008 20092010, Firms must take out insurance in accordance with these Rules with one or more Qualifying Insurers. Continuing arrangements dealing with past claims on the Solicitors Indemnity Fund are covered in the Solicitors' Indemnity Rules.

  • 1.5

    The Solicitors Indemnity Insurance Rules 2007 20082009 shall not apply in respect of any Indemnity Period beginning on or after 1 October 200820092010, but they shall remain in force in respect of the Indemnity Period from 1 October 20072008 to 30 September 20082009 inclusive (as amended by the Solicitors’ Indemnity Insurance (Amendment) Rules 2009 with effect from 31 March 2009) subject to the provisions of Rules 19.1(a), 19.1(b), 19.1(c) and 19.1(d) below.

  • Commentary:

    You should refer to previous Solicitors' Indemnity Insurance Rules in relation to earlier Indemnity Periods since 1 September 2000. However, you should refer to Rules 19.1(a) to 19.1(d) in relation to time limits in respect of an application for a waiver of the provisions of the Solicitors' Indemnity Insurance Rules 2000 to 2008 20092010.

2 Citation

  • 2.1

    These Rules may be cited as the Solicitors' Indemnity Insurance Rules 2008 2009.

3 Definitions and interpretation

  • 3.1

    In these Rules, unless the context otherwise requires:

Appointed Person
means any person who is designated as a fee-earner in accordance with any arrangements made from time to time between the Firm and the Legal Services Commission pursuant to the provisions of the Access to Justice Act 1999, regardless of whether the services performed for the Firm by that person in accordance with Rule 4.1 are performed pursuant to such arrangements or otherwise, and who is engaged by the Firm under a contract for services in the course of the Private Practice of the Firm.
Commentary:

Under Rule 4, work carried out by a designated fee-earner may be covered under the Qualifying Insurance of the Firm for which they do that work.

Approved Regulator
means a body listed in the first column of the table in paragraph 1 of Schedule 4 to the Legal Services Act 2007 (whether or not that paragraph has been brought into force), or designated as an approved regulator by an order under Part 2 of that Schedule.
Assigned Risks Pool
means the arrangements by which an Eligible Firm may obtain professional indemnity insurance against civil liability by means of an ARP Policy on the terms set out in Part 3 of these Rules.
Commentary:

The Assigned Risks Pool is designed to ensure that professional indemnity insurance will be available to all Eligible Firms. However, it is important to note that premiums payable to the Assigned Risks Pool are intended to be high. Refer to Appendix 2 to the Rules for the method of calculation of the ARP Premium.

ARP Manager
means the manager of the Assigned Risks Pool being any person from time to time appointed by the Society to carry out all or any particular functions of the ARP Manager or the Society and any such person.
ARP Policy
means a contract of professional indemnity insurance issued by the ARP Manager on behalf of Qualifying Insurers to an Eligible Firm in the Assigned Risks Pool including where the context permits a Policy provided to a Firm in Default.
Commentary:

A copy of the standard-form ARP Policy is available on the website of the Solicitors Regulation Authority at www.sra.org.uk, and is also available from the Solicitors Regulation Authority. Contact details appear at the end of the introductory commentary.

ARP Premium
means the premium calculated in accordance with Part 1 of Appendix 2 to these Rules, ARP Default Premium means the premium calculated in accordance with Part 2 of Appendix 2 to these Rules and ARP Run-off Premium means the premium calculated in accordance with Part 3 of Appendix 2 to these Rules.
ARP Run-off Policy
means a contract of professional indemnity insurance issued by the ARP Manager on behalf of Qualifying Insurers to a Run-off Firm in the Assigned Risks Pool.
Authorised Insurer
means:
  • (a)

    a person who has permission under Part IV of the Financial Services and Markets Act 2000 to effect or carry out contracts of insurance of a relevant class;

  • (b)

    a person who carries on an insurance market activity, within the meaning of section 316(3) of that Act;

  • (c)

    an EEA Firm of the kind mentioned in paragraph 5(d) of Schedule 3 to that Act, which has permission under paragraph 15 of that Schedule (as a result of qualifying for authorisation under paragraph 12 of that Schedule) to effect or carry out contracts of insurance of a relevant class; or

  • (d)

    a person who does not fall within paragraph (i)(a), (ii)(b) or (iii)(c) and who may lawfully effect or carry out contracts of insurance of a relevant class in a member state other than the United Kingdom

where relevant class has the meaning set out in section 87(1B) of the Solicitors Act 1974 and provided that this definition must be read with section 22 of the Financial Services and Markets Act 2000, any relevant order under that section and Schedule 2 to that Act.
Commentary:

Under the Solicitors Act 1974, it is only permitted to enter into arrangements with authorised insurers (including relevant Lloyd's syndicates), as defined under section 87(1A) of that Act. A Qualifying Insurer must be authorised to write new business on the date on which a Policy incepts, but the Policy will remain a Policy of Qualifying Insurance until it expires, even if the Qualifying Insurer then ceases to write, or be authorised to write, new insurance business.

Council
means the Council of the Society.
Difference In Conditions Policy
means a contract of professional indemnity insurance, made between one or more Qualifying Insurers and a Firm, which provides cover including the Minimum Terms and Conditions as modified in accordance with paragraph 2 of Appendix 3 to these Rules.
Eligible Firm
means any Firm which is eligible to be in the Assigned Risks Pool, being any Firm other than:
  • (a)

    a Firm that has been in the Assigned Risks Pool for twelve months or more in the four Indemnity Periods immediately prior to the date from which cover is sought, without the prior written approval of the Council unless:twenty four months or more (or twenty five months or more in the case of a Firm which was in the Assigned Risks Pool for the whole of the Indemnity Period from 1 September 2003 to 30 September 2004) in the four Indemnity Periods immediately prior to the date from which cover is sought, without the prior written approval of the Council; or

    • (i)

      the date from which cover is sought is on or before 1 October 2010; and

    • (ii)

      immediately prior to that date the Firm is in the Assigned Risks Pool, without the prior written approval of the Council, for less than twenty four months or more (or twenty five months or more in the case of a Firm which was in the Assigned Risks Pool for the whole of the Indemnity Period from 1 September 2003 to 30 September 2004) in the four Indemnity Periods immediately prior to thethat date from which cover is sought, without the prior written approval of the Council; or, in which case the Firm is eligible to be in the Assigned Risks Pool only for any unexpired part of the twenty four or twenty five month period (as the case may be);

  • (b)

    a Firm determined by the Council not to be an Eligible Firm by reason of its being treated as one single Firm with one or more other Firms already in the Assigned Risks Pool for the purposes of Rule 12.5 or Rule 12.6; or

  • (c)

    subject to Rule 12.3, a Firm that at the end of any Indemnity Period to which these Rules apply is in Policy Default; or

  • (d)

    a Firm which, at the time it applies to enter the Assigned Risks Pool, already has in place Qualifying Insurance outside the Assigned Risks Pool for the Indemnity Period in which that Firm requests cover through the Assigned Risks Pool to commence.

  • (e)

    (e) a Firm that has never had in place Qualifying Insurance except through the Assigned Risks Pool.

Commentary:

Firms cannot remain insured through the Assigned Risks Pool indefinitely. A Firm which at 1 October 2010 has been in the Assigned Risks Pool during the previous four indemnity periods is eligible for cover through the Assigned Risks Pool for a maximum of twenty four months (or twenty five months in the specified circumstances) less the aggregate number of months in which that Firm was insured through the Assigned Risks Pool during those previous four indemnity periods. For example, a Firm which has been insured through the Assigned Risks Pool for the 2004/052005/062007/08 and 2006/072008/09 Indemnity Periods will not be eligible to be insured through the Assigned Risks Pool for the 2009/10 Indemnity Period2010/11 Indemnity Period. Additionally, for the 2010/2011 indemnity year, a Firm which has not been insured through the Assigned Risks Pool in any of the four indemnity periods expiring on 1 October 2010 will, as from that date be entitled to be insured through the Assigned Risks Pool for a maximum of twelve months during the four indemnity years prior to the date from which cover is sought.

Subject to any waiver granted under Rule 19, any Firm which no longer fulfils the definition of an Eligible Firm is therefore required to obtain Qualifying Insurance from a Qualifying Insurer outside the Assigned Risks Pool, or to cease Practice.

A newly created Firm not previously regulated by the Solicitors Regulation Authority or a Non-SRA Firm which elects (and is accepted) to become regulated by the Solicitors Regulation Authority must obtain Qualifying Insurance in the open market outside the Assigned Risks Pool.

In addition, a Firm is not eligible to join the Assigned Risks Pool if it has already obtained Qualifying Insurance from a Qualifying Insurer outside the Assigned Risks Pool for the relevant Indemnity Period.

Firm
means:
  • (a)

    Partnership of two or more personsRecognised Sole Practitioner; or

  • (b)

    any Recognised Body (as constituted from time to time, ); or

  • (c)

    any solicitor or Registered European Lawyer who is a sole practitioner, unless that sole practitioner is a Non-SRA Firm; or

  • (d)

    any Partnership (as constituted from time to time) which is eligible to become a Recognised Body and which meets the requirements applicable to Recognised Bodies set out in rules 14.01, 14.03 and 14.04 of the Solicitors' Code of Conduct 2007, unless that Partnership is a Non-SRA Firm,

whether before or during any relevant Indemnity Period), .

consisting of:

  • (i)

    one or more Solicitors and/or Registered European Lawyers and/or Recognised Bodies; or

  • (ii)

    one or more Solicitors and/or Registered European Lawyers, together with one or more Registered Foreign Lawyers; or

  • (iii)

    one or more Registered European Lawyers together with one or more non-registered European lawyers, with or without one or more Solicitors and/or Registered Foreign Lawyers, as permitted for practice in England and Wales by rule 12 of the Solicitors' Code of Conduct 2007; or

  • (iv)

    one or more Registered European Lawyers together with one or more non-registered European lawyers and one or more Recognised Bodies, with or without one or more Solicitors, as permitted for practice in England and Wales by rule 12 of the Solicitors' Code of Conduct 2007; or

  • (b)

    any sole practitioner being either a Solicitor or Registered European Lawyer; or

  • (c)

    any Recognised Body.

Commentary:

If you are unsure whether you or your business fall within this definition, you should consult the Solicitors Regulation Authority. Contact details appear at the end of the introductory commentary.

Firm in Default
means a Firm that has failed to obtain Qualifying Insurance outside the Assigned Risks Pool and which,
  • (a)

    in the case of an Eligible Firm, has failed to apply in accordance with these Rules to be admitted into the Assigned Risks Pool before either the start of any Indemnity Period to which these Rules apply or the start of its Practice, whichever is the later; or

  • (b)

    in the case of a Firm which is not an Eligible Firm, is a Firm which is carrying on or continuing to carry on a Practice without Qualifying Insurance outside the Assigned Risks Pool; or

  • (c)

    in the case of a Run-off Firm, is a Run-off Firm which has failed to make an application in manner prescribed by these Rules to be issued with an ARP Run-off Policy; or

  • (d)

    is a Firm which is a Firm in Default by virtue of Rule 10.4,.

    or a Firm which, having previously obtained Qualifying Insurance, has failed to obtain alternative Qualifying Insurance when required to do so in accordance with Rule 6.

Commentary:

A Firm In Default, and each Principal in that Firm, will be required to pay the ARP Default Premium, and/or the ARP Run-Off Premium to the Assigned Risks Pool, and each Principal in that Firm will have committed a disciplinary offence by having breached these Rules. Refer to Part 4 of these Rules for the provisions that apply to a Firm In Default.

Indemnity Period
means the period of one year starting on 1 September 2000, 2001 or 2002, the period of 13 calendar months starting on 1 September 2003, or the period of one year starting on 1 October in any subsequent calendar year.
Commentary:

Under the Qualifying Insurer's Agreement, each Policy is required to expire at the end of an Indemnity Period. It is envisaged that any change to these Rules or to the Minimum Terms and Conditions would take effect from the start of an Indemnity Period, so that at any one time, all Policies in force comply with the same version of these Rules and the Minimum Terms and Conditions.

Qualifying Insurers are permitted under the Qualifying Insurer's Agreement to issue a Policy covering more than one Indemnity Period, provided that the Policy expires at the end of a subsequent Indemnity Period, and provided that the terms of the Policy are amended if required to reflect any change in the Rules or the Minimum Terms and Conditions while the Policy is in force.

Insolvency Event
means in relation to a Qualifying Insurer:
  • (a)

    the appointment of a provisional liquidator, administrator, receiver or an administrative receiver; or

  • (b)

    the approval of a voluntary arrangement under Part 1 of the Insolvency Act 1986 or the making of any other form of arrangement, composition or compounding with its creditors generally; or

  • (c)

    the passing of a resolution for voluntary winding up where the winding up is or becomes a creditors' voluntary winding up under Part IV of the Insolvency Act 1986; or

  • (d)

    the making of a winding up order by the court; or

  • (e)

    the making of an order by the court reducing the value of one or more of the Qualifying Insurer's contracts under section 377 of the Financial Services and Markets Act 2000; or

  • (f)

    the occurrence of any event analogous to any of the foregoing insolvency events in any jurisdiction outside England and Wales.

Limited Liability Partnership
means a limited liability partnership incorporated under the Limited Liability Partnerships Act 2000.
Manager means:
  • (a)

    a Partner in a Partnership;

  • (b)

    a member of a Limited Liability Partnership; or

  • (c)

    a director of a company.

Minimum Terms and Conditions
means the minimum terms and conditions with which a Policy of Qualifying Insurance is required by these Rules to comply a copy of which is annexed as Appendix 1 to these Rules.
Commentary:

All Qualifying Insurers agree under the Qualifying Insurer's Agreement to issue Policies which comply with the Minimum Terms and Conditions. However, under Rule 4 it remains the duty of each Firm and each Principal within that Firm to ensure that the Policy issued to it is issued by an insurer which is a Qualifying Insurer for the Indemnity Period in question, and that it complies with the Minimum Terms and Conditions. The SRA does not approve Qualifying Insurers, nor does it review their policy terms.

The standard form ARP Policy does comply with the Minimum Terms and Conditions.

In addition, each Firm should satisfy itself that the professional indemnity insurance that it has in place is sufficient. This may mean that the Firm takes out additional insurance over and above that provided under the Minimum Terms and Conditions. Any such "top-up" cover is outside the scope of these Rules, and does not have to be taken out with a Qualifying Insurer.

Most recognised bodies are required to obtain cover complying with the minimum terms and conditions and with a sum insured of £3 million, rather than £2 million for other Firms. The definition of "Relevant Recognised Body" in clause 8.2 of the Minimum Terms and Conditions indicates which recognised bodies this requirement applies to.

Non-SRA Firm
means a sole practitioner, Partnership, Limited Liability Partnership or company which is not authorised to practise by the Solicitors Regulation Authority, and which is either:
  • (a)

    authorised or capable of being authorised to practise by another Approved Regulator; or

  • (b)

    not capable of being authorised to practise by any Approved Regulator.

Partner and Partnership
refer to means an unincorporated Firm, and not to in which persons are or are held out as partners and does not include a Firm incorporated as a limited liability partnership.Limited Liability Partnership and Partner means a person who is or is held out to be a partner in a Partnership.
Commentary:

A limited liability partnership is treated for these purposes as a Recognised Body, rather than as a partnership.

Period Of Default
means in relation to a Firm in Default the period starting with the date when such Firm first became a Firm in Default and ending with the date when it ceased to be a Firm in Default.
Policy
means a contract of professional indemnity insurance made between one or more persons, each of which is a Qualifying Insurer, and a Firm, including where the context permits an ARP Policy and an ARP Run-off Policy.
Policy Default
means a failure on the part of a Firm or any Principal of that Firm:
  • (a)

    to pay for more than two months after the due date for payment all or any part of the premium or any other sum due in respect of a Policy (including without limitation any payment due under Rule 14.1); or

  • (b)

    to pay for more than two months after the due date for payment all or any part of any ARP Premium, any ARP Default Premium, or any ARP Run-Off Premium, or any instalment payable in relation thereto whether payable to the ARP Manager or otherwise; or

  • (c)

    to reimburse within two months a Qualifying Insurer (including the ARP Manager on behalf of Qualifying Insurers) in respect of any amount falling within a Firm's Policy excess which has been paid on an insured's behalf to a claimant by a Qualifying Insurer or by the ARP Manager.

    For the purposes of this definition, the due date for payment means, in respect of any Policy or any payment to be made under any Policy:

    • (i)

      the date on which such payment fell due under the terms of the Policy or any related agreement or arrangement; or

    • (ii)

      if a Firm was first required under these or any previous Rules to effect such a Policy prior to the date on which it did so, the date if earlier on which such payment would have fallen due had such Policy been effected by the Firm when it was first required to do so under these Rules or any previous rules.

Commentary:

Principals are committing a disciplinary offence if they or their Firm is in Policy Default, whether as a result of failing to pay premium when demanded or as a result of failing to take out a Policy when required to do so. In addition, their Firm will cease to be an Eligible Firm for the purpose of taking out or renewing an ARP Policy.

Practice
means the whole or such part of the Private Practice of a Firm as is carried on from one or more offices in England and Wales.
Commentary:

The Rules require Firms to take out Policies which include cover in accordance with the Minimum Terms and Conditions for that part of their Practice carried on from offices located in England and Wales. They do not apply to any part of the Practice of the Firm carried on from offices outside England and Wales (although rule 15.26 of the Solicitors' Code of Conduct 2007 does apply in such cases). However, the cover in relation to the Practice carried on from offices located in England and Wales must extend to acts or omissions wherever in the world they occur, and would therefore include, for example, a Principal based in a Firm's London office who travels to Paris to advise a client.

If you are unsure whether you or your business fall within this definition, you should consult the Solicitors Regulation Authority. Contact details appear at the end of the introductory commentary.

Principal
means:
  • (a)

    where the Firm is or was:

    • (i)

      a sole practitioner - that practitioner and any person held out as a Partner of that practitioner;

    • (ii)

      a Partnership - each Partner of that Firm and any person held out as a Partner;

    • (iii)

      a Recognised Body which is a company with a share capital - each director of that body and any person held out as a director and any person company and any solicitor, Registered European Lawyer or Registered Foreign Lawyer who:

      • (A)

        is held out as a director; or

      • (B)(A)

        beneficially owns the whole or any part of a share in such Recognised Bodythe company; or

      • (C)(B)

        is the ultimate beneficial owner of the whole or any part of a share in such Recognised Bodythe company.

    • (iv)

      a Recognised Body which is a company without a share capital – each director of that bodycompany and any person held out as a director and any person solicitor, Registered European Lawyer or Registered Foreign Lawyer who:

      • (A)

        is held out as a director; or

      • (B)

        is a member of such Recognised Body; orthe company; or

      • (C)(B)

        is the ultimate owner of the whole or any part of a body corporate or other legal person which is a member of such Recognised Bodythe company;

    • (v)

      a Recognised Body which is a limited liability partnershipLimited Liability Partnership – each member of that body, and any person Limited Liability Partnership, and any solicitor, Registered European Lawyer or Registered Foreign Lawyer who is the ultimate owner of the whole or any part of a body corporate or other legal person which is member of such Recognised Bodythe Limited Liability Partnership.

  • (b)

    where a Recognised Body is a partner or held out as a partner, all such persons as are referred to in body corporate or other legal person is a Partner in the Firm, all solicitors, Registered European Lawyers or Registered Foreign Lawyers who are within paragraph (a)(iii) of this definition (including sub paragraphs (A) and (BC) thereof), paragraph (a)(iv) of this definition (including sub paragraphs (A) and (BC) thereof), andor paragraph a(v) of this definition.

Commentary:

It is the duty of each Principal, under Rule 4, to ensure that the Firm has Qualifying Insurance at all times.

Private Practice
includes without limitation all the professional services provided by a Firm including acting as a personal representative, trustee, attorney, notary, licensed insolvency practitioner or in any other role in conjunction with a Practice, and includes services provided pro bono publico, but does not include:
  • (a)

    Practice carried on by a Solicitor or Registered European Lawyer in the course of employment with an employer other than a Firm; or

  • (b)

    Practice carried on through a Non-SRA Firm; or

  • (c)(b)

    discharging the functions of any of the following offices or appointments:

    • (i)

      judicial office;

    • (ii)

      Under Sheriffs;

    • (iii)

      members and clerks of such tribunals, committees, panels and boards as the Council may from time to time designate but including those subject to the Tribunals and Inquiries Act 1992, the Competition Commission, Legal Services Commission Review Panels and Parole Boards;

    • (iv)

      Justices' Clerks;

    • (v)

      Superintendent Registrars and Deputy Superintendent Registrars of Births, Marriages and Deaths and Registrars of Local Crematoria;

    • (vi)

      such other offices as the Council may from time to time designate; or

  • (d)(c)

    Practice consisting only of:

    • (i)

      providing professional services without remuneration for friends, relatives, or companies wholly owned by the solicitor or Registered European Lawyer's family, or registered charities; or

    • (ii)

      administering oaths and taking affidavits.

Commentary:

If you are unsure whether you or your Practice fall within this definition, you should consult the Solicitors Regulation Authority. Contact details appear at the end of the introductory commentary.

Qualifying Insurance
means a single Policy which includes the Minimum Terms and Conditions, or more than one Policy which, taken together, include the Minimum Terms and Conditions, and each of which includes the Minimum Terms and Conditions except only in relation to the Sum Insured (as defined in the Minimum Terms and Conditions).
Commentary:

All Firms are required to take out and maintain, as a minimum, Qualifying Insurance. This may take the form of a single policy, or policies written by more than one Qualifying Insurer which together provide the minimum cover required under these Rules.

Qualifying Insurer
means an Authorised Insurer which has entered into a Qualifying Insurer's Agreement with the Society which remains in force for the purposes of underwriting new business at the date on which the relevant contract of Qualifying Insurance is made.
Commentary:

A list of all Qualifying Insurers appears on the website of the Solicitors Regulation Authority at www.sra.org.uk, and is also available from the Solicitors Regulation Authority. Contact details appear at the end of the introductory commentary.

Qualifying Insurer's Agreement
means an agreement in such terms as the Society may from time to time prescribe setting out the terms and conditions on which a Qualifying Insurer may provide professional indemnity insurance to solicitors and others in Private Practice in England and Wales.
Commentary:

A copy of this standard form agreement, which each Qualifying Insurer is required to enter into, is available on request from the Solicitors Regulation Authority. Contact details appear at the end of the introductory commentary.

Recognised Body
means a body corporate for the time being recognised by the Solicitors Regulation Authority under section 9 of the Administration of Justice Act 1985. 1985 and the SRA Recognised Bodies Regulations [2009].
Recognised Sole Practitioner
means a solicitor or Registered European Lawyer authorised by the Solicitors Regulation Authority under section 1B of the Solicitors Act 1974 to practise as a sole practitioner.
Registered European Lawyer
means an individual registered with the Society under regulation 17 of the European Communities (Lawyer's Practice) Regulations 2000.
Registered Foreign Lawyer
means an individual registered with the Society under section 89 of the Courts and Legal Services Act 1990.
Rules
means these rules as from time to time modified or amended.
Run-off Firm
means a Firm or former Firm which has ceased to practise in circumstances where, in accordance with paragraph 5.1 of the Minimum Terms and Conditions, run-off cover is not required to be provided by any Qualifying Insurer.
Society
means the Law Society of England and Wales.
Solicitor
means a person who has been admitted as a solicitor and whose name is on the roll (within the meaning of the Solicitors Act 1974) and who practises as a solicitor whether or not he or she has in force a practising certificate as referred to in that Act and also includes practice under home title of a former Registered European Lawyer who has become a solicitor.
Solicitors Regulation Authority
means the Solicitors Regulation Authority carrying out regulatory functions assigned to the Law Society as an Approved Regulator.
Special Measures
means such measures as the Council may from time to time require with a view to reducing the risk of claims being made against a Firm in the future or with a view to enabling a Firm in the future to obtain Qualifying Insurance outside the Assigned Risks Pool.
Supplementary Run-off Cover
means run-off cover provided by the Solicitors Indemnity Fund following the expiry of run-off cover provided to a Firm in accordance with these Rules or otherwise under a Policy (but subject to compliance with the Minimum Terms and Conditions).
  • 3.2

    Interpretation

    In these Rules, unless the context otherwise requires:

    • (a)

      the singular includes the plural, and vice versa;

    • (b)

      a reference to a person includes a body corporate, partnerships, and other unincorporated associations or bodies of persons;

    • (c)

      a reference to a Rule is to a Rule forming part of these Rules;

    • (d)

      a reference to any statute, statutory provision, code or regulation includes:

      • (i)

        any subordinate legislation (as defined by section 21(1) of the Interpretation Act 1978) made under it; and

      • (ii)

        any provision which it has superseded or re-enacted (with or without modification) or amended, and any provision superseding it or re-enacting it (with or without modification) or amending it either before, or at the date of the commencement of these Rules, or after the date of the commencement of these Rules;

    • (e)

      references to the Society and to the Council include the Solicitors Regulation Authority and the Legal Complaints Service, and any body or person which succeeds in whole or in part to the functions of the Society, the Council, the Solicitors Regulation Authority or the Legal Complaints Service, and any delegate of the Society, the Council, the Solicitors Regulation Authority, the Legal Complaints Service or any such body or person;

    • (f)

      headings are for ease of reference only and shall not affect the interpretation of these Rules;

    • (g)

      explanatory notes and commentary shall be ignored in interpreting these Rules; and

    • (h)

      the appendices to these Rules form part of these Rules.

    These Rules will be governed by and interpreted in accordance with English law.

PART 2: RESPONSIBILITY AND MONITORING

4 Obligation to effect insurance

  • 4.1

    All Firms carrying on a Practice during any Indemnity Period beginning on or after 1 October 2008 20092010 must take out and maintain Qualifying Insurance under these Rules.

  • 4.2

    A solicitor or Registered European Lawyer is not required to take out and maintain Qualifying Insurance under these Rules in respect of work done as an employee or whilst otherwise directly engaged in the Practice of another Firm (including without limitation as an Appointed Person), where that Firm is required by these Rules to take out and maintain Qualifying Insurance.

  • 4.3

    Run-off Firm must apply in accordance with these Rules to be issued with an ARP Run-off Policy.

  • Commentary:

    Under these Rules, Firms have a continuing obligation to ensure that they have Qualifying Insurance in place at all times with effect from 1 October 2008 20092010. Refer to the definitions of Practice, amongst others, to establish whether a Firm falls within the scope of these Rules. Firms should also check that any insurance that they take out in order to comply with these Rules (as opposed to any "top-up" cover) is taken out with a Qualifying Insurer. A list of Qualifying Insurers appears on the website of the Solicitors Regulation Authority at www.sra.org.uk, and is also available from the Solicitors Regulation Authority. Contact details appear at the end of the introductory commentary.

    Firms should note in particular that work carried out by an Appointed Person for that Firm may be covered by the Firm's Policy, whether that person is engaged as an employee or on a contract for services.

    If a Firm cannot obtain a Policy from a Qualifying Insurer it should apply to join the Assigned Risks Pool in accordance with Part 3 of the Rules, if it is an Eligible Firm. If it is not an Eligible Firm, it must cease Practice.

    Note that, under the Minimum Terms and Conditions, a Policy, once taken out, cannot be cancelled before the end of an Indemnity Period unless:

    • (1) the Policy is an ARP Policy and the Firm has replaced it with a Policy of Qualifying Insurance outside the Assigned Risks Pool; or
    • (2) the Firm merges with another Firm and a Policy of Qualifying Insurance is in place for the merged Firm; or
    • (3) it subsequently transpires that the Firm was not in fact required to take out and maintain a Policy under these Rules; or
    • (4) in the case of an ARP Policy, it subsequently transpires that the Firm was not was not, or has ceased to be, an Eligible Firm; or
    • (5) the Qualifying Insurer which issues the Policy becomes the subject of an Insolvency Event, and the Firm has replaced the Policy with another Policy of Qualifying Insurance.

    The effect of cancellation in the circumstances described in (3) or (4) above is that the Firm ceases to have Qualifying Insurance in place with effect from the cancellation, and would therefore be in breach of Rule 4.1 if it were to carry on a Practice thereafter without taking out a new Policy.

    Most Recognised Bodies are required to obtain cover complying with the Minimum Terms and Conditions and with a sum insured of £3 million, rather than £2 million for other Firms. The definition of "Relevant Recognised Body" in clause 8.2 of the Minimum Terms and Conditions indicates which Recognised Bodies this requirement applies to.

  • 4.4

    The provisions of this Rule 4 shall be without prejudice to the ability of Firms to include as insureds on a Policy persons not required under these Rules to be insured.

5 Responsibility

  • 5.1

    Each Firm carrying on a Practice during any Indemnity Period beginning on or after 1 October 2008 20092010, and any person who is a Principal of such a Firm, must ensure:

    • (a)

      that the Firm has in place and maintains Qualifying Insurance outside the Assigned Risks Pool during any such Indemnity Period;

    or, in the case of an Eligible Firm,

    • (b)

      that the Firm has applied to enter the Assigned Risks Pool in accordance with the procedure set out in Rule 10;

    in either case before the start of any relevant Indemnity Period or the start of Practice whichever is later.

  • Commentary:

    Note that the duty to ensure that Qualifying Insurance is in place rests not just on the Firm as a whole, but also on every Principal within that Firm.

  • 5.2

    A Run-off Firm, and any person who was a Principal of that Run-off Firm immediately prior to it becoming a Run-off Firm, must ensure that the Run-off Firm has applied to enter the Assigned Risks Pool in accordance with the procedure set out in Rule 13.4(a). Making such an application does not absolve any Firm or person from any breach of Rule 5.1.

  • Commentary:

    A Firm which has continued to practise without Qualifying Insurance immediately prior to closing down is required to apply for Run-Off Cover through the Assigned Risks Pool, but the Firm and any Principal of the Firm may still face action for a breach of Rule 5.1 for practising without Qualifying Insurance.

6 Insolvency of Qualifying Insurer

  • 6.1

    If a Firm is carrying on a Practice which is being provided with Qualifying Insurance by a Qualifying Insurer (whether alone or together with other Qualifying Insurers) and that Qualifying Insurer is the subject of an Insolvency Event then, subject to any waiver under Rule 19.1, the Firm and any person who is a Principal of the Firm must ensure:

    • (a)

      that the Firm has in place Qualifying Insurance with another Qualifying Insurer which must be arranged as soon as may be reasonably practicable and in any event within four weeks of such an Insolvency Event;

    or, in the case of an Eligible Firm,

    • (b)

      that the Firm applies within that period of four weeks to enter the Assigned Risks Pool in accordance with the procedure set out in Rule 10.

  • Commentary:

    It is important to be aware that the arrangements for professional indemnity insurance put in place by the Solicitors Regulation Authority do not seek to protect Firms against the insolvency of a Qualifying Insurer. If an Insolvency Event occurs in respect of an insurer, that insurer will cease to be a Qualifying Insurer for the purposes of writing new policies and Firms insured by that insurer must effect alternative insurance in accordance with these Rules. This is because, in such circumstances, the insurer may not be in a position to pay claims in full. Any Firm which has qualifying insurance with a Qualifying Insurer which is the subject of an Insolvency Event mustis required therefore to obtain replacement cover as soon as possible, and in any event within four weeks of the Insolvency Event occurring. Having done so, a Firm should cancel the policy with the insolvent insurer and, if entitled to do so, seek a return of the premium relating to the balance of the Indemnity Period from the insurer which has become the subject of the Insolvency Event.

7 Monitoring

The Council may require from a Firm or any Principal in a Firm carrying on, or reasonably believed by the Council to be carrying on, a Practice such information and evidence as it may reasonably require to satisfy itself that such a Firm has in place Qualifying Insurance.

8 Registered European Lawyers

  • 8.1

    The special provisions contained in Appendix 3 to these Rules shall apply to a Firm that has at least one Principal who is a Registered European Lawyer.

PART 3: THE ASSIGNED RISKS POOL

9 Operation of the Assigned Risks Pool

The Assigned Risks Pool shall be managed by the ARP Manager.

10 Applying to the Assigned Risks Pool

  • 10.1

    Where a Firm carrying on a Practice has not obtained Qualifying Insurance outside the Assigned Risks Pool in respect of any Indemnity Period or part thereof to which these Rules apply it must, if an Eligible Firm, apply in accordance with the procedure set out in this Rule 10 to enter the Assigned Risks Pool, subject to Rule 10.2, before the start of the relevant Indemnity Period.

  • Commentary:

    A Firm which for any reason does not have Qualifying Insurance in place should apply to the Assigned Risks Pool before the start of the relevant Indemnity Period if it is an Eligible Firm. However, it is important to note that premiums payable to the Assigned Risks Pool are intended to be high, and Firms would therefore be prudent to seek quotations from Qualifying Insurers outside the Assigned Risks Pool before the start of an Indemnity Period.

    An ARP Policy can be cancelled if it is replaced by a Policy with a Qualifying Insurer. A return premium may be payable to a Firm which cancels an ARP Policy in these circumstances - refer to Appendix 2 for the basis on which the ARP Premium and any return premium is calculated.

    Firms should also be aware of the other consequences of being insured through the Assigned Risks Pool set out in this part of the Rules, including the need to comply with any Special Measures under Rule 10, and the limitations on eligibility set out in the definition of "Eligible Firm".

  • 10.2

    A Firm about to start carrying on a Practice which has not already obtained Qualifying Insurance outside the Assigned Risks Pool may, if an Eligible Firm, apply to enter the Assigned Risks Pool after the start of any relevant Indemnity Period. A Firm must not start carrying on a Practice without either having obtained Qualifying Insurance outside the Assigned Risks Pool or, alternatively, in the case of an Eligible Firm, without having applied in accordance with the procedure set out in this Rule 10 to enter the Assigned Risks Pool.

  • Commentary:

    Any Firm wishing to start up a new Practice must obtain Qualifying Insurance, whether in the open market with a Qualifying Insurer or throughother than the Assigned Risks Pool, before starting Practice. For the avoidance of doubt, a Firm which has not previously been regulated by the Solicitors Regulation Authority or a Non-SRA Firm that elects (and is accepted) for regulation by the SRA must also arrange Qualifying Insurance outside the Assigned Risks Pool in order to commence carrying on a Practice. Subject to this requirement, a new Firm may start Practice at any time during an Indemnity Period.

  • 10.3

    By applying to enter the Assigned Risks Pool, the Firm and any person who is a Principal of that Firm agrees to, and (if the Firm is admitted to the Assigned Risks Pool) the Firm and any person who is a Principal of that Firm shall be jointly and severally liable to:

    • (a)

      pay the ARP Premium in accordance with these Rules, together with any other sums due to the ARP Manager under the ARP Policy; and

    • (b)

      submit to such investigation and monitoring and to pay the Society's costs and expenses as referred to in Rule 11.2; and

    • (c)

      pay any costs and expenses incurred by the Society or the ARP Manager incurred as a result of any failure or delay by the Firm in complying with these Rules;

    and shall be required to implement at the expense of the Firm any Special Measures.

  • Commentary:

    Firms within the Assigned Risks Pool may be subject to a range of Special Measures. The appointed inspectors (in the first instance, the Forensic Investigations Unit of the Compliance Directorate) will visit a Firm insured through the Assigned Risks Pool to carry out investigation and monitoring of the Firm. This is in order to determine what Special Measures are appropriate for that Firm, and to ensure that those measures are fully implemented. It should be noted that the costs of investigation and monitoring by the Inspection & Investigation Directorate, costs and expenses incurred through any failure or delay by the Firm to comply, and the implementation of the Special Measures will be payable by the Firm concerned (and by any Principal of that Firm), in addition to paying the ARP Premium.

  • 10.4

    Any material misrepresentation made in an application for admission to the Assigned Risks Pool shall, subject to any waiver under Rule 19.1, render the Firm a Firm in Default for the purposes of Part 4 of these Rules. The provisions of that Part shall apply to the Firm as if that Firm had not been admitted to the Assigned Risks Pool but neither the Firm nor any Principal of the Firm shall be entitled to the refund of any ARP Premium paid to the ARP Manager. Any amount so paid shall be credited against any sums payable under Part 4 of these Rules.

  • Commentary:

    Although an ARP Policy, once issued, cannot be cancelled (unless and until a replacement Policy with a Qualifying Insurer is issued to that Firm), a Firm which makes a material misrepresentation in its application to be admitted to the Assigned Risks Pool will be nevertheless treated in the same way as a Firm in Default.

  • 10.5

    The application for admission to the Assigned Risks Pool must be made to the ARP Manager on the proposal form provided by the ARP Manager.

  • 10.6

    The applicant must state on the proposal form the date from which cover is sought. This date must not be earlier than the date on which the application is made for admission to the Assigned Risks Pool. The applicant must also provide such other information as the ARP Manager requires for the purposes of setting a premium.

  • 10.7

    If the applicant is a Firm in Default it must state on the proposal form that it is a Firm in Default and give the date of the start of the Period of Default from which retrospective cover is sought.

  • Commentary:

    The ARP Premium is calculated in accordance with a formula set out in Appendix 2, and is linked to the gross fees of the Firm concerned. It is important to note that, under Rule 15, any material misrepresentation in an application will result in the Firm being treated in the same way as a Firm In Default, including being liable to pay the ARP Default Premium.

  • 10.8

    The Firm, together with each Principal of the Firm, must ensure that the Firm's application has been made and must provide the ARP Manager with all information it reasonably requires to process the application.

  • Commentary:

    It is in the interests of the Firm and each of the Principals of that Firm to verify that the application to enter the Assigned Risks Pool has been received and that the Firm is insured. An application should be made before the start of an Indemnity Period. Failure to comply with the requirements of this Rule and Rules 13 to 15 will result in the Firm becoming a Firm in Default.

  • 10.9

    If a Firm has not received a written acknowledgement of its application from the ARP Manager 30 days after making the application, or within such other period as is stated on the proposal form, the Firm and any person who is a Principal of the Firm must seek written confirmation that the Firm's application has been received by the ARP Manager. If that written confirmation is not obtained within seven days after the end of the 30 days, or within seven days after such other period specified on the proposal form, the application shall be deemed not to have been made.

  • 10.10

    An applicant whose first application is deemed under Rule 10.9 not to have been made must, within seven days of the day when under Rule 10.9 the first application is deemed not to have been made, make a fresh application. The Firm and any person who is a Principal of the Firm must ensure that the Firm is in a position to prove to the reasonable satisfaction of the Society that the Firm's fresh application was delivered within those seven days to the ARP Manager at the address specified on the proposal form. Provided the Firm's fresh application was so delivered, the application shall be treated as having been made at the date when the Firm's first application was made. A Firm that is not in a position to prove to the reasonable satisfaction of the Society that its fresh application was so delivered shall be deemed not to have made any application.

  • 10.11

    Provided that an application or, if necessary, a fresh application, has been made in accordance with Rules 10.5 to 10.10, a Firm which is an Eligible Firm will be covered in the terms of the ARP Policy to be issued to it from the start of the relevant Indemnity Period or, in the case of a Firm to which Rule 10.2 applies, the date specified in the application, being the date specified in accordance with Rule 10.6, until whichever is the earlier of:

    • (a)

      the end of the relevant Indemnity Period; or

    • (b)

      the date on which the Firm obtains Qualifying Insurance outside the Assigned Risks Pool; or

    • (c)

      the date when the Firm ceases to be an Eligible Firm.

  • Commentary:

    An Eligible Firm which should have applied to the Assigned Risks Pool before the start of an Indemnity Period but fails to do so will have breached these Rules by failing to take out a Policy from the start of the Indemnity Period. It may make a later application, but will be liable to pay the ARP Default Premium for the Indemnity Period in question. Each Principal in an Eligible Firm which fails to make an application in time commits a disciplinary offence.

  • 10.12

    Any Firm in the Assigned Risks Pool, and any person who is a Principal of that Firm, is liable to pay to the ARP Manager the ARP Premium in respect of that Firm within thirty days of such premium being notified to it by the ARP Manager.

  • Commentary:

    It is a disciplinary offence for a Firm and for any Principal of that Firm to fail to pay the ARP Premium (including the ARP Run-off Premium) to the ARP Manager within the required 30 day period. A Firm may enter into arrangements with, for example, a premium funding company (whether offered by the ARP Manager or arranged independently) to enable it to make payments by instalments, provided that the premium is received in full by the ARP Manager from the premium funding company within the required 30 day period.

11 Special Measures

  • 11.1

    An Eligible Firm that has applied to enter the Assigned Risks Pool in accordance with the procedure set out in Rule 10 will be issued with an ARP Policy by the ARP Manager.

  • Commentary:

    A copy of the standard-form ARP Policy is available on the website of the Solicitors Regulation Authority at www.sra.org.uk and is also available from the Solicitors Regulation Authority. Contact details appear at the end of the introductory commentary.

  • 11.2

    A Firm in the Assigned Risks Pool must if and to the extent required by the Council submit to investigation and monitoring by the Society and/or its agents, including investigation and monitoring:

    • (a)

      to determine the reasons why Qualifying Insurance outside the Assigned Risks Pool was not obtained;

    • (b)

      to ascertain what Special Measures should be taken by the Firm.

    The Society's costs and expenses of the investigation and monitoring and the Society's costs and expenses of ascertaining what Special Measures should be taken and of monitoring them shall be met by the Firm and by any person who is a Principal of that Firm. The amount of such costs and expenses shall be determined by the Society which shall not be required to give any detailed breakdown thereof.

  • Commentary:

    The appointed inspectors (in the first instance, the Forensic Investigations Department of the Inspection & Investigation Directorate) will visit a Firm insured through the Assigned Risks Pool to carry out investigation and monitoring. This is in order to determine what Special Measures should be taken and are appropriate for that Firm, and to ensure that those measures are fully implemented. It should be noted that the costs and expenses of investigation and monitoring by the Inspection & Investigation Directorate and the implementation of the Special Measures (together with VAT if applicable) will be payable by the Firm concerned (including each Principal of that Firm), in addition to paying the ARP Premium.

12 Time in the Assigned Risks Pool

  • 12.1

    A Firm may leave the Assigned Risks Pool at any time after it has satisfied the ARP Manager that the Firm has obtained Qualifying Insurance outside the Assigned Risks Pool at least until the expiry of the relevant Indemnity Period.

  • Commentary:

    Refer to Appendix 2 to determine whether any return premium will be payable on leaving the Assigned Risks Pool.

  • 12.2

    Subject to Rule 12.7, a Firm may only remain in the Assigned Risks Pool so long as it is an Eligible Firm, or if it becomes a Run-off Firm.

  • Commentary:

    Firms cannot remain insured through the Assigned Risks Pool for more than 2412 months in any five year periodfour consecutive Indemnity Periods, and should therefore seek insurance in the open market with a Qualifying Insurer as soon as practicable. A Firm which is no longer an Eligible Firm (because, for example, it has already been insured through the Assigned Risks Pool for 2412 months in the last five yearsfour Indemnity Periods) must either obtain Qualifying Insurance on the open market or cease carrying on Practice.

  • 12.3

    Subject to Rule 12.7(b), a Firm in Policy Default at the end of an Indemnity Period shall be deemed to be a Firm in Default for the purposes of Part 4 of these Rules and shall not be an Eligible Firm. This Rule shall not apply in any case where the Council is satisfied that there exists a genuine dispute between the Firm and a Qualifying Insurer or the ARP Manager which makes it unreasonable for the Firm to be deemed to be a Firm in Default pending the resolution of that dispute.

  • Commentary:

    A Firm in Policy Default must remedy that default before the start of an Indemnity Period if it wishes to obtain insurance through the Assigned Risks Pool at any time during that Indemnity Period. Alternatively, it must either obtain Qualifying Insurance in the open market, or cease carrying on Practice. If a Firm believes that there is a genuine dispute which justifies that Firm not being deemed to be a Firm in Default, it should apply to the Solicitors Regulation Authority as soon as possible before the start of the next Indemnity Period. Contact details appear at the end of the introductory commentary.

  • 12.4

    A Firm that is no longer an Eligible Firm must either have Qualifying Insurance outside the Assigned Risks Pool or forthwith cease carrying on Practice.

  • 12.5

    Where the Practice of a Firm (the Original Firm) which has at any time been in the Assigned Risks Pool is split between two or more Firms (the Successor Firms), the Council may in its absolute discretion treat the Successor Firms or any of them and the Original Firm as being a single Firm for the purposes of determining whether the Successor Firms or any of them are or remain an Eligible Firm.

  • 12.6

    Where the Practice of a Firm (the Original Firm) which has at any time been in the Assigned Risks Pool is merged with, acquired, absorbed, or by any other means taken over by a Firm (the Successor Firm) the Council may in its absolute discretion treat the Successor Firm and the Original Firm as being a Single Firm for the purposes of determining whether the Successor Firm is or remains an Eligible Firm.

  • Commentary:

    The purpose of this Rule is to ensure that the time limit on participation in the Assigned Risks Pool cannot be avoided by a merger or reconstitution of that Firm. A Firm which was not previously eligible to join the Assigned Risks Pool will not necessarily become an Eligible Firm by virtue of changes in the composition of a Firm. Firms which are unsure about their eligibility following any such change should consult the Solicitors Regulation Authority. Contact details appear at the end of the introductory commentary.

  • 12.7

    The Council shall have power in any particular case or cases:

    • (a)

      to allow a Firm to remain in or to re-enter the Assigned Risks Pool after any date when the Firm would otherwise cease to be an Eligible Firm; and

    • (b)

      to permit a Firm to be admitted into or remain in or to re-enter the Assigned Risks Pool notwithstanding that the Firm is in Policy Default on such terms and conditions as the Council may prescribe including the taking of steps by the Firm by a specified date or dates to remedy the Policy Default;

    and when such power is exercised the Firm shall continue to be an Eligible Firm for so long as the Council may from time to time permit and provided that it complies with any such terms and conditions.

  • Commentary:

    It is envisaged that these powers would be exercised only in exceptional circumstances. Any application seeking the exercise of this power should be made to the Solicitors Regulation Authority at least three months before the Firm in question would otherwise cease to be an Eligible Firm.

PART 4: FIRMS IN DEFAULT

13 Eligibility of Firms in Default

  • 13.1

    At any time during the Period of Default a Firm in Default is entitled to be admitted to the Assigned Risks Pool and to be issued with an ARP Policy in accordance with Rule 13.2, subject to the provisions of this Rule 13.

  • 13.2

    A Firm in Default is entitled to be admitted to the Assigned Risks Pool if:

    • (a)

      it was an Eligible Firm at the start of the Period of Default;

    • (b)

      had it been admitted to the Assigned Risks Pool at the start of the Period of Default, its admission at that time would not have rendered it ineligible to be admitted to the Assigned Risks Pool for any part of any subsequent Indemnity Period in which it was in fact admitted to the Assigned Risks Pool;

    • (b)(c)

      it has applied to join the Assigned Risks Pool in accordance with Rule 10;

    • (c)(d)

      the Firm discharges in full the ARP Default Premium calculated for the whole of the Indemnity Period or Indemnity Periods for which cover is sought within 30 days of such premium being notified to it by the ARP Manager or such longer period as the Council may allow;

    • (d)(e)

      the Firm will be subject to and comply with Rules 10.3(b) to 0 and 11.2.

  • Commentary:

    If a Firm fails to make an application to the Assigned Risks Pool at the start of an Indemnity Period, and does not have any other Policy of Qualifying Insurance in force for that Indemnity Period, it may still be eligible to be issued with an ARP Policy provided that it meets all of the requirements of Rule 13.1Rule 13.2. However, each Principal of the Firm will have committed a disciplinary offence, and the Firm and each Principal of that Firm will be liable to pay the ARP Default Premium under any ARP Policy issued.

  • 13.3

    An ARP Policy issued under this Rule may afford cover retrospectively from the start of the Period of Default until the earlier ofend of the then current Indemnity Period or, if earlier, the date on which the Firm in Default would have ceased to be an Eligible Firm, ignoring for these purposes any failure to pay the ARP Premium or the ARP Default Premium:

    • (a)

      the end of the then current Indemnity Period or, if earlier,; or

    • (b)

      the date on which the Firm in Default would have ceased to be an Eligible Firm, ignoring for these purposes any failure to pay the ARP Premium or the ARP Default Premium:; or

    • (c)

      the date on which, had the Firm in Default been admitted to the Assigned Risks Pool at the start of the Period of Default, its being covered by the Assigned Risks Pool from that time would have first caused it to have been ineligible to be admitted to the Assigned Risks Pool for any part of any subsequent Indemnity Period in which it was in fact admitted to the Assigned Risks Pool.

  • 13.4

    A Run-off Firm shall be entitled at any time following the date on which it first becomes a Run-off Firm to be admitted to the Assigned Risks Pool and to be issued with an ARP Run-off Policy, subject to the following conditions:

    • (a)

      the Run-off Firm has made an application to join the Assigned Risks Pool in manner provided by Rule 10.5 stating on the proposal form that it is a Run-off Firm and giving the date from which cover under an ARP Run-off Policy is sought;

    • (b)

      the ARP Run-off Premium is discharged in full within thirty days of such premium being notified by the ARP Manager to the Firm or such longer period as the Council may allow; and

    • (c)

      the Firm, and any person who is a Principal of that Firm, will be subject to and comply with Rule 10.3(c).

  • Commentary:

    A Run-off Firm will be eligible to be issued with an ARP Policy if it meets all of the requirements of Rule 13.4. However, each Principal of the Firm will have committed a disciplinary offence for failing to make an application to the Assigned Risks Pool for run-off cover in accordance with Rule 5.2, and the Firm and each Principal of the Firm will be required to pay the ARP Run-off Premium under any ARP Run-off Policy issued.

  • 13.5

    An ARP Run-off Policy shall provide run-off cover to a Run-off Firm retrospectively from the date on which it became a Run-off Firm until the end of the day immediately prior to the sixth anniversary of:

    • (a)

      the start of the Indemnity Period in which it became a Run-off Firm; or

    • (b)

      if applicable, the start of the last Indemnity Period, prior to it becoming a Run-off Firm, in which it both ceased to be an Eligible Firm and was a Firm in Default and continued as such until the date on which it became a Run-off Firm,

    whichever is the earlier.

  • Commentary:

    Run-off Firms which are issued with an ARP Run-off Policy obtain six years' run-off cover either from the start of the Indemnity Period in which their Practice ceased, or the date on which they ceased to be eligible to apply for an ARP Policy while practising uninsured.

  • 13.6

    Rule 12.7 shall apply so as to enable the Council to extend the period in Rule 13.3Rule 13.3b for which a Firm in Default may be issued with an ARP Policy.

  • Commentary:

    It is envisaged that this power would be exercised only in exceptional circumstances.

  • 13.7

    Any Firm that has been admitted to the Assigned Risks Pool under Rule 13.1 shall for the purposes of computing its continuing eligibility to remain in the Assigned Risks Pool be deemed to have been admitted to the Assigned Risks Pool at start of the Period of Default and to have remained continuously in the Assigned Risks Pool until the end of the Indemnity Period current at the date of its application.

  • 13.8

    Rule 15.2 shall not apply to a Firm which has under Rule 13 been admitted to the Assigned Risks Pool and which has been issued with an ARP Policy or an ARP Run-off Policy, the liability of the Firm and of any person who is a Principal of that Firm being limited in those circumstances to the excess payable under the terms of the Policy.

  • Commentary:

    If a Firm is eligible to be issued with an ARP Policy under Rule 13.1, or an ARP Run-off Policy under Rule 13.4 then, provided that it complies with the relevant requirements under Rule 13 and is issued with an ARP Policy or an ARP Run-off Policy, the Firm and the Principals of that Firm will be required to pay to the ARP Manager only the relevant premium and the excess in the event of any claim.

14 Firms which fail to apply to the Assigned Risks Pool

  • 14.1

    A Firm in Default which is entitled to be admitted to the Assigned Risks Pool and to be issued with an ARP Policy in accordance with Rule 13.1 but which does not make an application to join the Assigned Risks Pool shall, notwithstanding, be liable, together with any person who is a Principal of that Firm, to pay to the Society an amount equivalent to the ARP Default Premium calculated for the whole of the Period of Default.

  • 14.2

    A Firm in Default which is entitled to be admitted to the Assigned Risks Pool and to be issued with an ARP Run-off Policy in accordance with Rules 13.4 and 13.5 but which does not make an application to join the Assigned Risks Pool shall, notwithstanding, be liable, together with any person who is a Principal of that Firm, to pay to the Society an amount equivalent to the ARP Run-off Premium calculated for the whole of the period equivalent to that which would be provided by an ARP Run-off Policy in accordance with Rule 13.5, or, if shorter and if it can be ascertained, the Period of Default.

  • 14.3

    Any amount payable in accordance with Rules 14.1 or 14.2 shall be determined by the ARP Manager on the basis of such assumption as to the Firm's gross fees and other matters as the ARP Manager shall in its absolute discretion determine, and may be reviewed from time to time by the ARP Manager in its absolute discretion on the basis of any further information provided to it. Any such amount paid under Rule 14.1 or 14.2 shall be deducted from any amount payable pursuant to Rule 15.2. The ARP Manager may and is hereby authorised to recover all sums due under Rules 14.1 or 14.2 on behalf of the Society.

  • Commentary:

    If a Firm fails to make an application to the Assigned Risks Pool, but carries on Practice without having obtained Qualifying Insurance, each Principal in that Firm will have committed a disciplinary offence. The same is true if a Run-off Firm fails to apply to be issued with an ARP Run-off Policy. In each case, that Firm, and each Principal in that Firm, will also be liable under these Rules to:

    • pay an amount to the Society equivalent to the ARP Default Premium calculated for the whole of the Period of Default; and
    • reimburse to the Society in full under Rule 15 the amount of any claim (together with defence costs) made against the Firm and relating to the period when it did not have Qualifying Insurance in force, less any amount due under this Rule.

15 Arrangements in relation to uninsured Firms

  • 15.1

    The ARP Manager on behalf of the Society shall make arrangements with Qualifying Insurers to cover any Claim (as defined in the Minimum Terms and Conditions) against:

    • (a)

      a Firm in Default; and

    • (b)

      a Run-off Firm

    including any Defence Costs (as defined in the Minimum Terms and Conditions) relating to a Claim, in like manner and to the like extent as the Claim and the Defence Costs would have been covered had that Firm during the Period of Default been in the Assigned Risks Pool and been issued with an ARP Policy and/or, as the case may require, an ARP Run-off Policy.

  • 15.2

    Subject to Rule 13.8, Rule 14.1 and Rule 14.2, the Society on behalf of Qualifying Insurers shall be entitled to recover from each and every Principal in the Firm in Default during the Period of Default all amounts paid in or towards the discharge of a Claim and Defence Costs pursuant to Rule 15 together with interest thereon at Barclays Bank Plc base rate plus three per cent from the date when such amounts were respectively paid. The ARP Manager may and is hereby authorised to recover all sums due under this Rule on behalf of the Society.

  • 15.3

    A Firm shall not be deemed to have been admitted to the Assigned Risks Pool or to be covered in accordance with Rule 15 solely by virtue of the fact that the ARP Manager may conduct or settle any claim made against that Firm under the terms of any agreement between the Society and any Qualifying Insurer.

  • Commentary:

    If a Firm fails to make an application to the Assigned Risks Pool, but carries on Practice without having obtained Qualifying Insurance, each Principal in that Firm will have committed a disciplinary offence. The same is true if a Run-off Firm fails to apply to be issued with an ARP Run-off Policy. In each case, that Firm, and each Principal in that Firm, will also be liable under these Rules to:

    • reimburse to the Society in full the amount paid pursuant to Rule 15.1 in respect of any claim (together with defence costs) made against the Firm and relating to the period when it did not have Qualifying Insurance in force, less any amount due under Rule 14 (where applicable); and
    • pay an amount under Rule 14 (where applicable) to the Society equivalent to the ARP Default Premium calculated for the whole of the Period of Default.

    However, if a Firm in these circumstances is eligible under Rule 13.1 to be issued with an ARP Policy, then, provided that it complies with Rule 13.1 and is issued with an ARP Policy, the liability of the Firm and the Principals of that Firm will be limited, from that point on, to the ARP Default Premium and the excess payable under the terms of the ARP Policy.

PART 5: DISCIPLINARY OFFENCES AND REPORTING

16 Disciplinary consequences of failure to comply with these Rules

  • 16.1

    The provisions in Part 4 of the Rules are made without prejudice to the powers of the Council or the Society under the Solicitors Act 1974, the Administration of Justice Act 1985, the Courts and Legal Services Act 1990 or the European Communities (Lawyer's Practice) Regulations 2000, or rules made under any of them, to bring disciplinary proceedings against any Firm that has failed to comply with these Rules or any person who is or was a Principal in such a Firm or to intervene in a Practice carried on by such a Firm.

  • Commentary:

    Payment of the ARP Default Premium and/or the ARP Run-off Premium does not detract from the fact that the Firm in question, and each Principal of that Firm, has committed a breach of these Rules as a result of the Firm being a Firm in Default. If a Firm in Default is not an Eligible Firm, it must either obtain Qualifying Insurance in the open market, or cease carrying on Practice and make an application to the Assigned Risks Pool for run-off cover in accordance with Rule 5.2.

  • 16.2

    Without prejudice to any other disciplinary offence which may arise under these Rules, it shall be a disciplinary offence for any Firm or any person who is at the relevant time a Principal in a Firm to be in Policy Default, or to fail to implement any Special Measures to the satisfaction of the Society.

  • Commentary:

    Policy Default and Special Measures are defined in Rule 3.1. Note that a Firm that is carrying on a Practice while in Policy Default will also not be an Eligible Firm for the purpose of seeking further cover through the Assigned Risks Pool.

17 Use of information

  • 17.1

    Any Qualifying Insurer (including the ARP Manager) may, in relation to any Firm which applies to it for Qualifying Insurance, and in the case of the ARP Manager any Run-off Firm or Firm in Default, whether or not that Firm applies to enter the Assigned Risks Pool, bring to the attention of the Society (including, in the case of the matters referred to in Rule 17.1(f), the Legal Complaints Service and/or the Office for Legal Complaints (including the Legal Ombudsman)) at any time and without notice to the Firm concerned:

    • (a)

      any failure on the part of the Firm or any person who is a Principal of that Firm to pay any sum, including an ARP Premium, ARP Default Premium or ARP Run-off Premium, on or before the date specified in these Rules or to reimburse any amount falling within a Policy excess which has been paid out by a Qualifying Insurer to a claimant;

    • (b)

      a material inaccuracy in any proposal form submitted by or on behalf of the Firm;

    • (c)

      the fact that the Firm has become or is believed to have become a Run-off Firm;

    • (d)

      any matter or circumstances that would entitle the Firm's Qualifying Insurer to avoid or repudiate a Policy but for the provisions of clause 4.1 of the Minimum Terms and Conditions (and/or the corresponding of the Policy);

    • (e)

      any dishonesty or fraud suspected by a Qualifying Insurer on the part of any Insured as defined in the Minimum Terms and Conditions; and

    • (f)

      any claim of inadequate professional services made against the Firm or any Insured of that Firm of which it becomes aware.

  • Commentary:

    All Firms, whether they obtain their Qualifying Insurance on the open market or through the Assigned Risks Pool, or whether, having failed to obtain Qualifying Insurance, they are subject to the provisions of Part 4 of these Rules, are deemed to have consented to their Qualifying Insurer or the ARP Manager bringing to the attention of the Solicitors Regulation Authority any of the matters referred to Rule 17.1 that may be applicable to the Firm. Any such information is subject to the confidentiality provisions of Rule 17.4.

  • 17.2

    The Legal Complaints Service of the Society and/or the Office for Legal Complaints (including the Legal Ombudsman) may pass such information as it in its absolute discretion sees fit to any other department or office of the Society, and to any Qualifying Insurer, including the ARP Manager, in relation to any complaint of inadequate professional services against a Firm of which it becomes aware.

  • 17.3

    The Council may require any Qualifying Insurer or the ARP Manager to bring to the attention of the Society any of the matters referred to in Rule 17.1 where it reasonably believes there are matters which ought to be brought to the attention of the Society in accordance with Rule 17.1.

  • 17.4

    In respect of any information that may be brought to the attention of the Society in accordance with Rules 17.1 to 17.3:

    • (a)

      the Society shall keep all such information confidential;

    • (b)

      the Society shall not (except where and to the extent required by law or in the proper performance by the Society of its regulatory functions) at any time reveal any such information to any person other than a duly authorised employee of the Society or any of its subsidiaries; and

    • (c)

      any privilege attaching to such information shall not be regarded as having been waived whether by virtue of such information having been provided to the Society or otherwise.

  • 17.5

    The provisions of Rule 17.4 shall not prevent the Society from:

    • (a)

      making use of any information referred to in that Rule for the purpose of bringing disciplinary proceedings against any person; or

    • (b)

      in relation to information about a Firm's Policy under Rule 18, disclosing that information, where and to the extent that the Society in its absolute discretion considers it appropriate, to any person entitled to such information, and to any other department or office of the Society, including without limitation to the Legal Complaints Service and/or the Office for Legal Complaints (including the Legal Ombudsman).

18 Details of Qualifying Insurer

  • 18.1

    If a person (a Claimant) asserts a claim against a Firm or any person insured under that Firm's Policy, and where such claim relates to any matter within the scope of cover of the Minimum Terms and Conditions (whether or not such claim would or may be upheld), the Firm and any person who is at the relevant time (or, in the case of a Firm which has ceased Practice, any person who was immediately before that Firm ceased Practice) a Principal in that Firm shall be required, upon being so requested by that Claimant, by any person insured under that Firm's Policy, or by any other person with a legitimate interest, to provide to that person the following details in relation to that Firm's Policy:

    • (a)

      the name of the Qualifying Insurer(s) who issued the policy; and

    • (b)

      the policy number; and

    • (c)

      the address and contact details of the Qualifying Insurer(s) for the purpose of making a claim under the policy;

    in each case in respect of the Policy which it is reasonably believed to be the relevant Policy to respond to the claim, or, if applicable, the fact that the Firm or person against whom the claim is asserted is covered by Supplementary Run-off Cover.

  • Commentary:

    A Firm, and each Principal in that Firm, is required to provide details of that Firm's policy of Qualifying Insurance to any person who asserts a claim against anyone insured under that Firm's Policy. Under Rule 17, the Solicitors Regulation Authority has the power to disclose information regarding a Firm's Qualifying Insurer where it considers it appropriate to do so.

PART 6: GENERAL POWERS OF THE COUNCIL

19 Waiver powers

  • 19.1

    The Council shall have power on such terms and conditions as it shall think fit to waive any Rule or part of any Rule in a particular case or cases including extending the time, either prospectively or retrospectively, for the doing of any act under any Rule.

    • (a)

      Any application by any person for a waiver of any Rule or part of any Rule under the Solicitors' Indemnity Insurance Rules 2001 to 2008 20092010 must be made in writing to the Society as soon as reasonably practicable, and in any event no later than the relevant date set out below:

      • Solicitors' Indemnity Insurance Rules 2001

        Relevant date - whichever is the later of:

        • 30 November 2001; or
        • 3 calendar months from the occurrence of any event or circumstances first giving rise to the obligation on that person under the relevant Rule or part of any Rule in respect of which the waiver application is or was made, but in any event no later than 30 November 2002.
      • Solicitors' Indemnity Insurance Rules 2002

        Relevant date - whichever is the later of:

        • 30 November 2002; or
        • 3 calendar months from the occurrence of any event or circumstances first giving rise to the obligation on that person under the relevant Rule or part of any Rule in respect of which the waiver application is or was made, but in any event no later than 30 November 2003.
      • Solicitors' Indemnity Insurance Rules 2003

        Relevant date - whichever is the later of:

        • 30 November 2003; or
        • 3 calendar months from the occurrence of any event or circumstances first giving rise to the obligation on that person under the relevant Rule or part of any Rule in respect of which the waiver application is or was made, but in any event no later than 31 December 2004.
      • Solicitors' Indemnity Insurance Rules 2004

        Relevant date - whichever is the later of:

        • 31 December 2004; or
        • 3 calendar months from the occurrence of any event or circumstances first giving rise to the obligation on that person under the relevant Rule or part of any Rule in respect of which the waiver application is or was made, but in any event no later than 31 December 2005.
      • Solicitors' Indemnity Insurance Rules 2005

        Relevant date - whichever is the later of:

        • 31 December 2005; or
        • 3 calendar months from the occurrence of any event or circumstances first giving rise to the obligation on that person under the relevant Rule or part of any Rule in respect of which the waiver application is or was made, but in any event no later than 31 December 2006.
      • Solicitors' Indemnity Insurance Rules 2006

        Relevant date - whichever is the later of:

        • 31 December 2006; or
        • 3 calendar months from the occurrence of any event or circumstances first giving rise to the obligation on that person under the relevant Rule or part of any Rule in respect of which the waiver application is or was made, but in any event no later than 31 December 2007.
      • Solicitors' Indemnity Insurance Rules 2007

        Relevant date - whichever is the later of:

        • 31 December 2007; or
        • 3 calendar months from the occurrence of any event or circumstances first giving rise to the obligation on that person under the relevant Rule or part of any Rule in respect of which the waiver application is or was made, but in any event no later than 31 December 2008.
      • Solicitors' Indemnity Insurance Rules 2008

        Relevant date - whichever is the later of:

        • 31 December 2008; or
        • 3 calendar months from the occurrence of any event or circumstances first giving rise to the obligation on that person under the relevant Rule or part of any Rule in respect of which the waiver application is or was made, but in any event no later than 31 December 2009.
      • Solicitors' Indemnity Insurance Rules 2009

        Relevant date - whichever is the later of:

        • 31 December 2009; or
        • 3 calendar months from the occurrence of any event or circumstances first giving rise to the obligation on that person under the relevant Rule or part of any Rule in respect of which the waiver application is or was made, but in any event no later than 31 December 2010.
      • Solicitors' Indemnity Insurance Rules 2010

        Relevant date - whichever is the later of:

        • 31 December 2010; or
        • 3 calendar months from the occurrence of any event or circumstances first giving rise to the obligation on that person under the relevant Rule or part of any Rule in respect of which the waiver application is or was made, but in any event no later than 31 December 2011.
    • (b)

      No application by any person for a waiver of any Rule or part of any Rule under the Solicitors' Indemnity Insurance Rules 2000 may be considered unless it was made in writing to the Society as soon as reasonably practicable and in any event no later than 28 February 2002.

    • (c)

      Any appeal against any decision made by the Society in respect of any application for a waiver of any Rule or part of any Rule under the Solicitors' Indemnity Insurance Rules 2000 to 2008 20092010) must be made in writing to the Society within 21 days from the date of the decision.

    • (d)

      An application for a waiver as contemplated by this Rule 19.1 or the making of an appeal against any decision made by the Society in respect of such application shall not relieve any person from any obligation under the Solicitors' Indemnity Insurance Rules 2000 to 2008 20092010 pending the determination of any such application or appeal.

    • Commentary:

      It is envisaged that Rules will be waived only in exceptional circumstances. Anyone who wishes to apply for a waiver, or to appeal against an initial decision, must do so in accordance with the time limits set out in this Rule. Contact details appear at the end of the introductory commentary. The Professional Standards Appeal Panel of Adjudicators Sub Committee has adopted a waiver policy, which is available on request. Unless and until any waiver is granted, the person concerned must comply with the requirements of these Rules in full. A waiver may be granted subject to conditions, and may be revoked without notice.

    • 19.2

      The Council shall have power to treat any Firm as complying with any Rule or Rules for the purposes of the Solicitors Act 1974 notwithstanding that the Firm has failed to comply with a Rule or Rules where such non-compliance is regarded by the Council in a particular case or cases as being insignificant.

    • 19.3

      For the purposes of the Solicitors Act 1974 (including without limitation section 10 of that Act), any person who is in breach of any Rule or part of any Rule under the Solicitors' Indemnity Insurance Rules 2000 to 2008 20092010 shall be deemed, for so long as he remains in breach, not to be complying with these Rules.

    • Commentary:

      The effect of this general power is that, for example, a practising certificate may be issued to a person notwithstanding a technical and insignificant breach by that person or a Firm of any provision of these Rules.

PART 7: OTHER OBLIGATIONS

20 Accountants' reports

Any accountant's report which a solicitor or Registered European Lawyer or registered foreign lawyer who is a Principal in a Practice or a Recognised Body is required to deliver to the Society under section 34 of the Solicitors Act 1974 or paragraph 8 of Schedule 14 to the Courts and Legal Services Act 1990 containing such information as is prescribed by rule 35 of the Solicitors' Accounts Rules 1998 must contain a statement certifying (if it is the case) for the whole period covered by the report (excluding any part of that period falling before 1 September 2000) either that the Firm has one or more certificates of Qualifying Insurance outside the Assigned Risks Pool or that the Firm has been issued with one or more policies by the ARP Manager.

Commentary:

Firms are required to provide evidence to their accountants that a Policy of Qualifying Insurance is in place. Each Qualifying Insurer is required under the Qualifying Insurer's agreement to provide a certificate of Qualifying Insurance to each Firm within 20 working days of the start of the period covered by the Policy. Producing the relevant certificate(s) to the reporting accountant will satisfy the requirement of this Rule.

7/1/2007 12:00:00 AM
 

The Solicitors' Indemnity Insurance Rules 2010 is replaced by the SRA Indemnity Insurance Rules 2011 as of 1 October 2011.

Go to SRA Handbook

The Solicitors' Indemnity Insurance Rules 2009 were replaced on 1 October 2010 by the Solicitors' Indemnity Insurance Rules 2010.

The Solicitors' Indemnity Insurance Rules 2008 were replaced on 1 October 2009 by the Solicitors' Indemnity Insurance Rules 2009.

The Solicitors' Indemnity Insurance Rules 2008 were amended on 31 March 2009 as part of a general updating of the rules to introduce firm-based regulation and legal disciplinary practices as provided for in the Legal Services Act 2007.

 
 

Introductory commentary

1 Introduction

  • 1.1

    The Law Society introduced arrangements for solicitors' professional indemnity insurance with effect from 1 September 2000 which achieved broad coverage for the profession and its clients, whilst at the same time allowing the profession access to a competitive, commercial insurance market.

  • 1.2

    At its meeting on 13 April 2000, the Council of the Law Society resolved, among other matters, that:

    1. With effect from 1 September 2000, the regulated profession in private practice will be required under the Solicitors' Indemnity Insurance Rules 2000 to secure professional indemnity insurance complying with certain Minimum Terms and Conditions, from any of the Qualifying Insurers.

    2. Each Qualifying Insurer will be required to enter into a Qualifying Insurer's Agreement with the Law Society.

  • 1.3

    The Solicitors' Indemnity Insurance Rules 200810 were approved by the Council on 22 May 2008, andBoard of the Solicitors Regulation Authority (SRA) with the concurrence of the Legal Services Board. They apply in respect of the indemnity period beginning on 1 October 200810.

2 Summary of the arrangements

  • 2.1

    Principals in private practice are free to secure professional indemnity insurance either by dealing direct with Qualifying Insurers or via their insurance brokers or other intermediaries. The Solicitors Indemnity Fund (SIF) has not underwritten new risks since 1 September 2000 but continues to run off the existing claims account. Since 1 September 2007, it has also provided cover in respect of firms which ceased to practise on or after 1 September 2000 without a successor practice (as defined in clause 8.2 of the Minimum Terms and Conditions), after the six-year run-off cover provided under their qualifying insurance has expired.

  • 2.2

    Evidence of professional indemnity insurance that complies with the Minimum Terms and Conditions is a requirement for obtaining a practising certificate. Solicitors are not permitted to practise without current professional indemnity insurance in force.

  • 2.3

    Each firm is obliged to arrange its professional indemnity insurance with one or more Qualifying Insurers, or to be admitted to the Assigned Risks Pool (see paragraph 4 below). That insurance must comply with the Minimum Terms and Conditions set out in Appendix 1 to the Rules.

  • 2.4

    The Rules require firms to take out a policy which includes cover in accordance with the Minimum Terms and Conditions for that part of their practice carried on from offices located in England and Wales. They do not apply to any part of the practice of the firm carried on from offices located outside England and Wales (although rule 15 of the Solicitors' Code of Conduct 2007 does apply in such cases). However, the cover in relation to the practice carried on from offices located in England and Wales must extend to acts or omissions wherever in the world they occur, and wherever in the world the claim is brought.

  • 2.5

    Each firm which is not a body corporate is required to secure professional indemnity insurance with Qualifying Insurer(s) to a limit of indemnity of £2,000,000 any one claim. Most bodies corporate, such as LLPs, are required to obtain such insurance with Qualifying Insurer(s) to a limit of indemnity of £3,000,000 any one claim.

  • 2.6

    Cover in excess of these amounts (top-up cover) is not subject to the Rules, and firms are free to make whatever arrangements they wish. Firms should always consider whether the minimum level of cover is adequate for their needs. Arrangements for top-up cover may be made with any insurer, not just a Qualifying Insurer.

  • 2.7

    Firms are free to negotiate with Qualifying Insurer(s) the level of excess - i.e., the amount of each claim that the firm itself would have to meet - that applies to their policy. The Minimum Terms and Conditions provide that, if a firm does not pay the part of any claim covered by the excess, the insurer will pay that part of the claim, but recover that amount from the Principals of the firm.

  • 2.8

    The Minimum Terms and Conditions require that a policy of Qualifying Insurance must provide at least 6 years' run-off cover if the firm's practice ceases during an indemnity period. However, if there is a "successor practice" (as defined in clause 8.2 of the Minimum Terms and Conditions) to that firm's practice, no run-off cover will be triggered. Instead, the Qualifying Insurance of the successor practice will be required to cover claims against the ceased practice. Under Rule 12.6, the Council may determine the eligibility of any successor firm for the purposes of the Assigned Risks Pool (see paragraph 4 below).

3 Minimum Terms and Conditions

  • 3.1

    In exercising its statutory functions the Law Society must act in such manner as it reasonably believes to be in the public interest. To this end the Council resolved on 23 June 1999 that the Society would, so far as possible, seek to replicate in the current arrangements the breadth of cover formerly provided by SIF.

  • 3.2

    The Minimum Terms and Conditions are not drafted as a policy, but rather as an expression of the scope of minimum coverage to be afforded to firms in respect of their regulated business. Qualifying Insurers are free to issue their own policy so long as they provide at least the coverage set out in the Minimum Terms and Conditions. As a safety net for both the public and for firms, Qualifying Insurers have committed that the coverage set out in the Minimum Terms and Conditions will apply as a minimum, regardless of the wording of the policy actually issued. The Minimum Terms and Conditions appear as Appendix 1 to the Rules.

4 The Assigned Risks Pool

  • 4.1

    It is recognised that some firms may not be able to secure terms from Qualifying Insurers, or may not be able reasonably to afford those terms which are available to them. This might be as a result of a poor claims record, a major claim being outstanding but not yet decided, or other risk factors. It is not the intention for such firms to be left without cover, at least in the short term. To this end, an Assigned Risks Pool (ARP) has been established to accept those risks which fall into this category.

  • 4.2

    Firms may not be insured through the ARP for more than, in aggregate, 12 a maximum of 24 months in any four consecutive indemnityfive year periods (or 25 months in the case of a firm insured through the ARP for the whole of the indemnity period from 1 September 2003 to 30 September 2004). Those firms receiving cover under the ARP will be required to pay a high premium, will be inspected and monitored (at the firm's expense), and may be required to attend approved courses and to implement specified practice management measures. It is envisaged that firms will apply for cover in the ARP only if they are unable to obtain insurance from a Qualifying Insurer in the open market. If a firm which has been insured through the ARP is unable to obtain cover with a Qualifying Insurer in the open market by the end of the maximum permitted period, the firm will have to cease practice.

  • 4.3

    The cover provided through the ARP is underwritten by each Qualifying Insurer in the same proportion as its proportion of premium income from underwriting the compulsory cover bears to the total of all premium income written by all the Qualifying Insurers for the compulsory cover in the indemnity period in question.

  • 4.4

    The premium for entry into the ARP is calculated in accordance with a formula set out in Appendix 2 to the Rules, and is based on a firm's gross fees. An additional premium is payable in the event that run-off cover is triggered.

  • 4.5

    In certain circumstances (for example, where a firm without Qualifying Insurance fails to apply to be insured through the ARP within the time period specified in the Rules), a default premium, 20% higher than the normal ARP premium, will be payable for the whole of the indemnity period in question.

  • 4.6

    In addition, in keeping with the duty to safeguard the interests of the public, the ARP will cover claims against firms which do not, for whatever reason, secure their own insurance arrangements in accordance with the Rules, including run-off cover in the case of firms which have no policy of qualifying insurance in place when they cease practice. Where firms fail to effect cover, however, the ARP Manager is entitled to recover the amount of any claims and any associated costs, plus interest, from the principals of the firm concerned.

  • 4.7

    The ARP is managed by a manager appointed by the SRASolicitors Regulation Authority. The functions of the ARP manager are currently carried out by Capita Commercial Insurance Services Limited on behalf of the SRASolicitors Regulation Authority.

5 Arrangements with St Paul Travelers

  • 5.1

    The Law Society has entered into a joint venture with St Paul Travelers. The purpose of these arrangements is to ensure that cover is offered to all sectors of the profession, alongside the commercial market. That does not mean that every firm will necessarily receive a quotation. St Paul Travelers - like any other individual Qualifying Insurer - is free to reject firms for reasons particular to that firm such as a poor premium payment recordwith unacceptable claims records. But it will not exclude firms only if their individual record is unacceptable, not because of the type of firm that they are, or the type of work that they do.

6 Changes for the 201008-201109 Indemnity Period

  • 6.1

    A number of small amendments to the Rules have been made this year. As well as the normal annual date changes, the following changes have been made:

    • 6.1.1

      The definition of "Eligible Firm" at Rule 3 has been amended to make it clear that a Firm is not eligible for cover from the Assigned Risks Pool indefinitely, to set out the new maximum time that a Firm may obtain cover in the Assigned Risks Pool and to prevent Firms which are unable to obtain cover outside of the Assigned Risks Pool from commencing business;

    • 6.1.2

      The commentary to Rule 6, in relation to the insolvency of a Qualifying Insurer, has been amended to make it clear that it ceases to be a Qualifying Insurer for the purposes of writing new policies and the Firms insured by that Insurer must seek alternative cover;

    • 6.1.3

      The Rules (in particular, Rule 10.2) relating to applying to the Assigned Risks Pool have been amended to make it clear that a Firm wishing to commence Practice may not do so without first obtaining Qualifying Insurance outside the Assigned Risks Pool;

    • 6.1.4

      The Rules and the Minimum Terms and Conditions have been updated to incorporate references to the office for Legal Complaints (including the Legal Ombudsman) where appropriate; and

    • 6.1.5

      The Minimum Terms and Conditions contained in Appendix 1 to the Rules have been amended:

      • (a)

        for the establishment of the new office of the Legal Ombudsman to provide that an Insurer is liable for certain awards made by the Legal Ombudsman but that an Insurer will have no liability in respect of a determination by the Legal Ombudsman for a Firm to refund any fees paid to an Insured;

      • (b)

        to allow Firms that would normally be the subject of a Succession to elect to be either insured under the run-off cover set out in paragraph 5.1 of the Minimum Terms and Conditions, or insured as a Prior Practice (provided there is appropriate insurance in place in relation to that Successor Practice). The definition of "Prior Practice" has been amended accordingly; and

      • (c)

        to permit the exclusion of cover in respect of Firm's legal liability arising in the course of the Firm’s practice from its use of or access to the HM Land Registry network under a Network Access Agreement (save for the payment of fees to HM Land Registry in the ordinary course).

  • 6.1

    The changes to the Rules and the Qualifying Insurer's Agreement are relatively few this year. As well as the normal annual date changes, the following changes have been made:

    • 6.1.1

      Qualifying Insurers are now required to use their best endeavours to ensure that an intermediary who acts as an agent of the Qualifying Insurer discloses that fact and whether it does so on an exclusive basis; and

    • 6.1.2

      the definition of "Policy Default" in the Rules has been amended to make it clear that being in Policy Default constitutes a failure on the part of each Principal of a Firm, as well as the Firm itself; similar changes have been made elsewhere in the Rules.

  • 6.2

    In addition, as a result of changes brought about by the Legal Services Act 2007 (the LSA), it is currently expected that, with effect from 1 March 2009, legal disciplinary practices (LDPs) will be permitted. The Rules will therefore need to be amended to take account of LDPs, and other new regulatory arrangements, such as the requirement for partnerships to become recognised bodies. A number of changes will need to be made to the Rules and the Minimum Terms and Conditions to reflect this fact. The Solicitors Regulation Board proposes to make these changes in good time before 1 March 2009, by way of amendment to the Solicitors' Indemnity Insurance Rules 2008.

  • 6.3

    The scope of the amended Rules is expected to be largely unchanged. They will apply in respect of firms which are:

    • recognised by the SRA; or
    • not recognised by the SRA, but where the SRA is the only approved regulator which could grant them recognition.

    It is thought that these changes will directly affect the indemnity insurance arrangements of few if any firms. However, firms which are considering taking advantage of the new structures permitted under the LSA will in the future need to consider the indemnity insurance implications.

7 Legal Services Act 2007

87 About the Rules

  • 87.1

    The Solicitors' Indemnity Insurance Rules 201008 were approved by the SRA Board, withCouncil on 22 May 2008, and the concurrence of the Legal Services BoardMaster of the Rolls was obtained on 18 June 2008. They apply in respect of the indemnity period beginning on 1 October 201008.

  • 87.2

    Commentary is provided after a number of provisions of the Rules where it is thought that this might be helpful, and is printed in italics. However, the commentary does not form part of the Rules, is provided for guidance only, and does not affect the meaning or interpretation of the Rules in any way. The Solicitors Regulation Authority reserves the right to amend or supplement the commentary at any time. The Appendices to the Rules appear in normal type.

  • 87.3

    References in the Rules to the Council include any committee or person to whom any of the functions of the Council may be delegated by virtue of section 79 of the Solicitors Act 1974.

98 Contact details for further information

  • 98.1

    If you are in doubt about any aspect of the indemnity insurance arrangements, you may contact the Client Protection Policy Unit of the Solicitors Regulation Authority on 01527 504487. Information about the arrangements, including a list of Qualifying Insurers, is provided on the website of the Solicitors Regulation Authority, at www.sra.org.uk.

Solicitors' Indemnity Insurance Rules 200820092010

The commentary provided with these Rules does not form part of the Rules, is provided for guidance only, and does not affect the meaning or interpretation of the Rules in any way.

PART 1: GENERAL

1 Authority and commencement

  • 1.1

    These Rules are made by the Solicitors Regulation Authority Boardby the Council with the concurrence of the Master of the Rolls under sections 31 and 3731, 37, 79 and 80 of the Solicitors Act 1974 (as amended by the Legal Services Act 2007),andsection 9 of the Administration of Justice Act 1985 (as amended by the Legal Services Act 2007) and section 89(3) of the Courts and Legal Services Act 1990with the concurrence of the Master of the Rolls under sections 31 and 37 of the Solicitors Act 1974 and paragraph 16 of Schedule 22 of the Legal Services Act 2007 and the concurrence, where requisite, of the Lord Chancellor under paragraph 16 of Schedule 22 of the Legal Services Act 2007. with the approval of the Legal Services Board under Schedule 4 Part 3 of the Legal Services Act 2007.

  • 1.2

    These Rules come into force on 1 October 2008 20092010.

  • 1.3

    These Rules require Solicitors, Registered European Lawyers, Registered Foreign Lawyers and Recognised Bodies and their Managers in Private Practice in England and Wales to take out and maintain professional indemnity insurance with Qualifying Insurers with effect from 1 October 2008 20092010.

  • Commentary:

    These Rules apply to:

    • Solicitors
    • Registered European Lawyers
    • Registered Foreign Lawyers and
    • Recognised Bodies and their Managers

    carrying on Private Practice in England and Wales as a Firm at any time after 1 October 2008 20092010. Refer to the definitions in Rule 3 for guidance on the exact meanings of these terms.

  • 1.4

    These Rules will apply to any Indemnity Period beginning on or after 1 October 2008 20092010.

  • Commentary:

    Before 1 September 2000, Firms were required to take out insurance with the Solicitors Indemnity Fund. Since 1 September 2000, Firms have been required to take out insurance in accordance with the Solicitors' Indemnity Insurance Rules. From 1 October 2008 20092010, Firms must take out insurance in accordance with these Rules with one or more Qualifying Insurers. Continuing arrangements dealing with past claims on the Solicitors Indemnity Fund are covered in the Solicitors' Indemnity Rules.

  • 1.5

    The Solicitors Indemnity Insurance Rules 2007 20082009 shall not apply in respect of any Indemnity Period beginning on or after 1 October 200820092010, but they shall remain in force in respect of the Indemnity Period from 1 October 20072008 to 30 September 20082009 inclusive (as amended by the Solicitors’ Indemnity Insurance (Amendment) Rules 2009 with effect from 31 March 2009) subject to the provisions of Rules 19.1(a), 19.1(b), 19.1(c) and 19.1(d) below.

  • Commentary:

    You should refer to previous Solicitors' Indemnity Insurance Rules in relation to earlier Indemnity Periods since 1 September 2000. However, you should refer to Rules 19.1(a) to 19.1(d) in relation to time limits in respect of an application for a waiver of the provisions of the Solicitors' Indemnity Insurance Rules 2000 to 2008 20092010.

2 Citation

  • 2.1

    These Rules may be cited as the Solicitors' Indemnity Insurance Rules 2008 2009.

3 Definitions and interpretation

  • 3.1

    In these Rules, unless the context otherwise requires:

Appointed Person
means any person who is designated as a fee-earner in accordance with any arrangements made from time to time between the Firm and the Legal Services Commission pursuant to the provisions of the Access to Justice Act 1999, regardless of whether the services performed for the Firm by that person in accordance with Rule 4.1 are performed pursuant to such arrangements or otherwise, and who is engaged by the Firm under a contract for services in the course of the Private Practice of the Firm.
Commentary:

Under Rule 4, work carried out by a designated fee-earner may be covered under the Qualifying Insurance of the Firm for which they do that work.

Approved Regulator
means a body listed in the first column of the table in paragraph 1 of Schedule 4 to the Legal Services Act 2007 (whether or not that paragraph has been brought into force), or designated as an approved regulator by an order under Part 2 of that Schedule.
Assigned Risks Pool
means the arrangements by which an Eligible Firm may obtain professional indemnity insurance against civil liability by means of an ARP Policy on the terms set out in Part 3 of these Rules.
Commentary:

The Assigned Risks Pool is designed to ensure that professional indemnity insurance will be available to all Eligible Firms. However, it is important to note that premiums payable to the Assigned Risks Pool are intended to be high. Refer to Appendix 2 to the Rules for the method of calculation of the ARP Premium.

ARP Manager
means the manager of the Assigned Risks Pool being any person from time to time appointed by the Society to carry out all or any particular functions of the ARP Manager or the Society and any such person.
ARP Policy
means a contract of professional indemnity insurance issued by the ARP Manager on behalf of Qualifying Insurers to an Eligible Firm in the Assigned Risks Pool including where the context permits a Policy provided to a Firm in Default.
Commentary:

A copy of the standard-form ARP Policy is available on the website of the Solicitors Regulation Authority at www.sra.org.uk, and is also available from the Solicitors Regulation Authority. Contact details appear at the end of the introductory commentary.

ARP Premium
means the premium calculated in accordance with Part 1 of Appendix 2 to these Rules, ARP Default Premium means the premium calculated in accordance with Part 2 of Appendix 2 to these Rules and ARP Run-off Premium means the premium calculated in accordance with Part 3 of Appendix 2 to these Rules.
ARP Run-off Policy
means a contract of professional indemnity insurance issued by the ARP Manager on behalf of Qualifying Insurers to a Run-off Firm in the Assigned Risks Pool.
Authorised Insurer
means:
  • (a)

    a person who has permission under Part IV of the Financial Services and Markets Act 2000 to effect or carry out contracts of insurance of a relevant class;

  • (b)

    a person who carries on an insurance market activity, within the meaning of section 316(3) of that Act;

  • (c)

    an EEA Firm of the kind mentioned in paragraph 5(d) of Schedule 3 to that Act, which has permission under paragraph 15 of that Schedule (as a result of qualifying for authorisation under paragraph 12 of that Schedule) to effect or carry out contracts of insurance of a relevant class; or

  • (d)

    a person who does not fall within paragraph (i)(a), (ii)(b) or (iii)(c) and who may lawfully effect or carry out contracts of insurance of a relevant class in a member state other than the United Kingdom

where relevant class has the meaning set out in section 87(1B) of the Solicitors Act 1974 and provided that this definition must be read with section 22 of the Financial Services and Markets Act 2000, any relevant order under that section and Schedule 2 to that Act.
Commentary:

Under the Solicitors Act 1974, it is only permitted to enter into arrangements with authorised insurers (including relevant Lloyd's syndicates), as defined under section 87(1A) of that Act. A Qualifying Insurer must be authorised to write new business on the date on which a Policy incepts, but the Policy will remain a Policy of Qualifying Insurance until it expires, even if the Qualifying Insurer then ceases to write, or be authorised to write, new insurance business.

Council
means the Council of the Society.
Difference In Conditions Policy
means a contract of professional indemnity insurance, made between one or more Qualifying Insurers and a Firm, which provides cover including the Minimum Terms and Conditions as modified in accordance with paragraph 2 of Appendix 3 to these Rules.
Eligible Firm
means any Firm which is eligible to be in the Assigned Risks Pool, being any Firm other than:
  • (a)

    a Firm that has been in the Assigned Risks Pool for twelve months or more in the four Indemnity Periods immediately prior to the date from which cover is sought, without the prior written approval of the Council unless:twenty four months or more (or twenty five months or more in the case of a Firm which was in the Assigned Risks Pool for the whole of the Indemnity Period from 1 September 2003 to 30 September 2004) in the four Indemnity Periods immediately prior to the date from which cover is sought, without the prior written approval of the Council; or

    • (i)

      the date from which cover is sought is on or before 1 October 2010; and

    • (ii)

      immediately prior to that date the Firm is in the Assigned Risks Pool, without the prior written approval of the Council, for less than twenty four months or more (or twenty five months or more in the case of a Firm which was in the Assigned Risks Pool for the whole of the Indemnity Period from 1 September 2003 to 30 September 2004) in the four Indemnity Periods immediately prior to thethat date from which cover is sought, without the prior written approval of the Council; or, in which case the Firm is eligible to be in the Assigned Risks Pool only for any unexpired part of the twenty four or twenty five month period (as the case may be);

  • (b)

    a Firm determined by the Council not to be an Eligible Firm by reason of its being treated as one single Firm with one or more other Firms already in the Assigned Risks Pool for the purposes of Rule 12.5 or Rule 12.6; or

  • (c)

    subject to Rule 12.3, a Firm that at the end of any Indemnity Period to which these Rules apply is in Policy Default; or

  • (d)

    a Firm which, at the time it applies to enter the Assigned Risks Pool, already has in place Qualifying Insurance outside the Assigned Risks Pool for the Indemnity Period in which that Firm requests cover through the Assigned Risks Pool to commence.

  • (e)

    (e) a Firm that has never had in place Qualifying Insurance except through the Assigned Risks Pool.

Commentary:

Firms cannot remain insured through the Assigned Risks Pool indefinitely. A Firm which at 1 October 2010 has been in the Assigned Risks Pool during the previous four indemnity periods is eligible for cover through the Assigned Risks Pool for a maximum of twenty four months (or twenty five months in the specified circumstances) less the aggregate number of months in which that Firm was insured through the Assigned Risks Pool during those previous four indemnity periods. For example, a Firm which has been insured through the Assigned Risks Pool for the 2004/052005/062007/08 and 2006/072008/09 Indemnity Periods will not be eligible to be insured through the Assigned Risks Pool for the 2009/10 Indemnity Period2010/11 Indemnity Period. Additionally, for the 2010/2011 indemnity year, a Firm which has not been insured through the Assigned Risks Pool in any of the four indemnity periods expiring on 1 October 2010 will, as from that date be entitled to be insured through the Assigned Risks Pool for a maximum of twelve months during the four indemnity years prior to the date from which cover is sought.

Subject to any waiver granted under Rule 19, any Firm which no longer fulfils the definition of an Eligible Firm is therefore required to obtain Qualifying Insurance from a Qualifying Insurer outside the Assigned Risks Pool, or to cease Practice.

A newly created Firm not previously regulated by the Solicitors Regulation Authority or a Non-SRA Firm which elects (and is accepted) to become regulated by the Solicitors Regulation Authority must obtain Qualifying Insurance in the open market outside the Assigned Risks Pool.

In addition, a Firm is not eligible to join the Assigned Risks Pool if it has already obtained Qualifying Insurance from a Qualifying Insurer outside the Assigned Risks Pool for the relevant Indemnity Period.

Firm
means:
  • (a)

    Partnership of two or more personsRecognised Sole Practitioner; or

  • (b)

    any Recognised Body (as constituted from time to time, ); or

  • (c)

    any solicitor or Registered European Lawyer who is a sole practitioner, unless that sole practitioner is a Non-SRA Firm; or

  • (d)

    any Partnership (as constituted from time to time) which is eligible to become a Recognised Body and which meets the requirements applicable to Recognised Bodies set out in rules 14.01, 14.03 and 14.04 of the Solicitors' Code of Conduct 2007, unless that Partnership is a Non-SRA Firm,

whether before or during any relevant Indemnity Period), .

consisting of:

  • (i)

    one or more Solicitors and/or Registered European Lawyers and/or Recognised Bodies; or

  • (ii)

    one or more Solicitors and/or Registered European Lawyers, together with one or more Registered Foreign Lawyers; or

  • (iii)

    one or more Registered European Lawyers together with one or more non-registered European lawyers, with or without one or more Solicitors and/or Registered Foreign Lawyers, as permitted for practice in England and Wales by rule 12 of the Solicitors' Code of Conduct 2007; or

  • (iv)

    one or more Registered European Lawyers together with one or more non-registered European lawyers and one or more Recognised Bodies, with or without one or more Solicitors, as permitted for practice in England and Wales by rule 12 of the Solicitors' Code of Conduct 2007; or

  • (b)

    any sole practitioner being either a Solicitor or Registered European Lawyer; or

  • (c)

    any Recognised Body.

Commentary:

If you are unsure whether you or your business fall within this definition, you should consult the Solicitors Regulation Authority. Contact details appear at the end of the introductory commentary.

Firm in Default
means a Firm that has failed to obtain Qualifying Insurance outside the Assigned Risks Pool and which,
  • (a)

    in the case of an Eligible Firm, has failed to apply in accordance with these Rules to be admitted into the Assigned Risks Pool before either the start of any Indemnity Period to which these Rules apply or the start of its Practice, whichever is the later; or

  • (b)

    in the case of a Firm which is not an Eligible Firm, is a Firm which is carrying on or continuing to carry on a Practice without Qualifying Insurance outside the Assigned Risks Pool; or

  • (c)

    in the case of a Run-off Firm, is a Run-off Firm which has failed to make an application in manner prescribed by these Rules to be issued with an ARP Run-off Policy; or

  • (d)

    is a Firm which is a Firm in Default by virtue of Rule 10.4,.

    or a Firm which, having previously obtained Qualifying Insurance, has failed to obtain alternative Qualifying Insurance when required to do so in accordance with Rule 6.

Commentary:

A Firm In Default, and each Principal in that Firm, will be required to pay the ARP Default Premium, and/or the ARP Run-Off Premium to the Assigned Risks Pool, and each Principal in that Firm will have committed a disciplinary offence by having breached these Rules. Refer to Part 4 of these Rules for the provisions that apply to a Firm In Default.

Indemnity Period
means the period of one year starting on 1 September 2000, 2001 or 2002, the period of 13 calendar months starting on 1 September 2003, or the period of one year starting on 1 October in any subsequent calendar year.
Commentary:

Under the Qualifying Insurer's Agreement, each Policy is required to expire at the end of an Indemnity Period. It is envisaged that any change to these Rules or to the Minimum Terms and Conditions would take effect from the start of an Indemnity Period, so that at any one time, all Policies in force comply with the same version of these Rules and the Minimum Terms and Conditions.

Qualifying Insurers are permitted under the Qualifying Insurer's Agreement to issue a Policy covering more than one Indemnity Period, provided that the Policy expires at the end of a subsequent Indemnity Period, and provided that the terms of the Policy are amended if required to reflect any change in the Rules or the Minimum Terms and Conditions while the Policy is in force.

Insolvency Event
means in relation to a Qualifying Insurer:
  • (a)

    the appointment of a provisional liquidator, administrator, receiver or an administrative receiver; or

  • (b)

    the approval of a voluntary arrangement under Part 1 of the Insolvency Act 1986 or the making of any other form of arrangement, composition or compounding with its creditors generally; or

  • (c)

    the passing of a resolution for voluntary winding up where the winding up is or becomes a creditors' voluntary winding up under Part IV of the Insolvency Act 1986; or

  • (d)

    the making of a winding up order by the court; or

  • (e)

    the making of an order by the court reducing the value of one or more of the Qualifying Insurer's contracts under section 377 of the Financial Services and Markets Act 2000; or

  • (f)

    the occurrence of any event analogous to any of the foregoing insolvency events in any jurisdiction outside England and Wales.

Limited Liability Partnership
means a limited liability partnership incorporated under the Limited Liability Partnerships Act 2000.
Manager means:
  • (a)

    a Partner in a Partnership;

  • (b)

    a member of a Limited Liability Partnership; or

  • (c)

    a director of a company.

Minimum Terms and Conditions
means the minimum terms and conditions with which a Policy of Qualifying Insurance is required by these Rules to comply a copy of which is annexed as Appendix 1 to these Rules.
Commentary:

All Qualifying Insurers agree under the Qualifying Insurer's Agreement to issue Policies which comply with the Minimum Terms and Conditions. However, under Rule 4 it remains the duty of each Firm and each Principal within that Firm to ensure that the Policy issued to it is issued by an insurer which is a Qualifying Insurer for the Indemnity Period in question, and that it complies with the Minimum Terms and Conditions. The SRA does not approve Qualifying Insurers, nor does it review their policy terms.

The standard form ARP Policy does comply with the Minimum Terms and Conditions.

In addition, each Firm should satisfy itself that the professional indemnity insurance that it has in place is sufficient. This may mean that the Firm takes out additional insurance over and above that provided under the Minimum Terms and Conditions. Any such "top-up" cover is outside the scope of these Rules, and does not have to be taken out with a Qualifying Insurer.

Most recognised bodies are required to obtain cover complying with the minimum terms and conditions and with a sum insured of £3 million, rather than £2 million for other Firms. The definition of "Relevant Recognised Body" in clause 8.2 of the Minimum Terms and Conditions indicates which recognised bodies this requirement applies to.

Non-SRA Firm
means a sole practitioner, Partnership, Limited Liability Partnership or company which is not authorised to practise by the Solicitors Regulation Authority, and which is either:
  • (a)

    authorised or capable of being authorised to practise by another Approved Regulator; or

  • (b)

    not capable of being authorised to practise by any Approved Regulator.

Partner and Partnership
refer to means an unincorporated Firm, and not to in which persons are or are held out as partners and does not include a Firm incorporated as a limited liability partnership.Limited Liability Partnership and Partner means a person who is or is held out to be a partner in a Partnership.
Commentary:

A limited liability partnership is treated for these purposes as a Recognised Body, rather than as a partnership.

Period Of Default
means in relation to a Firm in Default the period starting with the date when such Firm first became a Firm in Default and ending with the date when it ceased to be a Firm in Default.
Policy
means a contract of professional indemnity insurance made between one or more persons, each of which is a Qualifying Insurer, and a Firm, including where the context permits an ARP Policy and an ARP Run-off Policy.
Policy Default
means a failure on the part of a Firm or any Principal of that Firm:
  • (a)

    to pay for more than two months after the due date for payment all or any part of the premium or any other sum due in respect of a Policy (including without limitation any payment due under Rule 14.1); or

  • (b)

    to pay for more than two months after the due date for payment all or any part of any ARP Premium, any ARP Default Premium, or any ARP Run-Off Premium, or any instalment payable in relation thereto whether payable to the ARP Manager or otherwise; or

  • (c)

    to reimburse within two months a Qualifying Insurer (including the ARP Manager on behalf of Qualifying Insurers) in respect of any amount falling within a Firm's Policy excess which has been paid on an insured's behalf to a claimant by a Qualifying Insurer or by the ARP Manager.

    For the purposes of this definition, the due date for payment means, in respect of any Policy or any payment to be made under any Policy:

    • (i)

      the date on which such payment fell due under the terms of the Policy or any related agreement or arrangement; or

    • (ii)

      if a Firm was first required under these or any previous Rules to effect such a Policy prior to the date on which it did so, the date if earlier on which such payment would have fallen due had such Policy been effected by the Firm when it was first required to do so under these Rules or any previous rules.

Commentary:

Principals are committing a disciplinary offence if they or their Firm is in Policy Default, whether as a result of failing to pay premium when demanded or as a result of failing to take out a Policy when required to do so. In addition, their Firm will cease to be an Eligible Firm for the purpose of taking out or renewing an ARP Policy.

Practice
means the whole or such part of the Private Practice of a Firm as is carried on from one or more offices in England and Wales.
Commentary:

The Rules require Firms to take out Policies which include cover in accordance with the Minimum Terms and Conditions for that part of their Practice carried on from offices located in England and Wales. They do not apply to any part of the Practice of the Firm carried on from offices outside England and Wales (although rule 15.26 of the Solicitors' Code of Conduct 2007 does apply in such cases). However, the cover in relation to the Practice carried on from offices located in England and Wales must extend to acts or omissions wherever in the world they occur, and would therefore include, for example, a Principal based in a Firm's London office who travels to Paris to advise a client.

If you are unsure whether you or your business fall within this definition, you should consult the Solicitors Regulation Authority. Contact details appear at the end of the introductory commentary.

Principal
means:
  • (a)

    where the Firm is or was:

    • (i)

      a sole practitioner - that practitioner and any person held out as a Partner of that practitioner;

    • (ii)

      a Partnership - each Partner of that Firm and any person held out as a Partner;

    • (iii)

      a Recognised Body which is a company with a share capital - each director of that body and any person held out as a director and any person company and any solicitor, Registered European Lawyer or Registered Foreign Lawyer who:

      • (A)

        is held out as a director; or

      • (B)(A)

        beneficially owns the whole or any part of a share in such Recognised Bodythe company; or

      • (C)(B)

        is the ultimate beneficial owner of the whole or any part of a share in such Recognised Bodythe company.

    • (iv)

      a Recognised Body which is a company without a share capital – each director of that bodycompany and any person held out as a director and any person solicitor, Registered European Lawyer or Registered Foreign Lawyer who:

      • (A)

        is held out as a director; or

      • (B)

        is a member of such Recognised Body; orthe company; or

      • (C)(B)

        is the ultimate owner of the whole or any part of a body corporate or other legal person which is a member of such Recognised Bodythe company;

    • (v)

      a Recognised Body which is a limited liability partnershipLimited Liability Partnership – each member of that body, and any person Limited Liability Partnership, and any solicitor, Registered European Lawyer or Registered Foreign Lawyer who is the ultimate owner of the whole or any part of a body corporate or other legal person which is member of such Recognised Bodythe Limited Liability Partnership.

  • (b)

    where a Recognised Body is a partner or held out as a partner, all such persons as are referred to in body corporate or other legal person is a Partner in the Firm, all solicitors, Registered European Lawyers or Registered Foreign Lawyers who are within paragraph (a)(iii) of this definition (including sub paragraphs (A) and (BC) thereof), paragraph (a)(iv) of this definition (including sub paragraphs (A) and (BC) thereof), andor paragraph a(v) of this definition.

Commentary:

It is the duty of each Principal, under Rule 4, to ensure that the Firm has Qualifying Insurance at all times.

Private Practice
includes without limitation all the professional services provided by a Firm including acting as a personal representative, trustee, attorney, notary, licensed insolvency practitioner or in any other role in conjunction with a Practice, and includes services provided pro bono publico, but does not include:
  • (a)

    Practice carried on by a Solicitor or Registered European Lawyer in the course of employment with an employer other than a Firm; or

  • (b)

    Practice carried on through a Non-SRA Firm; or

  • (c)(b)

    discharging the functions of any of the following offices or appointments:

    • (i)

      judicial office;

    • (ii)

      Under Sheriffs;

    • (iii)

      members and clerks of such tribunals, committees, panels and boards as the Council may from time to time designate but including those subject to the Tribunals and Inquiries Act 1992, the Competition Commission, Legal Services Commission Review Panels and Parole Boards;

    • (iv)

      Justices' Clerks;

    • (v)

      Superintendent Registrars and Deputy Superintendent Registrars of Births, Marriages and Deaths and Registrars of Local Crematoria;

    • (vi)

      such other offices as the Council may from time to time designate; or

  • (d)(c)

    Practice consisting only of:

    • (i)

      providing professional services without remuneration for friends, relatives, or companies wholly owned by the solicitor or Registered European Lawyer's family, or registered charities; or

    • (ii)

      administering oaths and taking affidavits.

Commentary:

If you are unsure whether you or your Practice fall within this definition, you should consult the Solicitors Regulation Authority. Contact details appear at the end of the introductory commentary.

Qualifying Insurance
means a single Policy which includes the Minimum Terms and Conditions, or more than one Policy which, taken together, include the Minimum Terms and Conditions, and each of which includes the Minimum Terms and Conditions except only in relation to the Sum Insured (as defined in the Minimum Terms and Conditions).
Commentary:

All Firms are required to take out and maintain, as a minimum, Qualifying Insurance. This may take the form of a single policy, or policies written by more than one Qualifying Insurer which together provide the minimum cover required under these Rules.

Qualifying Insurer
means an Authorised Insurer which has entered into a Qualifying Insurer's Agreement with the Society which remains in force for the purposes of underwriting new business at the date on which the relevant contract of Qualifying Insurance is made.
Commentary:

A list of all Qualifying Insurers appears on the website of the Solicitors Regulation Authority at www.sra.org.uk, and is also available from the Solicitors Regulation Authority. Contact details appear at the end of the introductory commentary.

Qualifying Insurer's Agreement
means an agreement in such terms as the Society may from time to time prescribe setting out the terms and conditions on which a Qualifying Insurer may provide professional indemnity insurance to solicitors and others in Private Practice in England and Wales.
Commentary:

A copy of this standard form agreement, which each Qualifying Insurer is required to enter into, is available on request from the Solicitors Regulation Authority. Contact details appear at the end of the introductory commentary.

Recognised Body
means a body corporate for the time being recognised by the Solicitors Regulation Authority under section 9 of the Administration of Justice Act 1985. 1985 and the SRA Recognised Bodies Regulations [2009].
Recognised Sole Practitioner
means a solicitor or Registered European Lawyer authorised by the Solicitors Regulation Authority under section 1B of the Solicitors Act 1974 to practise as a sole practitioner.
Registered European Lawyer
means an individual registered with the Society under regulation 17 of the European Communities (Lawyer's Practice) Regulations 2000.
Registered Foreign Lawyer
means an individual registered with the Society under section 89 of the Courts and Legal Services Act 1990.
Rules
means these rules as from time to time modified or amended.
Run-off Firm
means a Firm or former Firm which has ceased to practise in circumstances where, in accordance with paragraph 5.1 of the Minimum Terms and Conditions, run-off cover is not required to be provided by any Qualifying Insurer.
Society
means the Law Society of England and Wales.
Solicitor
means a person who has been admitted as a solicitor and whose name is on the roll (within the meaning of the Solicitors Act 1974) and who practises as a solicitor whether or not he or she has in force a practising certificate as referred to in that Act and also includes practice under home title of a former Registered European Lawyer who has become a solicitor.
Solicitors Regulation Authority
means the Solicitors Regulation Authority carrying out regulatory functions assigned to the Law Society as an Approved Regulator.
Special Measures
means such measures as the Council may from time to time require with a view to reducing the risk of claims being made against a Firm in the future or with a view to enabling a Firm in the future to obtain Qualifying Insurance outside the Assigned Risks Pool.
Supplementary Run-off Cover
means run-off cover provided by the Solicitors Indemnity Fund following the expiry of run-off cover provided to a Firm in accordance with these Rules or otherwise under a Policy (but subject to compliance with the Minimum Terms and Conditions).
  • 3.2

    Interpretation

    In these Rules, unless the context otherwise requires:

    • (a)

      the singular includes the plural, and vice versa;

    • (b)

      a reference to a person includes a body corporate, partnerships, and other unincorporated associations or bodies of persons;

    • (c)

      a reference to a Rule is to a Rule forming part of these Rules;

    • (d)

      a reference to any statute, statutory provision, code or regulation includes:

      • (i)

        any subordinate legislation (as defined by section 21(1) of the Interpretation Act 1978) made under it; and

      • (ii)

        any provision which it has superseded or re-enacted (with or without modification) or amended, and any provision superseding it or re-enacting it (with or without modification) or amending it either before, or at the date of the commencement of these Rules, or after the date of the commencement of these Rules;

    • (e)

      references to the Society and to the Council include the Solicitors Regulation Authority and the Legal Complaints Service, and any body or person which succeeds in whole or in part to the functions of the Society, the Council, the Solicitors Regulation Authority or the Legal Complaints Service, and any delegate of the Society, the Council, the Solicitors Regulation Authority, the Legal Complaints Service or any such body or person;

    • (f)

      headings are for ease of reference only and shall not affect the interpretation of these Rules;

    • (g)

      explanatory notes and commentary shall be ignored in interpreting these Rules; and

    • (h)

      the appendices to these Rules form part of these Rules.

    These Rules will be governed by and interpreted in accordance with English law.

PART 2: RESPONSIBILITY AND MONITORING

4 Obligation to effect insurance

  • 4.1

    All Firms carrying on a Practice during any Indemnity Period beginning on or after 1 October 2008 20092010 must take out and maintain Qualifying Insurance under these Rules.

  • 4.2

    A solicitor or Registered European Lawyer is not required to take out and maintain Qualifying Insurance under these Rules in respect of work done as an employee or whilst otherwise directly engaged in the Practice of another Firm (including without limitation as an Appointed Person), where that Firm is required by these Rules to take out and maintain Qualifying Insurance.

  • 4.3

    Run-off Firm must apply in accordance with these Rules to be issued with an ARP Run-off Policy.

  • Commentary:

    Under these Rules, Firms have a continuing obligation to ensure that they have Qualifying Insurance in place at all times with effect from 1 October 2008 20092010. Refer to the definitions of Practice, amongst others, to establish whether a Firm falls within the scope of these Rules. Firms should also check that any insurance that they take out in order to comply with these Rules (as opposed to any "top-up" cover) is taken out with a Qualifying Insurer. A list of Qualifying Insurers appears on the website of the Solicitors Regulation Authority at www.sra.org.uk, and is also available from the Solicitors Regulation Authority. Contact details appear at the end of the introductory commentary.

    Firms should note in particular that work carried out by an Appointed Person for that Firm may be covered by the Firm's Policy, whether that person is engaged as an employee or on a contract for services.

    If a Firm cannot obtain a Policy from a Qualifying Insurer it should apply to join the Assigned Risks Pool in accordance with Part 3 of the Rules, if it is an Eligible Firm. If it is not an Eligible Firm, it must cease Practice.

    Note that, under the Minimum Terms and Conditions, a Policy, once taken out, cannot be cancelled before the end of an Indemnity Period unless:

    • (1) the Policy is an ARP Policy and the Firm has replaced it with a Policy of Qualifying Insurance outside the Assigned Risks Pool; or
    • (2) the Firm merges with another Firm and a Policy of Qualifying Insurance is in place for the merged Firm; or
    • (3) it subsequently transpires that the Firm was not in fact required to take out and maintain a Policy under these Rules; or
    • (4) in the case of an ARP Policy, it subsequently transpires that the Firm was not was not, or has ceased to be, an Eligible Firm; or
    • (5) the Qualifying Insurer which issues the Policy becomes the subject of an Insolvency Event, and the Firm has replaced the Policy with another Policy of Qualifying Insurance.

    The effect of cancellation in the circumstances described in (3) or (4) above is that the Firm ceases to have Qualifying Insurance in place with effect from the cancellation, and would therefore be in breach of Rule 4.1 if it were to carry on a Practice thereafter without taking out a new Policy.

    Most Recognised Bodies are required to obtain cover complying with the Minimum Terms and Conditions and with a sum insured of £3 million, rather than £2 million for other Firms. The definition of "Relevant Recognised Body" in clause 8.2 of the Minimum Terms and Conditions indicates which Recognised Bodies this requirement applies to.

  • 4.4

    The provisions of this Rule 4 shall be without prejudice to the ability of Firms to include as insureds on a Policy persons not required under these Rules to be insured.

5 Responsibility

  • 5.1

    Each Firm carrying on a Practice during any Indemnity Period beginning on or after 1 October 2008 20092010, and any person who is a Principal of such a Firm, must ensure:

    • (a)

      that the Firm has in place and maintains Qualifying Insurance outside the Assigned Risks Pool during any such Indemnity Period;

    or, in the case of an Eligible Firm,

    • (b)

      that the Firm has applied to enter the Assigned Risks Pool in accordance with the procedure set out in Rule 10;

    in either case before the start of any relevant Indemnity Period or the start of Practice whichever is later.

  • Commentary:

    Note that the duty to ensure that Qualifying Insurance is in place rests not just on the Firm as a whole, but also on every Principal within that Firm.

  • 5.2

    A Run-off Firm, and any person who was a Principal of that Run-off Firm immediately prior to it becoming a Run-off Firm, must ensure that the Run-off Firm has applied to enter the Assigned Risks Pool in accordance with the procedure set out in Rule 13.4(a). Making such an application does not absolve any Firm or person from any breach of Rule 5.1.

  • Commentary:

    A Firm which has continued to practise without Qualifying Insurance immediately prior to closing down is required to apply for Run-Off Cover through the Assigned Risks Pool, but the Firm and any Principal of the Firm may still face action for a breach of Rule 5.1 for practising without Qualifying Insurance.

6 Insolvency of Qualifying Insurer

  • 6.1

    If a Firm is carrying on a Practice which is being provided with Qualifying Insurance by a Qualifying Insurer (whether alone or together with other Qualifying Insurers) and that Qualifying Insurer is the subject of an Insolvency Event then, subject to any waiver under Rule 19.1, the Firm and any person who is a Principal of the Firm must ensure:

    • (a)

      that the Firm has in place Qualifying Insurance with another Qualifying Insurer which must be arranged as soon as may be reasonably practicable and in any event within four weeks of such an Insolvency Event;

    or, in the case of an Eligible Firm,

    • (b)

      that the Firm applies within that period of four weeks to enter the Assigned Risks Pool in accordance with the procedure set out in Rule 10.

  • Commentary:

    It is important to be aware that the arrangements for professional indemnity insurance put in place by the Solicitors Regulation Authority do not seek to protect Firms against the insolvency of a Qualifying Insurer. If an Insolvency Event occurs in respect of an insurer, that insurer will cease to be a Qualifying Insurer for the purposes of writing new policies and Firms insured by that insurer must effect alternative insurance in accordance with these Rules. This is because, in such circumstances, the insurer may not be in a position to pay claims in full. Any Firm which has qualifying insurance with a Qualifying Insurer which is the subject of an Insolvency Event mustis required therefore to obtain replacement cover as soon as possible, and in any event within four weeks of the Insolvency Event occurring. Having done so, a Firm should cancel the policy with the insolvent insurer and, if entitled to do so, seek a return of the premium relating to the balance of the Indemnity Period from the insurer which has become the subject of the Insolvency Event.

7 Monitoring

The Council may require from a Firm or any Principal in a Firm carrying on, or reasonably believed by the Council to be carrying on, a Practice such information and evidence as it may reasonably require to satisfy itself that such a Firm has in place Qualifying Insurance.

8 Registered European Lawyers

  • 8.1

    The special provisions contained in Appendix 3 to these Rules shall apply to a Firm that has at least one Principal who is a Registered European Lawyer.

PART 3: THE ASSIGNED RISKS POOL

9 Operation of the Assigned Risks Pool

The Assigned Risks Pool shall be managed by the ARP Manager.

10 Applying to the Assigned Risks Pool

  • 10.1

    Where a Firm carrying on a Practice has not obtained Qualifying Insurance outside the Assigned Risks Pool in respect of any Indemnity Period or part thereof to which these Rules apply it must, if an Eligible Firm, apply in accordance with the procedure set out in this Rule 10 to enter the Assigned Risks Pool, subject to Rule 10.2, before the start of the relevant Indemnity Period.

  • Commentary:

    A Firm which for any reason does not have Qualifying Insurance in place should apply to the Assigned Risks Pool before the start of the relevant Indemnity Period if it is an Eligible Firm. However, it is important to note that premiums payable to the Assigned Risks Pool are intended to be high, and Firms would therefore be prudent to seek quotations from Qualifying Insurers outside the Assigned Risks Pool before the start of an Indemnity Period.

    An ARP Policy can be cancelled if it is replaced by a Policy with a Qualifying Insurer. A return premium may be payable to a Firm which cancels an ARP Policy in these circumstances - refer to Appendix 2 for the basis on which the ARP Premium and any return premium is calculated.

    Firms should also be aware of the other consequences of being insured through the Assigned Risks Pool set out in this part of the Rules, including the need to comply with any Special Measures under Rule 10, and the limitations on eligibility set out in the definition of "Eligible Firm".

  • 10.2

    A Firm about to start carrying on a Practice which has not already obtained Qualifying Insurance outside the Assigned Risks Pool may, if an Eligible Firm, apply to enter the Assigned Risks Pool after the start of any relevant Indemnity Period. A Firm must not start carrying on a Practice without either having obtained Qualifying Insurance outside the Assigned Risks Pool or, alternatively, in the case of an Eligible Firm, without having applied in accordance with the procedure set out in this Rule 10 to enter the Assigned Risks Pool.

  • Commentary:

    Any Firm wishing to start up a new Practice must obtain Qualifying Insurance, whether in the open market with a Qualifying Insurer or throughother than the Assigned Risks Pool, before starting Practice. For the avoidance of doubt, a Firm which has not previously been regulated by the Solicitors Regulation Authority or a Non-SRA Firm that elects (and is accepted) for regulation by the SRA must also arrange Qualifying Insurance outside the Assigned Risks Pool in order to commence carrying on a Practice. Subject to this requirement, a new Firm may start Practice at any time during an Indemnity Period.

  • 10.3

    By applying to enter the Assigned Risks Pool, the Firm and any person who is a Principal of that Firm agrees to, and (if the Firm is admitted to the Assigned Risks Pool) the Firm and any person who is a Principal of that Firm shall be jointly and severally liable to:

    • (a)

      pay the ARP Premium in accordance with these Rules, together with any other sums due to the ARP Manager under the ARP Policy; and

    • (b)

      submit to such investigation and monitoring and to pay the Society's costs and expenses as referred to in Rule 11.2; and

    • (c)

      pay any costs and expenses incurred by the Society or the ARP Manager incurred as a result of any failure or delay by the Firm in complying with these Rules;

    and shall be required to implement at the expense of the Firm any Special Measures.

  • Commentary:

    Firms within the Assigned Risks Pool may be subject to a range of Special Measures. The appointed inspectors (in the first instance, the Forensic Investigations Unit of the Compliance Directorate) will visit a Firm insured through the Assigned Risks Pool to carry out investigation and monitoring of the Firm. This is in order to determine what Special Measures are appropriate for that Firm, and to ensure that those measures are fully implemented. It should be noted that the costs of investigation and monitoring by the Inspection & Investigation Directorate, costs and expenses incurred through any failure or delay by the Firm to comply, and the implementation of the Special Measures will be payable by the Firm concerned (and by any Principal of that Firm), in addition to paying the ARP Premium.

  • 10.4

    Any material misrepresentation made in an application for admission to the Assigned Risks Pool shall, subject to any waiver under Rule 19.1, render the Firm a Firm in Default for the purposes of Part 4 of these Rules. The provisions of that Part shall apply to the Firm as if that Firm had not been admitted to the Assigned Risks Pool but neither the Firm nor any Principal of the Firm shall be entitled to the refund of any ARP Premium paid to the ARP Manager. Any amount so paid shall be credited against any sums payable under Part 4 of these Rules.

  • Commentary:

    Although an ARP Policy, once issued, cannot be cancelled (unless and until a replacement Policy with a Qualifying Insurer is issued to that Firm), a Firm which makes a material misrepresentation in its application to be admitted to the Assigned Risks Pool will be nevertheless treated in the same way as a Firm in Default.

  • 10.5

    The application for admission to the Assigned Risks Pool must be made to the ARP Manager on the proposal form provided by the ARP Manager.

  • 10.6

    The applicant must state on the proposal form the date from which cover is sought. This date must not be earlier than the date on which the application is made for admission to the Assigned Risks Pool. The applicant must also provide such other information as the ARP Manager requires for the purposes of setting a premium.

  • 10.7

    If the applicant is a Firm in Default it must state on the proposal form that it is a Firm in Default and give the date of the start of the Period of Default from which retrospective cover is sought.

  • Commentary:

    The ARP Premium is calculated in accordance with a formula set out in Appendix 2, and is linked to the gross fees of the Firm concerned. It is important to note that, under Rule 15, any material misrepresentation in an application will result in the Firm being treated in the same way as a Firm In Default, including being liable to pay the ARP Default Premium.

  • 10.8

    The Firm, together with each Principal of the Firm, must ensure that the Firm's application has been made and must provide the ARP Manager with all information it reasonably requires to process the application.

  • Commentary:

    It is in the interests of the Firm and each of the Principals of that Firm to verify that the application to enter the Assigned Risks Pool has been received and that the Firm is insured. An application should be made before the start of an Indemnity Period. Failure to comply with the requirements of this Rule and Rules 13 to 15 will result in the Firm becoming a Firm in Default.

  • 10.9

    If a Firm has not received a written acknowledgement of its application from the ARP Manager 30 days after making the application, or within such other period as is stated on the proposal form, the Firm and any person who is a Principal of the Firm must seek written confirmation that the Firm's application has been received by the ARP Manager. If that written confirmation is not obtained within seven days after the end of the 30 days, or within seven days after such other period specified on the proposal form, the application shall be deemed not to have been made.

  • 10.10

    An applicant whose first application is deemed under Rule 10.9 not to have been made must, within seven days of the day when under Rule 10.9 the first application is deemed not to have been made, make a fresh application. The Firm and any person who is a Principal of the Firm must ensure that the Firm is in a position to prove to the reasonable satisfaction of the Society that the Firm's fresh application was delivered within those seven days to the ARP Manager at the address specified on the proposal form. Provided the Firm's fresh application was so delivered, the application shall be treated as having been made at the date when the Firm's first application was made. A Firm that is not in a position to prove to the reasonable satisfaction of the Society that its fresh application was so delivered shall be deemed not to have made any application.

  • 10.11

    Provided that an application or, if necessary, a fresh application, has been made in accordance with Rules 10.5 to 10.10, a Firm which is an Eligible Firm will be covered in the terms of the ARP Policy to be issued to it from the start of the relevant Indemnity Period or, in the case of a Firm to which Rule 10.2 applies, the date specified in the application, being the date specified in accordance with Rule 10.6, until whichever is the earlier of:

    • (a)

      the end of the relevant Indemnity Period; or

    • (b)

      the date on which the Firm obtains Qualifying Insurance outside the Assigned Risks Pool; or

    • (c)

      the date when the Firm ceases to be an Eligible Firm.

  • Commentary:

    An Eligible Firm which should have applied to the Assigned Risks Pool before the start of an Indemnity Period but fails to do so will have breached these Rules by failing to take out a Policy from the start of the Indemnity Period. It may make a later application, but will be liable to pay the ARP Default Premium for the Indemnity Period in question. Each Principal in an Eligible Firm which fails to make an application in time commits a disciplinary offence.

  • 10.12

    Any Firm in the Assigned Risks Pool, and any person who is a Principal of that Firm, is liable to pay to the ARP Manager the ARP Premium in respect of that Firm within thirty days of such premium being notified to it by the ARP Manager.

  • Commentary:

    It is a disciplinary offence for a Firm and for any Principal of that Firm to fail to pay the ARP Premium (including the ARP Run-off Premium) to the ARP Manager within the required 30 day period. A Firm may enter into arrangements with, for example, a premium funding company (whether offered by the ARP Manager or arranged independently) to enable it to make payments by instalments, provided that the premium is received in full by the ARP Manager from the premium funding company within the required 30 day period.

11 Special Measures

  • 11.1

    An Eligible Firm that has applied to enter the Assigned Risks Pool in accordance with the procedure set out in Rule 10 will be issued with an ARP Policy by the ARP Manager.

  • Commentary:

    A copy of the standard-form ARP Policy is available on the website of the Solicitors Regulation Authority at www.sra.org.uk and is also available from the Solicitors Regulation Authority. Contact details appear at the end of the introductory commentary.

  • 11.2

    A Firm in the Assigned Risks Pool must if and to the extent required by the Council submit to investigation and monitoring by the Society and/or its agents, including investigation and monitoring:

    • (a)

      to determine the reasons why Qualifying Insurance outside the Assigned Risks Pool was not obtained;

    • (b)

      to ascertain what Special Measures should be taken by the Firm.

    The Society's costs and expenses of the investigation and monitoring and the Society's costs and expenses of ascertaining what Special Measures should be taken and of monitoring them shall be met by the Firm and by any person who is a Principal of that Firm. The amount of such costs and expenses shall be determined by the Society which shall not be required to give any detailed breakdown thereof.

  • Commentary:

    The appointed inspectors (in the first instance, the Forensic Investigations Department of the Inspection & Investigation Directorate) will visit a Firm insured through the Assigned Risks Pool to carry out investigation and monitoring. This is in order to determine what Special Measures should be taken and are appropriate for that Firm, and to ensure that those measures are fully implemented. It should be noted that the costs and expenses of investigation and monitoring by the Inspection & Investigation Directorate and the implementation of the Special Measures (together with VAT if applicable) will be payable by the Firm concerned (including each Principal of that Firm), in addition to paying the ARP Premium.

12 Time in the Assigned Risks Pool

  • 12.1

    A Firm may leave the Assigned Risks Pool at any time after it has satisfied the ARP Manager that the Firm has obtained Qualifying Insurance outside the Assigned Risks Pool at least until the expiry of the relevant Indemnity Period.

  • Commentary:

    Refer to Appendix 2 to determine whether any return premium will be payable on leaving the Assigned Risks Pool.

  • 12.2

    Subject to Rule 12.7, a Firm may only remain in the Assigned Risks Pool so long as it is an Eligible Firm, or if it becomes a Run-off Firm.

  • Commentary:

    Firms cannot remain insured through the Assigned Risks Pool for more than 2412 months in any five year periodfour consecutive Indemnity Periods, and should therefore seek insurance in the open market with a Qualifying Insurer as soon as practicable. A Firm which is no longer an Eligible Firm (because, for example, it has already been insured through the Assigned Risks Pool for 2412 months in the last five yearsfour Indemnity Periods) must either obtain Qualifying Insurance on the open market or cease carrying on Practice.

  • 12.3

    Subject to Rule 12.7(b), a Firm in Policy Default at the end of an Indemnity Period shall be deemed to be a Firm in Default for the purposes of Part 4 of these Rules and shall not be an Eligible Firm. This Rule shall not apply in any case where the Council is satisfied that there exists a genuine dispute between the Firm and a Qualifying Insurer or the ARP Manager which makes it unreasonable for the Firm to be deemed to be a Firm in Default pending the resolution of that dispute.

  • Commentary:

    A Firm in Policy Default must remedy that default before the start of an Indemnity Period if it wishes to obtain insurance through the Assigned Risks Pool at any time during that Indemnity Period. Alternatively, it must either obtain Qualifying Insurance in the open market, or cease carrying on Practice. If a Firm believes that there is a genuine dispute which justifies that Firm not being deemed to be a Firm in Default, it should apply to the Solicitors Regulation Authority as soon as possible before the start of the next Indemnity Period. Contact details appear at the end of the introductory commentary.

  • 12.4

    A Firm that is no longer an Eligible Firm must either have Qualifying Insurance outside the Assigned Risks Pool or forthwith cease carrying on Practice.

  • 12.5

    Where the Practice of a Firm (the Original Firm) which has at any time been in the Assigned Risks Pool is split between two or more Firms (the Successor Firms), the Council may in its absolute discretion treat the Successor Firms or any of them and the Original Firm as being a single Firm for the purposes of determining whether the Successor Firms or any of them are or remain an Eligible Firm.

  • 12.6

    Where the Practice of a Firm (the Original Firm) which has at any time been in the Assigned Risks Pool is merged with, acquired, absorbed, or by any other means taken over by a Firm (the Successor Firm) the Council may in its absolute discretion treat the Successor Firm and the Original Firm as being a Single Firm for the purposes of determining whether the Successor Firm is or remains an Eligible Firm.

  • Commentary:

    The purpose of this Rule is to ensure that the time limit on participation in the Assigned Risks Pool cannot be avoided by a merger or reconstitution of that Firm. A Firm which was not previously eligible to join the Assigned Risks Pool will not necessarily become an Eligible Firm by virtue of changes in the composition of a Firm. Firms which are unsure about their eligibility following any such change should consult the Solicitors Regulation Authority. Contact details appear at the end of the introductory commentary.

  • 12.7

    The Council shall have power in any particular case or cases:

    • (a)

      to allow a Firm to remain in or to re-enter the Assigned Risks Pool after any date when the Firm would otherwise cease to be an Eligible Firm; and

    • (b)

      to permit a Firm to be admitted into or remain in or to re-enter the Assigned Risks Pool notwithstanding that the Firm is in Policy Default on such terms and conditions as the Council may prescribe including the taking of steps by the Firm by a specified date or dates to remedy the Policy Default;

    and when such power is exercised the Firm shall continue to be an Eligible Firm for so long as the Council may from time to time permit and provided that it complies with any such terms and conditions.

  • Commentary:

    It is envisaged that these powers would be exercised only in exceptional circumstances. Any application seeking the exercise of this power should be made to the Solicitors Regulation Authority at least three months before the Firm in question would otherwise cease to be an Eligible Firm.

PART 4: FIRMS IN DEFAULT

13 Eligibility of Firms in Default

  • 13.1

    At any time during the Period of Default a Firm in Default is entitled to be admitted to the Assigned Risks Pool and to be issued with an ARP Policy in accordance with Rule 13.2, subject to the provisions of this Rule 13.

  • 13.2

    A Firm in Default is entitled to be admitted to the Assigned Risks Pool if:

    • (a)

      it was an Eligible Firm at the start of the Period of Default;

    • (b)

      had it been admitted to the Assigned Risks Pool at the start of the Period of Default, its admission at that time would not have rendered it ineligible to be admitted to the Assigned Risks Pool for any part of any subsequent Indemnity Period in which it was in fact admitted to the Assigned Risks Pool;

    • (b)(c)

      it has applied to join the Assigned Risks Pool in accordance with Rule 10;

    • (c)(d)

      the Firm discharges in full the ARP Default Premium calculated for the whole of the Indemnity Period or Indemnity Periods for which cover is sought within 30 days of such premium being notified to it by the ARP Manager or such longer period as the Council may allow;

    • (d)(e)

      the Firm will be subject to and comply with Rules 10.3(b) to 0 and 11.2.

  • Commentary:

    If a Firm fails to make an application to the Assigned Risks Pool at the start of an Indemnity Period, and does not have any other Policy of Qualifying Insurance in force for that Indemnity Period, it may still be eligible to be issued with an ARP Policy provided that it meets all of the requirements of Rule 13.1Rule 13.2. However, each Principal of the Firm will have committed a disciplinary offence, and the Firm and each Principal of that Firm will be liable to pay the ARP Default Premium under any ARP Policy issued.

  • 13.3

    An ARP Policy issued under this Rule may afford cover retrospectively from the start of the Period of Default until the earlier ofend of the then current Indemnity Period or, if earlier, the date on which the Firm in Default would have ceased to be an Eligible Firm, ignoring for these purposes any failure to pay the ARP Premium or the ARP Default Premium:

    • (a)

      the end of the then current Indemnity Period or, if earlier,; or

    • (b)

      the date on which the Firm in Default would have ceased to be an Eligible Firm, ignoring for these purposes any failure to pay the ARP Premium or the ARP Default Premium:; or

    • (c)

      the date on which, had the Firm in Default been admitted to the Assigned Risks Pool at the start of the Period of Default, its being covered by the Assigned Risks Pool from that time would have first caused it to have been ineligible to be admitted to the Assigned Risks Pool for any part of any subsequent Indemnity Period in which it was in fact admitted to the Assigned Risks Pool.

  • 13.4

    A Run-off Firm shall be entitled at any time following the date on which it first becomes a Run-off Firm to be admitted to the Assigned Risks Pool and to be issued with an ARP Run-off Policy, subject to the following conditions:

    • (a)

      the Run-off Firm has made an application to join the Assigned Risks Pool in manner provided by Rule 10.5 stating on the proposal form that it is a Run-off Firm and giving the date from which cover under an ARP Run-off Policy is sought;

    • (b)

      the ARP Run-off Premium is discharged in full within thirty days of such premium being notified by the ARP Manager to the Firm or such longer period as the Council may allow; and

    • (c)

      the Firm, and any person who is a Principal of that Firm, will be subject to and comply with Rule 10.3(c).

  • Commentary:

    A Run-off Firm will be eligible to be issued with an ARP Policy if it meets all of the requirements of Rule 13.4. However, each Principal of the Firm will have committed a disciplinary offence for failing to make an application to the Assigned Risks Pool for run-off cover in accordance with Rule 5.2, and the Firm and each Principal of the Firm will be required to pay the ARP Run-off Premium under any ARP Run-off Policy issued.

  • 13.5

    An ARP Run-off Policy shall provide run-off cover to a Run-off Firm retrospectively from the date on which it became a Run-off Firm until the end of the day immediately prior to the sixth anniversary of:

    • (a)

      the start of the Indemnity Period in which it became a Run-off Firm; or

    • (b)

      if applicable, the start of the last Indemnity Period, prior to it becoming a Run-off Firm, in which it both ceased to be an Eligible Firm and was a Firm in Default and continued as such until the date on which it became a Run-off Firm,

    whichever is the earlier.

  • Commentary:

    Run-off Firms which are issued with an ARP Run-off Policy obtain six years' run-off cover either from the start of the Indemnity Period in which their Practice ceased, or the date on which they ceased to be eligible to apply for an ARP Policy while practising uninsured.

  • 13.6

    Rule 12.7 shall apply so as to enable the Council to extend the period in Rule 13.3Rule 13.3b for which a Firm in Default may be issued with an ARP Policy.

  • Commentary:

    It is envisaged that this power would be exercised only in exceptional circumstances.

  • 13.7

    Any Firm that has been admitted to the Assigned Risks Pool under Rule 13.1 shall for the purposes of computing its continuing eligibility to remain in the Assigned Risks Pool be deemed to have been admitted to the Assigned Risks Pool at start of the Period of Default and to have remained continuously in the Assigned Risks Pool until the end of the Indemnity Period current at the date of its application.

  • 13.8

    Rule 15.2 shall not apply to a Firm which has under Rule 13 been admitted to the Assigned Risks Pool and which has been issued with an ARP Policy or an ARP Run-off Policy, the liability of the Firm and of any person who is a Principal of that Firm being limited in those circumstances to the excess payable under the terms of the Policy.

  • Commentary:

    If a Firm is eligible to be issued with an ARP Policy under Rule 13.1, or an ARP Run-off Policy under Rule 13.4 then, provided that it complies with the relevant requirements under Rule 13 and is issued with an ARP Policy or an ARP Run-off Policy, the Firm and the Principals of that Firm will be required to pay to the ARP Manager only the relevant premium and the excess in the event of any claim.

14 Firms which fail to apply to the Assigned Risks Pool

  • 14.1

    A Firm in Default which is entitled to be admitted to the Assigned Risks Pool and to be issued with an ARP Policy in accordance with Rule 13.1 but which does not make an application to join the Assigned Risks Pool shall, notwithstanding, be liable, together with any person who is a Principal of that Firm, to pay to the Society an amount equivalent to the ARP Default Premium calculated for the whole of the Period of Default.

  • 14.2

    A Firm in Default which is entitled to be admitted to the Assigned Risks Pool and to be issued with an ARP Run-off Policy in accordance with Rules 13.4 and 13.5 but which does not make an application to join the Assigned Risks Pool shall, notwithstanding, be liable, together with any person who is a Principal of that Firm, to pay to the Society an amount equivalent to the ARP Run-off Premium calculated for the whole of the period equivalent to that which would be provided by an ARP Run-off Policy in accordance with Rule 13.5, or, if shorter and if it can be ascertained, the Period of Default.

  • 14.3

    Any amount payable in accordance with Rules 14.1 or 14.2 shall be determined by the ARP Manager on the basis of such assumption as to the Firm's gross fees and other matters as the ARP Manager shall in its absolute discretion determine, and may be reviewed from time to time by the ARP Manager in its absolute discretion on the basis of any further information provided to it. Any such amount paid under Rule 14.1 or 14.2 shall be deducted from any amount payable pursuant to Rule 15.2. The ARP Manager may and is hereby authorised to recover all sums due under Rules 14.1 or 14.2 on behalf of the Society.

  • Commentary:

    If a Firm fails to make an application to the Assigned Risks Pool, but carries on Practice without having obtained Qualifying Insurance, each Principal in that Firm will have committed a disciplinary offence. The same is true if a Run-off Firm fails to apply to be issued with an ARP Run-off Policy. In each case, that Firm, and each Principal in that Firm, will also be liable under these Rules to:

    • pay an amount to the Society equivalent to the ARP Default Premium calculated for the whole of the Period of Default; and
    • reimburse to the Society in full under Rule 15 the amount of any claim (together with defence costs) made against the Firm and relating to the period when it did not have Qualifying Insurance in force, less any amount due under this Rule.

15 Arrangements in relation to uninsured Firms

  • 15.1

    The ARP Manager on behalf of the Society shall make arrangements with Qualifying Insurers to cover any Claim (as defined in the Minimum Terms and Conditions) against:

    • (a)

      a Firm in Default; and

    • (b)

      a Run-off Firm

    including any Defence Costs (as defined in the Minimum Terms and Conditions) relating to a Claim, in like manner and to the like extent as the Claim and the Defence Costs would have been covered had that Firm during the Period of Default been in the Assigned Risks Pool and been issued with an ARP Policy and/or, as the case may require, an ARP Run-off Policy.

  • 15.2

    Subject to Rule 13.8, Rule 14.1 and Rule 14.2, the Society on behalf of Qualifying Insurers shall be entitled to recover from each and every Principal in the Firm in Default during the Period of Default all amounts paid in or towards the discharge of a Claim and Defence Costs pursuant to Rule 15 together with interest thereon at Barclays Bank Plc base rate plus three per cent from the date when such amounts were respectively paid. The ARP Manager may and is hereby authorised to recover all sums due under this Rule on behalf of the Society.

  • 15.3

    A Firm shall not be deemed to have been admitted to the Assigned Risks Pool or to be covered in accordance with Rule 15 solely by virtue of the fact that the ARP Manager may conduct or settle any claim made against that Firm under the terms of any agreement between the Society and any Qualifying Insurer.

  • Commentary:

    If a Firm fails to make an application to the Assigned Risks Pool, but carries on Practice without having obtained Qualifying Insurance, each Principal in that Firm will have committed a disciplinary offence. The same is true if a Run-off Firm fails to apply to be issued with an ARP Run-off Policy. In each case, that Firm, and each Principal in that Firm, will also be liable under these Rules to:

    • reimburse to the Society in full the amount paid pursuant to Rule 15.1 in respect of any claim (together with defence costs) made against the Firm and relating to the period when it did not have Qualifying Insurance in force, less any amount due under Rule 14 (where applicable); and
    • pay an amount under Rule 14 (where applicable) to the Society equivalent to the ARP Default Premium calculated for the whole of the Period of Default.

    However, if a Firm in these circumstances is eligible under Rule 13.1 to be issued with an ARP Policy, then, provided that it complies with Rule 13.1 and is issued with an ARP Policy, the liability of the Firm and the Principals of that Firm will be limited, from that point on, to the ARP Default Premium and the excess payable under the terms of the ARP Policy.

PART 5: DISCIPLINARY OFFENCES AND REPORTING

16 Disciplinary consequences of failure to comply with these Rules

  • 16.1

    The provisions in Part 4 of the Rules are made without prejudice to the powers of the Council or the Society under the Solicitors Act 1974, the Administration of Justice Act 1985, the Courts and Legal Services Act 1990 or the European Communities (Lawyer's Practice) Regulations 2000, or rules made under any of them, to bring disciplinary proceedings against any Firm that has failed to comply with these Rules or any person who is or was a Principal in such a Firm or to intervene in a Practice carried on by such a Firm.

  • Commentary:

    Payment of the ARP Default Premium and/or the ARP Run-off Premium does not detract from the fact that the Firm in question, and each Principal of that Firm, has committed a breach of these Rules as a result of the Firm being a Firm in Default. If a Firm in Default is not an Eligible Firm, it must either obtain Qualifying Insurance in the open market, or cease carrying on Practice and make an application to the Assigned Risks Pool for run-off cover in accordance with Rule 5.2.

  • 16.2

    Without prejudice to any other disciplinary offence which may arise under these Rules, it shall be a disciplinary offence for any Firm or any person who is at the relevant time a Principal in a Firm to be in Policy Default, or to fail to implement any Special Measures to the satisfaction of the Society.

  • Commentary:

    Policy Default and Special Measures are defined in Rule 3.1. Note that a Firm that is carrying on a Practice while in Policy Default will also not be an Eligible Firm for the purpose of seeking further cover through the Assigned Risks Pool.

17 Use of information

  • 17.1

    Any Qualifying Insurer (including the ARP Manager) may, in relation to any Firm which applies to it for Qualifying Insurance, and in the case of the ARP Manager any Run-off Firm or Firm in Default, whether or not that Firm applies to enter the Assigned Risks Pool, bring to the attention of the Society (including, in the case of the matters referred to in Rule 17.1(f), the Legal Complaints Service and/or the Office for Legal Complaints (including the Legal Ombudsman)) at any time and without notice to the Firm concerned:

    • (a)

      any failure on the part of the Firm or any person who is a Principal of that Firm to pay any sum, including an ARP Premium, ARP Default Premium or ARP Run-off Premium, on or before the date specified in these Rules or to reimburse any amount falling within a Policy excess which has been paid out by a Qualifying Insurer to a claimant;

    • (b)

      a material inaccuracy in any proposal form submitted by or on behalf of the Firm;

    • (c)

      the fact that the Firm has become or is believed to have become a Run-off Firm;

    • (d)

      any matter or circumstances that would entitle the Firm's Qualifying Insurer to avoid or repudiate a Policy but for the provisions of clause 4.1 of the Minimum Terms and Conditions (and/or the corresponding of the Policy);

    • (e)

      any dishonesty or fraud suspected by a Qualifying Insurer on the part of any Insured as defined in the Minimum Terms and Conditions; and

    • (f)

      any claim of inadequate professional services made against the Firm or any Insured of that Firm of which it becomes aware.

  • Commentary:

    All Firms, whether they obtain their Qualifying Insurance on the open market or through the Assigned Risks Pool, or whether, having failed to obtain Qualifying Insurance, they are subject to the provisions of Part 4 of these Rules, are deemed to have consented to their Qualifying Insurer or the ARP Manager bringing to the attention of the Solicitors Regulation Authority any of the matters referred to Rule 17.1 that may be applicable to the Firm. Any such information is subject to the confidentiality provisions of Rule 17.4.

  • 17.2

    The Legal Complaints Service of the Society and/or the Office for Legal Complaints (including the Legal Ombudsman) may pass such information as it in its absolute discretion sees fit to any other department or office of the Society, and to any Qualifying Insurer, including the ARP Manager, in relation to any complaint of inadequate professional services against a Firm of which it becomes aware.

  • 17.3

    The Council may require any Qualifying Insurer or the ARP Manager to bring to the attention of the Society any of the matters referred to in Rule 17.1 where it reasonably believes there are matters which ought to be brought to the attention of the Society in accordance with Rule 17.1.

  • 17.4

    In respect of any information that may be brought to the attention of the Society in accordance with Rules 17.1 to 17.3:

    • (a)

      the Society shall keep all such information confidential;

    • (b)

      the Society shall not (except where and to the extent required by law or in the proper performance by the Society of its regulatory functions) at any time reveal any such information to any person other than a duly authorised employee of the Society or any of its subsidiaries; and

    • (c)

      any privilege attaching to such information shall not be regarded as having been waived whether by virtue of such information having been provided to the Society or otherwise.

  • 17.5

    The provisions of Rule 17.4 shall not prevent the Society from:

    • (a)

      making use of any information referred to in that Rule for the purpose of bringing disciplinary proceedings against any person; or

    • (b)

      in relation to information about a Firm's Policy under Rule 18, disclosing that information, where and to the extent that the Society in its absolute discretion considers it appropriate, to any person entitled to such information, and to any other department or office of the Society, including without limitation to the Legal Complaints Service and/or the Office for Legal Complaints (including the Legal Ombudsman).

18 Details of Qualifying Insurer

  • 18.1

    If a person (a Claimant) asserts a claim against a Firm or any person insured under that Firm's Policy, and where such claim relates to any matter within the scope of cover of the Minimum Terms and Conditions (whether or not such claim would or may be upheld), the Firm and any person who is at the relevant time (or, in the case of a Firm which has ceased Practice, any person who was immediately before that Firm ceased Practice) a Principal in that Firm shall be required, upon being so requested by that Claimant, by any person insured under that Firm's Policy, or by any other person with a legitimate interest, to provide to that person the following details in relation to that Firm's Policy:

    • (a)

      the name of the Qualifying Insurer(s) who issued the policy; and

    • (b)

      the policy number; and

    • (c)

      the address and contact details of the Qualifying Insurer(s) for the purpose of making a claim under the policy;

    in each case in respect of the Policy which it is reasonably believed to be the relevant Policy to respond to the claim, or, if applicable, the fact that the Firm or person against whom the claim is asserted is covered by Supplementary Run-off Cover.

  • Commentary:

    A Firm, and each Principal in that Firm, is required to provide details of that Firm's policy of Qualifying Insurance to any person who asserts a claim against anyone insured under that Firm's Policy. Under Rule 17, the Solicitors Regulation Authority has the power to disclose information regarding a Firm's Qualifying Insurer where it considers it appropriate to do so.

PART 6: GENERAL POWERS OF THE COUNCIL

19 Waiver powers

  • 19.1

    The Council shall have power on such terms and conditions as it shall think fit to waive any Rule or part of any Rule in a particular case or cases including extending the time, either prospectively or retrospectively, for the doing of any act under any Rule.

    • (a)

      Any application by any person for a waiver of any Rule or part of any Rule under the Solicitors' Indemnity Insurance Rules 2001 to 2008 20092010 must be made in writing to the Society as soon as reasonably practicable, and in any event no later than the relevant date set out below:

      • Solicitors' Indemnity Insurance Rules 2001

        Relevant date - whichever is the later of:

        • 30 November 2001; or
        • 3 calendar months from the occurrence of any event or circumstances first giving rise to the obligation on that person under the relevant Rule or part of any Rule in respect of which the waiver application is or was made, but in any event no later than 30 November 2002.
      • Solicitors' Indemnity Insurance Rules 2002

        Relevant date - whichever is the later of:

        • 30 November 2002; or
        • 3 calendar months from the occurrence of any event or circumstances first giving rise to the obligation on that person under the relevant Rule or part of any Rule in respect of which the waiver application is or was made, but in any event no later than 30 November 2003.
      • Solicitors' Indemnity Insurance Rules 2003

        Relevant date - whichever is the later of:

        • 30 November 2003; or
        • 3 calendar months from the occurrence of any event or circumstances first giving rise to the obligation on that person under the relevant Rule or part of any Rule in respect of which the waiver application is or was made, but in any event no later than 31 December 2004.
      • Solicitors' Indemnity Insurance Rules 2004

        Relevant date - whichever is the later of:

        • 31 December 2004; or
        • 3 calendar months from the occurrence of any event or circumstances first giving rise to the obligation on that person under the relevant Rule or part of any Rule in respect of which the waiver application is or was made, but in any event no later than 31 December 2005.
      • Solicitors' Indemnity Insurance Rules 2005

        Relevant date - whichever is the later of:

        • 31 December 2005; or
        • 3 calendar months from the occurrence of any event or circumstances first giving rise to the obligation on that person under the relevant Rule or part of any Rule in respect of which the waiver application is or was made, but in any event no later than 31 December 2006.
      • Solicitors' Indemnity Insurance Rules 2006

        Relevant date - whichever is the later of:

        • 31 December 2006; or
        • 3 calendar months from the occurrence of any event or circumstances first giving rise to the obligation on that person under the relevant Rule or part of any Rule in respect of which the waiver application is or was made, but in any event no later than 31 December 2007.
      • Solicitors' Indemnity Insurance Rules 2007

        Relevant date - whichever is the later of:

        • 31 December 2007; or
        • 3 calendar months from the occurrence of any event or circumstances first giving rise to the obligation on that person under the relevant Rule or part of any Rule in respect of which the waiver application is or was made, but in any event no later than 31 December 2008.
      • Solicitors' Indemnity Insurance Rules 2008

        Relevant date - whichever is the later of:

        • 31 December 2008; or
        • 3 calendar months from the occurrence of any event or circumstances first giving rise to the obligation on that person under the relevant Rule or part of any Rule in respect of which the waiver application is or was made, but in any event no later than 31 December 2009.
      • Solicitors' Indemnity Insurance Rules 2009

        Relevant date - whichever is the later of:

        • 31 December 2009; or
        • 3 calendar months from the occurrence of any event or circumstances first giving rise to the obligation on that person under the relevant Rule or part of any Rule in respect of which the waiver application is or was made, but in any event no later than 31 December 2010.
      • Solicitors' Indemnity Insurance Rules 2010

        Relevant date - whichever is the later of:

        • 31 December 2010; or
        • 3 calendar months from the occurrence of any event or circumstances first giving rise to the obligation on that person under the relevant Rule or part of any Rule in respect of which the waiver application is or was made, but in any event no later than 31 December 2011.
    • (b)

      No application by any person for a waiver of any Rule or part of any Rule under the Solicitors' Indemnity Insurance Rules 2000 may be considered unless it was made in writing to the Society as soon as reasonably practicable and in any event no later than 28 February 2002.

    • (c)

      Any appeal against any decision made by the Society in respect of any application for a waiver of any Rule or part of any Rule under the Solicitors' Indemnity Insurance Rules 2000 to 2008 20092010) must be made in writing to the Society within 21 days from the date of the decision.

    • (d)

      An application for a waiver as contemplated by this Rule 19.1 or the making of an appeal against any decision made by the Society in respect of such application shall not relieve any person from any obligation under the Solicitors' Indemnity Insurance Rules 2000 to 2008 20092010 pending the determination of any such application or appeal.

    • Commentary:

      It is envisaged that Rules will be waived only in exceptional circumstances. Anyone who wishes to apply for a waiver, or to appeal against an initial decision, must do so in accordance with the time limits set out in this Rule. Contact details appear at the end of the introductory commentary. The Professional Standards Appeal Panel of Adjudicators Sub Committee has adopted a waiver policy, which is available on request. Unless and until any waiver is granted, the person concerned must comply with the requirements of these Rules in full. A waiver may be granted subject to conditions, and may be revoked without notice.

    • 19.2

      The Council shall have power to treat any Firm as complying with any Rule or Rules for the purposes of the Solicitors Act 1974 notwithstanding that the Firm has failed to comply with a Rule or Rules where such non-compliance is regarded by the Council in a particular case or cases as being insignificant.

    • 19.3

      For the purposes of the Solicitors Act 1974 (including without limitation section 10 of that Act), any person who is in breach of any Rule or part of any Rule under the Solicitors' Indemnity Insurance Rules 2000 to 2008 20092010 shall be deemed, for so long as he remains in breach, not to be complying with these Rules.

    • Commentary:

      The effect of this general power is that, for example, a practising certificate may be issued to a person notwithstanding a technical and insignificant breach by that person or a Firm of any provision of these Rules.

PART 7: OTHER OBLIGATIONS

20 Accountants' reports

Any accountant's report which a solicitor or Registered European Lawyer or registered foreign lawyer who is a Principal in a Practice or a Recognised Body is required to deliver to the Society under section 34 of the Solicitors Act 1974 or paragraph 8 of Schedule 14 to the Courts and Legal Services Act 1990 containing such information as is prescribed by rule 35 of the Solicitors' Accounts Rules 1998 must contain a statement certifying (if it is the case) for the whole period covered by the report (excluding any part of that period falling before 1 September 2000) either that the Firm has one or more certificates of Qualifying Insurance outside the Assigned Risks Pool or that the Firm has been issued with one or more policies by the ARP Manager.

Commentary:

Firms are required to provide evidence to their accountants that a Policy of Qualifying Insurance is in place. Each Qualifying Insurer is required under the Qualifying Insurer's agreement to provide a certificate of Qualifying Insurance to each Firm within 20 working days of the start of the period covered by the Policy. Producing the relevant certificate(s) to the reporting accountant will satisfy the requirement of this Rule.

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