Professional indemnity insurance hikes fuelling migration to legal consultancies
London, January 11, 2022 – A rise in professional indemnity insurance (“PII”) premiums is driving independent legal practitioners to become consultants for larger firms in increasing numbers, according to Taylor Rose MW, the fast-growing and innovative UK law firm.
Taylor Rose MW recently revealed it has more than doubled the number of consultant solicitors in its legal consultancy division within the past year, with its growth momentum helped by an increased acceptance of home working since the pandemic.
It says this growth is being further fuelled by the pressure on smaller firms and sole practitioners over increasing PII premiums. A recent report1 from Lexis Nexis revealed that PII has increased by an average of 30% amongst SME firms, with two-thirds of respondents saying the cost of PII was among the biggest threats to their firm. Further research from Mazars2 suggested that closures of law firms over failures to obtain insurance have increased sixfold in five years.
Insurers are becoming more risk-averse in areas such as conveyancing and have been pushing up premiums to cover potentially high payouts. The increased number of solicitors working from home since Covid has also increased risk for insurers, particularly for those working in smaller firms without well-established risk, compliance and quality control processes.
Taylor Rose MW says this is making life very difficult for startups and sole practitioners. Its analysis3 reveals that the number of sole practitioners regulated by the SRA has dropped by 5% in the past 6 months alone.
Adrian Jaggard, CEO, Taylor Rose MW, explained:
“Increasing PII premiums have particularly impacted smaller firms and sole practitioners and it is having a marked impact on their appetite to keep operating independently.
“We are seeing a lot of experienced solicitors who no longer want the responsibilities of compliance and increasing operating costs, and instead are seeking the relative security and freedom of operating as consultants.
“This is certainly a contributing factor to the fast growth of our consultancy division.”
Taylor Rose MW’s consultant solicitor platform is one of the top four in the UK, and number one in the property sector and in consumer law. Its consultants enjoy multiple benefits, including a referral network, marketing support, a recognised brand, sophisticated IT support and systems, professional indemnity insurance and compliance support, as well as the low operating costs of working from home.
Kindly shared by Taylor Rose MW
Main photo courtesy of Pixabay
