Update June 2021: Solicitors in England & Wales should be aware that, since the following article was written, the SRA has now postponed the closure of the Solicitors’ Indemnity Fund until September 2022. However, the same underlying risk issues remain, as explained in our article here:

On 30th September this year, the Solicitors’ Indemnity Fund (SIF) will close. SIF is currently the means of paying Professional Indemnity Insurance (PII) claims against firms whose mandatory 6-year run off PII cover has expired.

Therefore, this leaves owners of law firms that have closed in the last 20 years with a dilemma. In the event that the Solicitors Regulation Authority (SRA) cannot replace the funding from SIF, owners may be personally liable for any claims that come to light after 1st October 2021 or the expiry of their run-off insurance.

The risks of not having any run-off option in place should not be dismissed out of hand. Firms that undertook conveyancing, wills/trusts and personal injury work should be especially mindful, as these areas of work can and do generate allegations of negligence many years after the initial work was completed.

Firms that acquired an outgoing practice and sought elective run-off cover for the business being bought should also consider that SIF will no longer provide recompense for any legacy issues once the elective run-off policy expires. Firms in this situation need to understand where liability would sit in the event of a claim occurring from a prior practice which no longer has run-off insurance.

Gareth Milner, Client Director at JM Glendinning Professional Risks commented: “The insurance market has been largely silent on this issue and we expect that many insurers will simply not wish to consider taking on the risk of expired firms, especially in the currently very tough PII trading conditions where insurers’ books of business for existing practices are under continually increasing scrutiny.

However, JM Glendinning Professional Risks understands that at least one current Participating Insurer of law firms is looking to offer a run-off insurance product. However, this will only be available to any practice which fits the insurers underwriting criteria and can demonstrate that payment of the expiring run-off policy has been made. We also suspect that various trade/regulatory bodies (including the SRA and Law Society) may also be working towards a solution. We will of course keep all of our clients and contacts updated, but should this issue be of particular concern for you, please do not hesitate to get in touch.”