Professional indemnity insurance: Lawcover has you covered

Renewal of the Lawcover Professional Indemnity Insurance (PII) policy for your law practice commences in April. Your law practice’s PII policy expires at midnight on 30 June 2023. It is important that you complete your 2023/24 application in line with your practising certificate renewal to ensure the Law Society of NSW can issue practising certificates to your law practice’s solicitors for the coming year.

Your practice will be notified when it is time for you to complete the online PII policy application via Lawcover’s website at lawcover.com.au

What does the policy cover?

Claims for compensation or damages arising from your legal work

The policy covers the law practice, and all its principals and employees for civil liability for a claim for compensation or damages arising from the provision of legal services. The majority of claims which arise from day-to-day work done by a solicitor in the ordinary course of a solicitor’s practice, will fall within the coverage of the policy.

If a claim is brought against a principal of a law practice, even after they have retired, that claim will still be covered by the remaining practice’s policy. The policy also covers the claimant’s costs, and the costs of defending individuals and law practices, against a claim.

However, claims for recovery of property, accounts of profits, costs assessments, restraints, declarations, and the like are not covered as they are not claims for compensation or damages. Disciplinary or professional misconduct proceedings are also not covered.

Some claims for compensation or damages are excluded from cover; a full list of exclusions is in clause 9 of the policy. The most common exclusions are explained below.

Exclusions from cover

The policy is not a general insurance business policy. Claims and disputes which arise from running a business premises, disputes with landlords or suppliers (including barristers) are not covered by the policy. Similarly, claims which relate to personal injury at the law practice premises are not covered by the policy.

Similarly, Lawcover does not cover disputes about your fees. If your client refuses to pay a bill, or seeks to have your costs assessed, those disputed fees will not be covered by the policy and the costs of dealing with a dispute about fees are also excluded.

Some claims against law practices involve a claim for negligence, and part of the damages sought could be a claim for refund of fees. The policy will cover damages sought for the negligence claim, but the claim for return of fees will fall to the law practice to defend and to pay. However, claims where fees paid to barristers or expert witnesses form part of the compensation sought, will be covered by the policy.

The policy does not cover principals or employees for work they do as directors of a body corporate. Solicitors who agree to sit on Boards should ensure that appropriate D&O insurance is in place to cover them for that activity.

Solicitors are sometimes asked to provide undertakings and indemnities for their own businesses, or on behalf of clients. You should be aware that some of those contracts and indemnities might be exposing your law practice to claims which the policy does not cover. Contractual warranties or indemnities which extend your duty beyond a normal solicitor’s duty, or contracts which increase the compensation or damages beyond what a solicitor would normally be liable for, are excluded from the policy. Be careful before entering into contracts to make sure you are not extending your practice’s own exposure.

Making a claim

Claims are stressful and time consuming. As soon as you believe there might be a claim against your law practice, Lawcover encourages you to get in touch. Lawcover claims solicitors have seen the gamut of claims against solicitors, and we can answer a range of questions about the claims process, and the best way to mitigate the risks of dealing with a claim. Once Lawcover accepts indemnity for a claim, we also assume conduct of the defence on your behalf, so you can focus on your practice.

We take a co-operative approach to defending proceedings brought against your practice.  Decisions about appointing panel solicitors, conducting the litigation and strategy will be made in consultation with you as much as possible, but ultimately Lawcover can make those decisions on your behalf, if necessary. The policy imposes a duty to co-operate on insured solicitors, so you will need to make yourself available to give instructions about factual matters, provide your file and provide assistance to Lawcover or the appointed panel solicitors at your own expense, throughout the defence process.

One of the biggest decisions in defending any litigation is whether to make or accept a settlement offer. The policy makes that decision a joint one between you and Lawcover; neither of us can settle a claim without the consent of the other. Again, Lawcover claims solicitors bring their experience of similar claims to the decision making around whether to settle or defend a claim, but the decision is made jointly with the insured solicitor.