Break in Insurance Cover

Apart from the obvious consequences of a break in insurance cover, there are less obvious consequences. Failure to maintain insurance cover in place will almost certainly result in a gap between the expiry of one practising certificate and the commencement date of the next practising certificate. This may render a person ineligible for a judicial appointment or other appointments which requires a minimum number of years in practice prior to the date on which an application for such appointment is made.

Solicitors employed in the public and corporate sectors

These solicitors are exempted from having to have professional indemnity insurance as they provide legal advise exclusively to their employer, who is not a solicitor. The exemption does not extend to exempt such solicitors from the necessity of having run-off cover in respect of previous private practice.

Should solicitors engage in the provision of legal services outside their employment, they will come within the scope of the regulations and therefore will require professional indemnity insurance. The provision of legal services may be as simple as providing advice for family or friends. If such services are provided neglicgently, such solicitor might leave themselves personally liable and accordingly it is clear that it is necessary that they have professional indemnity insurance cover in place, prior to providing legal advise to any person, other than their employer.

World-wide Cover

Solicitors giving advice on legal matters outside this jurisdiction should check their professional indemnity insurance policies to ensure that they have cover when providing such advice, as the content of policies on offer vary. In particular, solicitors appearing before the European Court of Justice, Luxemburg, should check with their insurer/broker in this regard. The same would apply to a solicitor taking an action on behalf of a client to the European Rights Commission in Strasbourg. Solicitors acting as arbitrators abroad should also ensure that their current professional indemnity insurance policy provides cover in such instances.

Minimum Level of Cover/Top-up Cover

The Professional Indemnity Insurance Committee is aware that the sum of €1.3 million for each and every claim may not provide adequate cover for all solicitors in private practice and advises each solicitor to evaluate for themselves what they consider to be the relevant level of cover for their particular practice. Thought should be given to situations where higher cover is obtained for a particular case, as it is then necessary to continue to have the higher cover in place as claims are (as already stated) on a claims made basis.

General Points

Shop around prior to renewing cover, a listing of the qualified insurers providing cover is available on the Society's web-site.

- Consider risk to firm prior to taking on a new client.

- Get contractual arrangements right.

- Seeing incoming post is important because if a client has a complaint, you should be the first to know.

- The principal or a partner in the practice should attend to all matters relating to a potential claim.

- Always check letters and enclosures carefully prior to dispatching same.

- Ensure that cheques are for the correct amount in favour of the right person and forwarded to the correct address.

- Potential claims arise mainly from the following areas:- time limits, delays, undertakings, lack of communication, supervision, delegation and organisation.

Professional Indemnity Insurance Regulations

Section 26 of the Solicitors (Amendment) Act, 1994 permitted the Society to make regulations relating to professional indemnity insurance cover for the profession.

Statutory Instrument No.312 of 1995 sets out the regulations in general.Statutory Instrument No.209 of 1998 provides for the increase in the minimum level of cover from IR£350,000 each and every claim to IR£1 million each and every claim. Statutory Instrument No.362 of 1999 amends the definition of legal services to take account of the Investor Compensation Act, 1998 and to amend the minimum period of run-off cover to a period of 2 years. Statutory Instrument No.504 of 2001 converts the monies in the various regulations from punts to euro.

The Professional Indemnity Insurance Committee in this practice note has attempted to highlight some of the problems that have come to light since the regulations came into force. Practitioners will understand that in a practice note of this type it is impossible to cover the whole range of problems that may arise, or to give authoritative advice on issues involving individual queries. Expert advice should be sought from your insurer or broker.

The simplest answer to all of the problems, however, is for practitioners to ensure that at all times they have cover not only for themselves but their employees as appropriate.

The Professional Indemnity Insurance Committee welcomes any queries or suggestions particularly those which may be of general interest to the profession.