The Solicitors Regulation Authority (SRA) has confirmed 12 law firms have been forced to close for failing to secure professional indemnity insurance (PII) while the status of a further 37 has yet to be determined.
The SRA has seen a drastic drop in the number of firms heading for closure after failing to find indemnity insurance. As of 6 January 2015, 49 firms in total entered the cessation period for not renewing their PII, of which 12 have already filed notice of closure and have largely completed the winding down process.
The closures follows the Legal Services Board’s rejection of the SRA’s proposal to reduce the minimum PII cover required from the current £2m to £500,00 in November 2014.
The SRA told Legal Business that the status of the remaining 37 is unclear at present, especially because more firms are increasingly taking advantage of the flexible renewal date, which provides an extended policy period.
The 12 firms closing this year is considerably lower than last year when 136 firms were forced to close, of which 31 were in London, six in Manchester, four in Birmingham, five in Leeds, three in Liverpool and two in Newcastle.
The complete list of firms is expected to be released at the end of this month. SRA chief executive Paul Philip said in the Chief Executive’s Report: ‘All [firms] have been written to formally outlining their responsibilities. As we did last year, the intention is to publish the list of Firms which do not have PII, with appropriate communications to support the publication. We expect to do this by the end of the month, subject to us being fully satisfied with the data.’