18% of firms have been victims of scams according to the Law Society with banks and insurers picking up the tab in two thirds of cases.
According to a survey of 560 firms conducted on behalf of the Law Society by Mustard Research Limited, 25% of firms have been targeted, with less than 10% of attempts being successful when it comes to obtaining client money.
In one third of cases, the firm’s insurers paid up, with banks paying up in another third of cases.
The survey was part of the Society’s look at Professional Indemnity Insurance. The survey found the average premium was 8% this year with average premium costs dropping for all sizes of firms.
76% of firms found the process easier, up from 62% last year. However the median cost of run-off cover has gone up from last year’s 250% to 300%. Larger firms were more concerned than small firms about the SRA reducing compulsory run-off cover from six years to three
Nearly two thirds of firms renewed with their previous insurer. When asked about claims experience, 86% of firms were very satisfied or fairly satisfied with the way their insurer had handled claims in the last year
Law Society president, Jonathan Smithers said: “The increased rated PII capacity and lower premiums are good news for firms, as is the easier renewal process. Firms should take advantage of these favourable conditions and shop around for cover when renewing.
“It is vital firms keep their risk management up to date, in particular in relation to scams, if they wish to continue to benefit from lower PII premiums. Some insurers now ask about the measures firms have taken to protect against scams, including their security and IT systems. The Law Society provides training and resources to help solicitors prevent scams and keep up-to-date on this important issue.
“Run-off cover is a necessary protection for clients, employees and for retiring solicitors. The hike in run-off cover and the closure of SIF in 2020 create challenges for partners in small firms wishing to retire. For the same reasons, closing down a firm will require careful forward planning. The Law Society of England and Wales is considering whether there are any viable options to replace the SIF beyond 2020.”