Whether your firm employs 5, 50 or 500, PI insurance is likely to be, (*sigh*), another significant cost to the business and, (*sigh again*), yet another thing, that is absolutely vital to get right, not only in meeting your regulatory obligations but also to protect you and your clients if (*one more sigh*) things do go wrong.
Approximately 60% of SRA regulated law firms will renew their PII in October so now’s the time to do that all important preparation to stand out from the crowd in the right way when your application is considered. Then all you have to worry about in October is selecting the office pumpkin.
Whilst there has been some good news in the PII market in the last 18 months with new entrants providing increased competition for both SRA and CLC regulated firms resulting in premium levels increasing at lower levels or being maintained despite higher firm turnovers, it’s still tough out there – particularly for smaller firms and those doing a high proportion of conveyancing work.
Data produced by the SRA relating to the period 2004-2014 showed residential conveyancing contributing to around 26% of all PII claims and notifications. According to data from one of the largest PII brokers, Howdens, this remains largely unchanged ten years on. Yes, conveyancing is still a very risky business.
During that time, new risks have emerged such as buyer funded developments, SDLT reclaim companies, cyber crime, fraud and everyone’s favourite… The Building Safety Act. These remain a significant concern for insurers against the backdrop of SRA thematic reviews resulting in more sanctions and fines for firms for high risk areas such as AML, higher client expectations, increased lender requirements, remote working and the difficulties of recruiting and retaining experienced conveyancers. And of course whether it’s peaks in transactions leading to concerns about conveyancers making mistakes under pressure, or drops in the market meaning concerns about financial stability of law firms and lenders seeking to recoup losses on re-sale when title issues or failure to follow instructions emerge on repossession cases, it’s no wonder that conveyancing is seen as a high risk area by insurers.
In the same way that we all now have to do a risk assessment before taking on a new client or when an existing client returns, insurers will base their view of you not only on your claims record but also on your risk profile. You need to be able to demonstrate to insurers how you’re managing the risks law firms face, particularly in this increasingly complex area of work. You need to be able to articulate that you have effective controls and processes in place to mitigate risk on everything from IT security, AML, fraud prevention, work types and sources, training, file audit, supervision, case volumes and allocation, wellbeing at work… and… well… just being at work! The list goes on and on.
And then there’s the actual legal work. Some common causes of conveyancing claims are:
- not checking the intended use is permitted,
- not spotting or advising on access issues,
- failing to advise on restrictive covenants,
- failing to advise on important lease clauses, and
- inadequate reporting
What is perhaps less widely understood, is how the technology partnerships you have can help you address some of these concerns with your insurer.
We have, for example, provided customers with guidance on how to complete their renewal form to highlight the risk management benefits of our own products and services to their insurer as easily as possible. We’ve seen a number of other providers doing this as part of their risk management support for their clients
Making clients aware of issues earlier
By using AI technology, conveyancing firms can more quickly alert clients to potential issues to minimise the risk of complaints or claims. Increasingly, technology can check title, including the lease where applicable, to flag potential defects and complexities at the start of a transaction, enabling conveyancing lawyers to highlight issues at the outset that may affect the client’s desire or ability to progress the transaction further.
Standardisation and reducing the margin for human error
For many conveyancers, the value in using AI technology is ‘the second pair of eyes’ it provides on a file, reducing the margin for human error by helping firms to ensure that nothing has been overlooked. AI can also help firms ensure that title checking and reporting is carried out consistently, across their team. We are, for example, seeing technology and AI assist junior lawyers who are starting to take on more complex work, and supervisors, to spot significant issues without the need to repeat a full title check.
Improved client care through time savings
Where AI technology saves time conveyancers are able to focus their efforts on more complex tasks, having the downstream effect of better client service and care.
Supporting workflow allocation and future training
Early identification of complexities also enables firms to refine the way in which they choose to distribute work across their teams. With complex cases flagged straight away work can be allocated to the most appropriate conveyancer at the outset. This minimises any potential disruption or dissatisfaction for clients caused by case re-allocation. The existence of an electronic record of the checks that have been performed on any given case also means that supervision and monitoring by firms internally is easier, both for auditing and training purposes.
Having conversations with your PI insurers about using AI ?
Earlier this year, Orbital Witness announced the launch of AI Reliance insurance: a first of its kind insurance-backed accuracy guarantee for our own product and customers. Helping customers secure all the advantages of AI, with an optional extra layer of protection for added reassurance to their PI insurance provider, is hopefully a step in the right direction an provide the insurers with some confidence in such products and services moving forward.
In summary, there are lots of tricky balancing acts to perform in the conveyancing world (*one last sigh?*). But hopefully, with a little help from technology, we can all keep those plates successfully spinning.
Stephen Watson is a conveyancer at legal-tech business Orbital Witness
