Law Society says solicitors are potentially “missing a trick” to save on insurance costs.
Solicitors could be missing out on the opportunity of obtaining lower professional indemnity insurance rates in the current economic slowdown, the Law Society has warned.
The Society said there is the potential for solicitors feeling the squeeze of the economic slump to save money through their insurance premiums by implementing the framework in the Law Society’s practice management standard, Lexcel.
Law Society president, Paul Marsh, said: “Implementing the Lexcel framework across a practice can help a firm manage itself more effectively, which gives them the potential to lower PII premiums.
"Not only does the profession recognise Lexcel as a standard of excellence, it seems many insurers value its worth as well. Firms without Lexcel accreditation might, therefore, be missing a trick.”
A study by the Independent Commissioner in 2005 revealed that 69.1 per cent of Lexcel accredited firms had seen lower insurance premiums since gaining Lexcel accreditation.
Marsh added: "Anything which improves a firm’s risk profile may be looked upon more favourably by insurers. Lexcel might be a factor in helping maintain current or potentially reducing future premium levels for solicitors.”
The Lexcel standard provides legal practices with a supportive framework for their business that focuses on key practice management areas. By implementing the requirements across all areas, firms can better manage risk and enhance client service.
Craig Jones, operations director at Simpson Millar LLP, the first firm to attain Lexcel and which is now in its 10th year of the accreditation, said: “The processes and procedures that Lexcel requires coupled with the discipline it imposes has led to a more uniform approach and increased standardisation throughout our business.”
“Undoubtedly this has reduced the risks and consequently improved Simpson Millar LLP’s performance in the eyes of our professional indemnity insurers as evidenced by the cost of our PI insurance cover over the years. We believe that the PII industry will pay further attention to the presence or otherwise of Lexcel accreditation as will other relevant insurances like those offered by the Solicitors Defence Service.”
Andrew Nickels, risk manager at Zurich Professional, said: “Zurich recognises that Lexcel includes excellent requirements and recommendations for systems and procedures which, if complied with consistently and conscientiously throughout the practice, can help significantly to reduce exposure to complaints and claims and in turn have a beneficial effect on indemnity premiums.”