But closures down sharply on the 136 seen in 2014

closed shut runoff

Twelve law firms have been forced to close after failing to find professional indemnity (PI) insurance as of 6 January this year.  

The Solicitors Regulation Authority (SRA) said that the status of a further 37 law firms is still undecided.

All 49 firms entered the so-called cessation period because they failed to find PI insurance in the 30 days after the renewal date. Law firms in the 60-day cessation period are not allowed to take  on any new business and must close if they still cannot find cover after the cessation period expires.

But even if all 49 firms close, the number is far lower than the 136 closures seen last year because of failure to find PI cover.

The number of firms closing at the turn of the year was expected to reduce because 1 October 2013 was the last fixed renewal date. Since then, law firms have been able to choose their own renewal date, rather than having to renew on 1 October, and can also now opt for cover that lasts for more than one year.

This means that renewals, and thus closures caused by failing to find cover, will start to spread out in the year rather than being concentrated around one date.  

As last year, the SRA plans to publish a list of law firms without professional indemnity cover at the end of January.

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