The Solicitors Regulation Authority (SRA) have been prominent in the legal press for more than 6 months as they ratchet their powers of censure, and we are aware of several firms who have had investigations who have subsequently been left in limbo for 18 months or more after the event without decisions. Some high-profile cases have revealed inconsistencies in SRA actions and have even been challenged.

The inescapable reality is that if they want to engage with a law firm, nothing will deter them, even if the basis for it is flawed. Not surprisingly, because livelihoods depend on a successful outcome, emotions can run high and as a result, it can be difficult to keep to the facts and focus on responding to the allegations being made.

The intention of a Directors and Officers Liability (D&O) policy is that it will trigger early intervention and put up a regulatory specialist who will step in between the solicitor and the SRA. Crucially the aim is to establish the facts and mitigate matters as soon as is possible, and preferably before formal judgements are made. Insurers also seek to prevent their Insured’s being drawn further into a regulatory matter by dealing with it early on.

Brokers and Insurers claims teams and their legal representatives will help their customers understand the process of a complaint and how it ramps up and help uncover aspects of a case which are not always visible.

D&O policies are designed to protect senior individuals with responsibility (COLP/COFA for example) as well as the firm. Entity cover will protect the firm for actions made against it as opposed to individuals. Company reimbursement will pay the firm if it has reimbursed an individual as a result of an action that the Company is responsible for under their Company reimbursement policy. 

The intention is that most policies are in place to protect against a range of regulatory issues, not only those relating to the SRA but also health and safety, HR and accounting for example.

The problem is however that not all brokers understand how policy cover works and particularly how it relates to law firms, so one of the most important aspects in the business (the safeguarding of its fee earners and managers) is often left to guesswork.

Some D&O policies exclude interventions, and some don’t. Some brokers and Insurers will ask you if you would like entity, company reimbursement and Employment Practices Liability (EPL) cover and some don’t.  EPL is a particularly difficult purchase for law firms but it is possible, and it is relevant in the light of increasing work from home activity, and the consequences of staff adopting poor posture and suffering from stress as a result of lack of interaction with peers.

D&O policies can be backed and integrated into competent HR policies and procedures which work hand in hand to protect the firm and it’s people. Some Insurers will provide HR related advice as a part of the defence of a claim, some will provide it as a general supportive measure for policyholders. Our team includes a pre-eminent Directors and Officers specialist who has worked as an underwriter at high level for some large Insurers and who understands and can help with the issues.

If you need advice, please call us on 0151 351 6555 or email