This article explains why having a PrimeLaw standard certification would help reduce the premium on a lawyer’s Professional Indemnity Insurance.

Lawyers who want to avoid having to pay higher premiums for their Professional Indemnity Insurance should take some time to appreciate how insurers directly relate risk to premiums. Firms that manage risk effectively and systematically will enjoy lower premiums.

A systematic approach to managing risk is key. Law firms that are able to demonstrate that they have in place good systems and procedures to control their exposure to operational risk and can prove that these systems and procedures are working effectively will certainly benefit from a more favourable evaluation in the risk to premium relationship.

In addition to the firm’s claim records and areas of practice, insurers will evaluate management systems and procedures, specific risk management systems, level of expertise, supervision as well as communication within the firm.

Most complaints and claims against solicitors stem from failures in administration and service delivery. Therefore, every firm should systematically and continually evaluate, manage and limit exposure to claims. Having effective systems and procedures in place prevents mistakes from occurring.

Busy senior and managing partners often find it difficult to devote time to risk management. Mistakes can easily be made when people are under pressure.

The systems and processes will cover areas such as supervision of staff, ensuring appropriate skills, knowledge and training. It should also include terms of engagement, file management, diary control and conflict of interest, undertakings and other risk exposures. By ensuring adherence to specific systems and procedures, the risk of mistakes through lapses in professional standards is greatly reduced.

When firms are able to clearly demonstrate that they have effective systems and procedures in place, this translates into good risk management. Good risk management translates to lower potential exposure to claims and, therefore, insurers are willing to charge lower premiums.

In order to assist legal practitioners set up proper systems and procedures and demonstrate that they do have effective systems and procedures in place, the Law Society has launched its own practice management excellence standard, PrimeLaw. Certification that a firm operates to the PrimeLaw standard would make a good case for that firm to ask its professional indemnity insurers for a discount on its Professional Indemnity premiums. Get ready to be certified!

Stanley Jeremiah

Goodwins Law Corporation
E-mail: stanley_jeremiah@goodwinslaw.com