(1888PressRelease)
December 07, 2007 - Less than half of solicitors (46%) are prioritising risk management despite Rule 5 coming into effect on 1 July which demands effective management of the firm. Aon, the UK’s leading insurance broker and risk management consultant, is now urging law firms to shift risk to the top of the agenda to adhere to Rule 5’s requirements and avoid possible sanctions by the Solicitors Regulation Authority (SRA).
When questioned on motivation to buy insurance at renewal, price – unsurprisingly – came top but risk management advice only ranked fourth, according to an Aon survey.
Top drivers affecting decision to purchase
1. price 78%
2. claims handled by a qualified solicitor 71%
3. broker speed of response 62%
4. risk management service 46%
5. capped excess 45%
However, the new Rule 5, which is part of the Solicitors' Code of Conduct 2007, demands more focus on risk management through the effective management of the firm, including plans on how to continue business in the event of absences and emergencies with the minimum interruption to clients' businesses. The method of delivery is up to the firm but practices will be expected to produce evidence that a systematic and effective risk management approach is in operation and that there are regular reviews of its effectiveness.
Failure to adopt Rule 5 could ultimately lead to sanctions by the SRA and, in extreme circumstances, the Solicitors’ Disciplinary Tribunal.
Patrick Hearn, director at Aon’s professional services group, said: “Some firms have embraced Quality Assurance through the Law Society's own Lexcel standard, ISO 9001, Investors in People or the Legal Services Commission’s Quality Mark for publicly funded work. Others have not recognised Quality Assurance as necessary for their business but this has to change. Rule 5 demands that law firms look at their client and business related risks. Therefore, leading up to the annual professional indemnity renewals, firms must consider how insurance can be supported with risk management advice to conform to the new Code of Conduct.”
Law firms must now ask themselves:
1. can we produce evidence of systematic and effective risk management arrangements?
2. can we show that these arrangements are regularly reviewed?
3. should we commit to an external quality standard or participate in a Quality Assurance exercise to assess our current status and identify the risks?
4. how will we comply with the requirement to check with reasonable regularity, the quality of work undertaken for clients – do we have agreed processes and responsibilities for this?
Aon UK is ranked by A.M. Best as the number one global insurance brokerage based on brokerage revenues and voted best insurance intermediary, offering classic car insurance, high value home insurance, entertainment and media insurance and construction site insurance.
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