Options to Practise after Closure
For those who decide to shut their practices and take run-off cover there is an opportunity for them to continue to work and earn whilst at the same time controlling the time they wish to commit.
Firms are becoming increasingly concerned about becoming successor practices for insurance purposes. This year’s renewal questionnaires have extended the historical period for which underwriters require information. Questions about successor practice used to raise questions going back for a period of five years but now often they do not have a time limit.
Increasing amounts of information concerning the casework conducted over the previous 10 years including values and percentages have been required placing an increasing burden on the individuals charged with securing PII.
Where run-off is taken it is not possible to provide legal advice without invalidating insurance but there is an exception to this. If run-off cover is taken and paid to cover the closing practice, and the SRA is notified within five working days that run-off cover has been taken and is in place, there will be no successor practice. The principal of the closed practice can go to work with another firm without invalidating cover or creating a successor practice.
That solicitor will then be practising under the insurance of the new firm.
The solicitor could then service his existing client base from the new firm.
An increasing number of firms are offering fee share consultancy to experienced solicitors. In circumstances where there are no regulatory issues such as pending disciplinary proceedings it is likely that the solicitor will be able to secure a position on this basis.
Many firms offer flexibility in terms of where and how much work is undertaken and offer more favourable rates in respect of casework introduced by the consultant concerned.
The Consultant is freed from the administrative burden of running their own firm but retains significant autonomy and is able to generate an income which can offset the expenses incurred including the payment of the run-off cover. That income is often at a higher proportion of fees earned than was achieved in the closed firm.
At last there is a situation where you can have your cake and eat it!!
We will be happy to discuss this further with anybody interested.
Richard Nelson is a solicitor in private practice at Richard Nelson LLP specialising in solicitors disciplinary, regulatory and practice management matters. He is a member of the Solicitors Assistance Scheme and the Regulatory Processes Committee of The Law Society. Any comments made or views expressed are his own and not those of or on behalf of any other organisation or party.
Real stories of people in the legal community who have experienced stress, depression, anxiety and more.