FCA authorised · FRN 724952 0117 325 0027Quote & buy →
Solicitors’ PI guide
Yes, if you carry out reserved legal activities. A freelance solicitor doing reserved work must take out and maintain indemnity insurance that provides “adequate and appropriate” cover for the services they provide or have provided (regulation 10.2(b) of the SRA Authorisation of Individuals Regulations). You do not have to buy a policy on the SRA Minimum Terms and Conditions, but you must tell clients that before you are engaged.
Part of: Solicitors’ PI insurance
In short
Since 25 November 2019, a solicitor who has practised for at least three years since admission can carry out reserved legal activities on their own without being an SRA-authorised firm, if they meet the conditions in regulation 10.2(b). One condition is adequate and appropriate PI cover for all their services, reserved or not, and for past work. The SRA sets no minimum amount: it expects a reasonable and rational assessment of your clients, matters, values, probable maximum loss and claims history. If you only do non-reserved work, the SRA’s guidance says the insurance obligation does not arise. Transparency Rule 4.3 still requires you to tell clients you are not covered by the Minimum Terms.
Regulation 10.1 of the SRA Authorisation of Individuals Regulations says a solicitor must not act as a sole practitioner unless the practice is authorised as a recognised sole practice. Regulation 10.2 sets out when you are not treated as a sole practitioner, which is what allows freelance practice. You are not, if:
The conditions in regulation 10.2(b) are that you:
Reserved legal activities are the six listed in section 12 of the Legal Services Act 2007: rights of audience, the conduct of litigation, reserved instrument activities, probate activities, notarial activities and the administration of oaths. These rules came in with the SRA Standards and Regulations, which replaced the SRA Handbook on 25 November 2019.
It depends on the work you do.
Freelancers do not have to buy MTC cover, so the MTC minimum limits do not apply to them. For comparison, the MTC require a firm’s cover for any one claim, excluding defence costs, to be at least £3 million for a relevant recognised body or relevant licensed body, and at least £2 million in all other cases.
There is no set figure. The SRA says the right level and scope of cover depends on your business and circumstances, and it will want to see “a reasonable and rational assessment” of the level and wider terms of cover. It lists factors to consider:
If you can show that you considered the relevant factors and reached a reasonable and rational decision, the SRA says it “would not second guess that decision or take action for breach of this requirement”. Keep a record of your assessment and review it when your work changes.
The SRA’s case studies show how this works for firms. A firm with £2 million of cover taking on a £2.5 million conveyancing matter is not automatically in breach: what matters is its likely maximum liability, including the claimant’s costs, and whether the client made an informed choice. By contrast, £3 million of cover is unlikely to be appropriate for a clinical negligence claim worth more than £5 million for a vulnerable client, because a missed time limit could expose the firm to the full value of the claim plus costs.
There is no fixed run-off rule for freelancers. The SRA’s guidance says that, unlike the MTC, “there is no requirement to purchase a specific level of run-off cover”. But PI for legal services is normally written on a claims-made basis: the policy that responds is the one in force when the claim is made, not when the work was done.
The SRA therefore expects you to consider how you will meet claims after you stop practising, because services “cannot be adequately and appropriately insured if the solicitor knows that they will be unable to meet the potential claims arising from their practice”.
The requirement also covers services you “have provided”. The SRA’s example is a freelancer who moves from employment work to criminal advocacy in year four but does not reduce cover yet, because claims could still arrive from earlier employment matters.
For comparison, the MTC require an authorised firm’s policy to provide run-off cover when its practice ceases, extending the period of insurance for an additional six years.
Rule 4.3 of the SRA Transparency Rules applies to solicitors providing legal services to the public other than through an SRA-regulated firm. Where you are not required to meet the MTC, you must, before engagement:
The SRA’s guidance says this applies to reserved and non-reserved services alike, and treats transparency as a factor in whether your cover is adequate and appropriate. A fully informed client might still instruct you with cover that would not meet every possible loss, but you must be satisfied that going ahead is in the client’s best interests.
If you want to cap your liability to a client, the guidance says any cap should be fair and reasonable in the circumstances, reflect the balance of power and knowledge between you and the client, take account of the client’s best interests, and be explained so the client understands its impact. The SRA says it would not expect caps “as a matter of routine”.
The SRA’s factors are also useful when you arrange cover. Before you buy or renew, gather:
Before a policy is entered into, the Insurance Act 2015 requires a fair presentation of the risk, including every material circumstance you know or ought to know (section 3).
Apex arranges professional indemnity insurance for solicitors. Cover is always subject to the policy terms. See our solicitors’ PI guide and what adequate and appropriate cover means.
Yes, if you carry out reserved legal activities as a freelancer under regulation 10.2(b) of the SRA Authorisation of Individuals Regulations. You must hold insurance that gives adequate and appropriate cover for all your services and past work. If you only do non-reserved work, the SRA’s guidance says the obligation only arises if you provide reserved legal services.
The SRA sets no minimum amount for freelancers. Your cover must be adequate and appropriate, based on a reasonable and rational assessment of your client profile, matters, engagement values, probable maximum loss, claims history and any alternative arrangements. The MTC minimums of £2 million or £3 million apply to authorised firms, not freelancers.
Before engagement you must tell all clients that you are not required to meet the SRA Minimum Terms and Conditions, say that alternative insurance arrangements are in place if they are, and give information about the cover if asked (Transparency Rule 4.3).
There is no specific run-off requirement for freelancers. But PI is normally written on a claims-made basis, and the SRA expects you to consider how you will meet claims after you stop practising.
Only in a limited way. Regulation 10.2(b) allows money for your fees and unpaid disbursements held before you deliver a bill, provided any money held for disbursements relates to costs you incurred for the client and are liable for, and you told the client in advance where and how it would be held.
The rule that stops authorised firms capping liability below the MTC minimum does not apply to you. But the SRA’s guidance says any cap should be fair and reasonable, reflect the balance of power and knowledge, take account of the client’s best interests and be explained so the client understands it. It would not expect caps as a matter of routine.
Apex arranges professional indemnity insurance for solicitors. Tell us how you practise and we’ll find cover that fits. Or call 0117 325 0027.
Get a quote Call 0117 325 0027Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales, company number 07014570. This page is general information, not legal or tax advice on your individual circumstances, and it does not guarantee that cover will be available or on what terms.
