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Short answer. Most UK professional indemnity policies give the insurer the right to appoint solicitors from its own panel and to conduct the defence. Using your own firm is normally possible only with the insurer’s written consent, and rates are usually capped at panel levels. The SRA Minimum Terms do not remove that control; they require only that there be no monetary limit on defence costs cover.
PI policies almost always give the insurer the right to conduct the defence of any claim they are liable to indemnify. In practice, that means the insurer instructs a solicitor from its own defence panel. For many claims the arrangement works well: panel firms know the wording, know the claims handlers, and price the work at pre-agreed rates. But for a professional with a long-standing law firm of its own — particularly where the claim touches a key client relationship — the panel default can sit awkwardly. This entry sets out the default position, when the insured can push back, and how a broker typically brokers a compromise.
Most PI policies contain a defence and settlement clause that reserves to the insurer the conduct of any claim, including the choice of solicitors. That right is not unlimited, but it is real. It exists because the insurer is funding the defence and any settlement — a point the Supreme Court touched on in PACCAR Inc v Competition Appeal Tribunal [2023] UKSC 28 in the wider context of who controls litigation and on what terms. In a PI setting, the insurer's control flows from the policy contract and from the practical reality that it is writing the cheques.
The corresponding obligations sit under ICOBS 8, which requires the insurer to handle claims promptly and fairly, to provide reasonable guidance, and to avoid unreasonable delay in settling. Choice of defence solicitor is part of that duty.
Who conducts the defence is one question; who pays for it, and out of which limit, is the other. The published positions are set out below.
| Regime | Defence costs position | Practical effect on your limit | Source |
|---|---|---|---|
| SRA Minimum Terms (solicitors) | There must be no monetary limit on the cover for defence costs | Defence spend does not exhaust the £2m or £3m indemnity limit | SRA Minimum Terms and Conditions |
| RICS requirements (chartered surveyors) | Defence costs should be in addition to the limit of indemnity, other than for asbestos, pollution and fire safety where they may be inclusive | Full limit stays available for damages on most claims; not on the three carve-outs | RICS PII requirements, 2 July 2025 |
| ARB guidance (architects) | Not specified; ARB sets a minimum limit of £250,000 each and every claim and notes policies cover legal defence costs | Whether costs sit inside or outside the limit is left to the wording | ARB PII Guidance paras 1.4, 3.2 |
| FCA MIPRU 3.2 (insurance intermediaries) | Not specified in the minimum-limits rule | Determined by the wording offered | FCA Handbook MIPRU 3.2 |
Sources: SRA Minimum Terms and Conditions (sra.org.uk); RICS Professional indemnity insurance requirements 2 July 2025 (rics.org); ARB PII Guidance (arb.org.uk); FCA MIPRU 3.2 (handbook.fca.org.uk). Individual insurer wordings vary and are not summarised here.
Panel firms are on the panel because the insurer has assessed their capability in the relevant class and negotiated rates. Advantages include cost efficiency (panel rates are usually lower than open-market rates), a defence team that already knows the wording and the insurer's approach, no premium loading for using off-panel counsel, and quicker mobilisation. For lower-value claims, or for claims that turn on established points of professional practice, panel firms typically do a good job.
A long-standing external law firm may already know the client concerned, understand the sector, or have specific expertise — construction adjudication, regulatory work, financial services litigation — that the panel firm does not carry to the same depth. The commercial relationship matters too: if the claimant is a major client, being defended by a firm the client already respects can help preserve the wider relationship. For reputationally sensitive matters, some professionals want their own name partners involved.
The classic authority is Groom v Crocker [1939] 1 KB 194, where the Court of Appeal confirmed that an insurer conducting the defence owes an implied duty to act in good faith towards the insured. The insurer cannot use its conduct rights to prefer its own commercial interests where doing so would prejudice the insured. An insurer that insisted on an unsuitable firm, or one with a demonstrable conflict, could be challenged.
Where the insurer's interests diverge materially from the insured's — coverage disputes, allegations that could trigger a policy exclusion, or claims exceeding the limit of indemnity where the insured has exposure above cover — the case for separate representation strengthens. In sharp conflicts, the insured may be entitled to instruct its own solicitor at the insurer's expense; more often, both sides accept that the insured has separate coverage counsel while defence conduct continues with the panel firm.
Most disagreements about choice of solicitor are resolved commercially rather than through legal argument. The insurer may accept the insured's chosen firm on terms — an increased retention, hourly-rate caps, a co-counsel arrangement with a panel firm leading, or agreed scope limits. The broker's role is to structure and negotiate that compromise.
Worked example. A mid-sized accountancy firm faces a professional negligence claim from one of its largest clients, arising from advice on a corporate transaction. The insurer notifies its panel firm. The accountancy firm asks its broker to arrange for its own long-standing external law firm — used for years on transactional and regulatory work — to run the defence, on the ground that the client relationship must be preserved and the external firm already knows the transaction background.
The broker negotiates. The compromise: the panel firm has conduct of the defence and correspondence with the claimant, with the insured's chosen firm engaged as second-chair providing sector input and client liaison. If the matter reaches formal litigation, both firms are on the record with defined roles. The insured accepts an increased retention of £15,000. Six months later the claim settles at £380,000, within cover, and the underlying client relationship is preserved.
When defence-firm choice becomes contentious, Apex will typically review the policy wording, identify any conflict-of-interest triggers, engage the claims handler early before positions harden, present the insured's operational reasons for wanting particular counsel, and propose a structured compromise. Related reading: what to expect during a PI claim investigation and subrogation and conflicts of interest in PI insurance. Sector-specific PI guides are available for accountants, solicitors, architects, surveyors and IFAs.
Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Firm reference number 724952. This entry is general information, not advice on any particular policy.
