Six years. That is the run-off cover requirement under the SRA Minimum Terms when an SRA-regulated practice ceases to operate, whether through closure, retirement, or sale to a non-successor entity. The cover must be maintained at the MTC minimum limit, cannot be cancelled by the insurer, and must be in place from the date the practice ceases.
This article walks through the practical mechanics: when the obligation triggers, what it costs, who pays, and what happens to claims notified after the six years expires.
It complements the full Solicitors PI Guide and the Solicitors sector page.
What triggers the run-off obligation
The run-off requirement is triggered when an SRA-regulated practice ceases. The three most common triggers:
Voluntary closure. Partners decide to wind up the firm, often a sole practitioner retirement, or a small partnership closing because the partners are stepping back.
Sale where the buyer is NOT a successor practice. If the buyer is taking the book of clients but not establishing themselves as a successor in PI terms (for example, an asset purchase by a non-law-firm entity, or a sale across regulatory boundaries), the seller has a separate run-off obligation that does not transfer.
Regulatory cessation. SRA intervention, suspension, or strike-off can also trigger the requirement, though in those cases the firm's PI insurer typically continues cover under the run-off clause whether the firm pays or not.
What doesn't trigger it. A merger where the surviving entity is treated as the successor practice under the MTC. The surviving firm absorbs the run-off obligation rather than the predecessor purchasing separate run-off (unless the predecessor elects otherwise under MTC clause 5.5). See Solicitors PI on a law firm merger or acquisition for that case.
What the cover has to do
The MTC sets out the structural requirements for run-off (clauses 5.3 to 5.7):
Duration. Six years from the date the firm ceases (clause 5.4(d)). The cover must remain in force throughout, regardless of whether the firm pays the run-off premium.
Limit. The same minimum limit as ordinary cover applied to the practice: £2m each-and-every-claim for sole practitioners and partnerships of natural persons, £3m for incorporated firms. Many firms buying run-off opt to maintain a limit above the statutory minimum, in line with what their final-year cover was, to reflect the same single-claim exposure.
Non-cancellable by the insurer. Once run-off cover is activated under clause 5, the insurer cannot cancel it. The grounds for cancellation in MTC clause 4.3 do not apply to run-off once it is in force. If the firm fails to pay the run-off premium, the insurer remains on risk, must pay claimants directly when claims emerge, and has to recover the unpaid premium from the firm separately. The default rate on run-off premium is reported by the SRA as around 50%, with the unpaid cost factored into general insurance rates for the profession.
Insurer responsibility for unpaid excess. MTC clause 3.4: if the firm fails to pay to a claimant any amount within the excess within 30 days of it becoming due, the claimant may notify the insurer of the default, and the insurer is then liable to remedy the default on the firm's behalf. The insurer can then recover the amount from the firm and any amount paid may erode the sum insured.
These provisions exist to protect claimants from a closed firm's inability or unwillingness to pay.
What it costs
Run-off is typically priced as a single-premium policy paid upfront on cessation, covering the full six-year term. The cost varies significantly by:
- The firm's claims history. A firm with a clean record over the look-back window typically attracts the lower end of the run-off pricing range. A firm with a recent severe claim, or multiple claims, may attract substantially higher pricing.
- The work mix at cessation. Conveyancing-heavy firms attract higher run-off premiums because of the tail-claim profile of property work. Commercial-heavy and litigation-heavy firms can be lower.
- The size of the firm at cessation. Larger firms (by fee income or fee-earner count) generally face higher run-off premiums in absolute terms.
- The insurer. Different insurers price run-off differently. Some quote keenly; others price defensively because run-off is a tail risk they would rather not write.
Typical range. The Law Society describes a typical range of two to three times the final annual premium for the six-year run-off term. Lockton's published guidance puts the market range at 225-400% of the preceding year's primary layer premium, with insurer variation.
For a sole practitioner with a £4,000 final-year premium, that is roughly £8,000-£16,000 payable as a single premium on retirement. For a 10-partner LLP with a £100,000 final-year premium, that is £200,000-£400,000.
These are not trivial numbers. Run-off is one of the largest predictable costs in the lifecycle of a law firm.
When and how to plan
The honest answer: most firms wait too long to plan run-off. Specific recommendations:
Sole practitioners thinking about retirement. Start the run-off conversation with your broker at least 12 months before your intended cessation date. The numbers will frame your retirement decision. If the run-off cost is meaningfully out of line with your expectations, you may want to adjust your timing or your work-mix in the final years.
Partnerships planning a wind-down. As soon as a wind-down is on the agenda, brief the broker. The firm's final year of activity can sometimes be structured to make the run-off cheaper, for instance by avoiding new conveyancing matters or by closing certain higher-risk work types in the months before cessation.
Firms in distress. If the firm is closing because of financial difficulty, the run-off cost may be unaffordable. The insurer remains on risk regardless, but the firm may face additional regulatory consequences for unpaid premium. The SRA has consulted historically on a hardship fund for sole practitioners unable to afford run-off; nothing has yet been implemented but the issue is on the regulator's radar. Talk to your broker and to the SRA early.
Partner agreement on excess contribution. A practical tip from market experience: before any partnership dissolution, agree in writing that each former partner will contribute to any future excess payments during the six-year run-off period. Without this, one partner can be left exposed to the full excess when a claim emerges years after the others have lost touch.
What happens after the six years
Claims notified more than six years after cessation fall outside the mandatory run-off period. Those late claims are covered by the Solicitors Indemnity Fund (SIF).
The SRA took direct control of SIF on 1 October 2023, having confirmed in early 2023 that it would continue to provide post-six-year indemnity to former principals rather than close SIF as previously contemplated. Initial day-to-day claims handling was contracted to Polo Works (Polo Commercial Insurance Services) on an 18-month contract. Following a tender process, Lester Aldridge LLP took over as the SIF claims management provider from 1 April 2025 under a new contract. Claims can be sent to Lester Aldridge LLP, Russell House, Oxford Road, Bournemouth BH8 8EX (quoting ref: 3.SRA.SIF).
There is no additional cost to former principals. The SIF arrangement is funded centrally from the residual SIF reserves. The SRA reserves the right to introduce a levy on the profession in future if reserves become insufficient, but has chosen not to do so at this stage.
The practical effect: a solicitor who closed their firm in 2018, finished run-off in 2024, and now faces a claim notified in 2027 (year 9 post-closure) is still indemnified by SIF. The cover is not unlimited and is subject to SIF's own rules, but it eliminates the prospect of being personally exposed to a late claim after run-off has expired.
Scale of post-six-year claims. Willis Towers Watson analysis cited by the SRA estimates the average annual SIF claim volume at around 31 claims per year on a normalised basis, with an average claim cost (including defence costs) of around £34,600 over a 10-year forecast. Around 11% of all claims against closed firms are made after the mandatory run-off period has expired, with most of those falling between six and 15 years after closure. Conveyancing accounts for around 74% of SIF claims by value and 76% by number; wills, trusts, and probate make up most of the balance.
Special situations
The partner who leaves a continuing firm. When an individual partner retires from a partnership that continues, the partnership's ongoing PI provides forward cover for the retired partner's past acts. The retired partner does not need to arrange personal run-off cover unless they continue to practise (in which case they need new cover for their new work).
The partner who continues consulting. Partners who retire from active practice but stay on as consultants or "of counsel" need to consider whether they are still doing reserved legal activities. If they are, they are still in private practice and need cover. If they are not (for example, purely non-legal advisory work), they may not.
The sole practitioner who sells the practice to another solicitor. If the buyer is treated as a successor practice under the MTC, the seller does not have a separate run-off obligation. If the buyer is not a successor (uncommon in straightforward sole-practitioner-to-sole-practitioner sales but possible in atypical structures), the seller needs run-off.
The sole practitioner who joins a partnership. If the sole practitioner ceases sole practice and joins a partnership, and if the partnership is treated as the successor, the sole practitioner's run-off obligation is absorbed. If the partnership is structured to specifically exclude that absorption, the sole practitioner would need separate run-off.
How Apex helps
Run-off planning is one of the things Apex handles regularly because we work with sole practitioners, partnerships, and LLPs at every lifecycle stage. We:
- Quote run-off scenarios well before cessation so you can plan
- Identify which insurer is currently appetite-positive for the specific run-off profile
- Where helpful, structure the final-year ongoing cover to make the subsequent run-off pricing more favourable
- Handle the run-off binding mechanics at cessation
- Stay engaged through the six-year period for any claims advocacy
If you are thinking about closing your firm, retiring, or selling the practice, talk to your named Apex broker as early as you can. Upload your current Statement of Fact and existing policy schedule to proposal.apexinsurancebrokers.co.uk with a note about your intended timing, and your named broker will be in touch.