If your firm is contemplating closure, retirement, merger or succession, the SRA Minimum Terms and Conditions (MTC) will shape almost every next decision. This page walks a solicitor firm through the Extended Policy Period, the Cessation Period, the six-year run-off obligation and the successor practice route, in the order the decisions actually arrive.
The intention is to help a principal or firm manager work out which branch of the SRA rules applies to the situation in front of them, and where the substantive risks and costs are hidden. Nothing here is legal advice — it is a plain-English map of the mechanics, drawn against the current SRA Indemnity Insurance Rules and the SRA guidance on closure.
This walk-through is written for the following situations. A sole practitioner is planning retirement. A two- or three-partner firm is contemplating dissolution because one partner is standing down. A firm is looking at merger with a larger practice. A limited company practice is planning to strike itself off. A firm has been unable to renew its qualifying insurance at the standard 1 October renewal and is looking at the 30-day and 60-day protections built into the MTC.
The relevant regulatory framework is the SRA Indemnity Insurance Rules and the annexed Minimum Terms and Conditions. Every qualifying insurer authorised to write solicitor PI in England and Wales must issue a policy that meets the MTC as a floor. That means the answers below come from the MTC itself — they are not commercial choices any insurer can vary downwards.
Two SRA-defined terms sit at the centre of this area. They are often confused, and the confusion tends to cost money.
The Extended Policy Period (EPP) is a 30-day window that begins the moment a qualifying policy expires without a new qualifying policy incepting the following day. During those 30 days the firm continues to hold cover with its previous insurer on the same MTC terms. The firm may continue to practise as normal — taking on new instructions, receiving client money, drawing down on client files. The purpose of the EPP is to give a firm that has narrowly missed a renewal a fair opportunity to find a placement with an alternative qualifying insurer without an immediate coverage gap.
The Cessation Period is a further 60 days that begins where the EPP expires without a new qualifying policy incepting. During those 60 days the firm remains insured under the previous insurer's MTC policy, but the SRA rules restrict what the firm may do. In particular, the firm must not take on any new instructions. It may only work on existing matters to the extent necessary to discharge existing obligations to clients. In practical terms the Cessation Period is a wind-down and orderly transfer window, not a trading window.
Combining the two, a firm that fails to obtain renewal at policy expiry has a total of 90 days of continuing MTC cover from the last-named insurer — 30 days of normal trading followed by 60 days of restricted, wind-down trading. At the end of the Cessation Period, if no qualifying insurance has incepted, cessation is treated as having occurred and the six-year run-off obligation is triggered against the last-participating insurer.
A separate SRA notification obligation runs alongside. A firm that enters the EPP must notify the SRA at insuredreports@sra.org.uk within five business days of entry, and a firm that reaches the Cessation Period without a placement must notify again.
What follows is the shape of the actual decision, walked in the order the questions typically arrive.
If the firm has ceased — meaning it no longer carries on any legal practice activities, has ceased to hold client money, and is not going to accept new instructions — then the six-year run-off obligation under the MTC has crystallised. The last-named qualifying insurer is contractually obliged to provide run-off cover for six years from the date of cessation. There is no way for the firm to opt out of that obligation and there is no way for the insurer to refuse. The remaining questions are about premium level and payment timing, not availability.
If another firm has taken over the practice in a way that meets the SRA definition of successor practice — see the section below — the successor's own qualifying insurance responds to claims relating to the ceased firm's work as prior practice cover. Separate run-off cover is not mandatory in that case. The ceasing firm may still elect, before cessation, to have the ceased practice insured under its own run-off cover rather than under the successor practice's MTC policy. That election is a live commercial decision, worth taking with advice.
A merger only removes the run-off obligation if the surviving firm qualifies as a successor practice. That is not automatic. It requires that the surviving firm is being held out to clients, regulators and the public as the successor of the merging firm, and it requires that the surviving firm's qualifying insurance accepts prior practice liability for the merged work. Both need to be documented clearly. A merger that does not meet the successor practice test triggers a run-off obligation on the disappearing firm's last-named insurer in exactly the same way as a straight closure.
If a sole practitioner or partner is standing down but the firm continues to hold authorisation and carry on regulated legal activity, then the firm still needs qualifying insurance on the standard MTC terms. Retirement of an individual is not cessation of the firm. Cover has to renew annually until the firm is formally closed on the SRA register.
The EPP is not a product a broker can sell as a planned cash-flow deferral. It is a rule-driven 30-day extension that only comes into effect where a qualifying policy has expired without a replacement placement. Firms sometimes ask whether they can lean on the EPP to buy negotiating time at renewal. The honest answer is that the EPP mechanism exists — the last-named insurer must continue cover — but relying on it carries an SRA notification, a restriction on operations once the Cessation Period begins, and market reputational cost. It is a safety net, not a strategy.
The MTC requires the last-named qualifying insurer to provide run-off cover for a period of six years from the date of cessation. Run-off cover exists because solicitor PI is written on a claims-made basis. The insurer that must respond to a claim is the insurer on cover when the claim is made against the firm, not the insurer on cover when the underlying negligent act occurred. Without a run-off requirement a firm could close in year one, receive a claim in year three, and have no policy to respond.
The structural mechanics matter. Premium for run-off cover is set by the last-participating insurer, on the basis provided for in the qualifying policy. Insurers commonly quote a run-off premium as a multiple of the last annual premium, typically expressed as a factor spread across the six-year period or as a single lump-sum premium payable at cessation. Higher-risk work — conveyancing exposure, wills and probate exposure with historic claims, claims-active firms generally — attracts a higher multiplier. Lower-risk work profiles attract a lower one. Firms should ask the incumbent insurer for the run-off basis before making cessation decisions, so the exit cost is visible up-front rather than at the moment the firm has no leverage.
Two features of the run-off obligation are worth internalising. First, the obligation attaches to the insurer, not to the firm. Closing a limited company or dissolving a partnership does not extinguish the insurer's contractual duty to provide the six-year cover. Second, the obligation is not avoidable by refusing to renew — the very act of not renewing is what triggers the crystallisation, once the EPP and Cessation Period have run out.
The SRA definition of successor practice is set out in the Glossary to the Rules. The essential test is whether another firm (B) is being held out, expressly or by implication, as the successor of the ceasing firm (A), or as having taken A into itself. The holding out can be on notepaper, business cards, electronic communications, promotional material, or in statements to a regulator or tax authority. Where A's owner was a sole practitioner and the transition occurred on or after 1 September 2000, an additional test applies — the sole practitioner needs to be a principal or employee of B's owner.
Where a successor practice exists, the mechanics change materially. B's qualifying insurance responds to claims about A's historic work as prior practice cover under the MTC. No separate run-off is mandatory for A. This is often the most cost-efficient exit route for a firm that is winding down, because B's incumbent PI programme absorbs the tail risk at the marginal cost of an increased premium on the successor firm's policy rather than at the cost of a discrete six-year run-off premium on the ceasing firm's policy.
The successor practice test must be documented well enough to satisfy the SRA and B's insurer at the time cessation is registered. A handshake merger is not enough. Terms of business, notepaper, client-facing announcements, engagement letters and the SRA notification of closure of A all need to line up with the successor practice narrative. Where this is not done clearly, an insurer can — and sometimes does — dispute whether prior practice cover extends, and a firm that thought it had avoided a run-off obligation finds itself buying one at short notice.
The four errors we see repeated in this area are worth flagging.
Assuming EPP equals run-off. They are different rules doing different work. The EPP is a 30-day continuation of a qualifying policy where a renewal has not been placed in time. Run-off is a six-year continuation of cover triggered when the firm actually ceases. A firm that reaches the end of the Cessation Period without a placement will move straight into a run-off obligation on the last-named insurer, and that is the point at which the six-year clock starts.
Assuming that closing the limited company removes the run-off obligation. The run-off obligation is a contractual duty owed by the qualifying insurer under the MTC. Striking the limited company off the Companies House register does not release the insurer or the SRA-imposed floor. It also does not release the individuals who were principals from their conduct obligations.
Delaying the run-off buying decision until after cessation. Premium mechanics are least favourable at the moment the firm is most exposed. If cessation is confirmed and the incumbent insurer is the only insurer contractually obliged to write the run-off, the firm has no meaningful commercial leverage. Better practice is to open the conversation with the incumbent insurer twelve months before intended cessation, so the run-off basis, multiplier, single-premium versus instalment structure and payment timing are understood in advance.
Under-documenting a successor practice arrangement. If a firm is closing on the basis that another firm is a successor practice, the paperwork needs to survive scrutiny — from the SRA, from the successor's insurer, and from any future claimant lawyer trying to identify who is on cover. Notepaper, engagement letters, client communications and formal SRA notifications all need to reflect the successor narrative and align on effective date.
A reasonable minimum planning horizon for a considered cessation is twelve months before the intended date. That allows time for the conversation with the incumbent insurer on run-off basis, time for a conversation with any acquiring or successor firm on whether the deal will qualify as successor practice under the MTC, and time to negotiate rather than accept a stated position.
The conversation with the incumbent insurer should cover the run-off multiplier, whether the run-off premium is expressed as a single sum or spread over the six years, whether there is any credit for a clean loss record, and whether the insurer will underwrite a run-off placement into a specialist run-off market or retain it in-house. Different insurers approach this very differently, and the differences can be material at the point of cessation.
The conversation with any prospective successor firm should cover whether that firm is willing to accept prior practice liability under its qualifying insurance, whether its insurer is prepared to accept the merged book, and how the successor practice status will be documented on both sides. It is a documented agreement, not a handshake — and it is the sort of agreement solicitors should reduce to writing at the same standard they would apply to any client transaction.
Where cessation is being forced by an inability to obtain renewal — a very different situation from a planned wind-down — the timeline compresses to the 30-day EPP plus the 60-day Cessation Period. Even in that compressed timeline, the mandatory SRA notification within five business days of entering the EPP creates a hard deadline that firms should not miss.
Apex Insurance Brokers Limited is an FCA-authorised general insurance intermediary (firm reference number 724952) with a professions focus. Matthew Bartlett is the director, holding SMF3, SMF16 and SMF17 approvals. We arrange solicitor professional indemnity insurance for firms across England and Wales, with placement across the SRA-participating insurer panel and, where the risk requires it, into the Lloyd's market. Our work in this area includes standard renewals, sub-scale or claims-active placements, cessation and run-off, and successor practice arrangements where two firms are combining. If your firm is contemplating any of the scenarios on this page, we will walk the mechanics with you before any decision is made.
The EPP is a 30-day period built into the SRA Minimum Terms and Conditions. It begins on the day after a qualifying policy expires where no replacement qualifying policy has incepted. During those 30 days the firm continues to hold cover with the last-named insurer on MTC terms and may practise as normal. It exists to give a firm that has narrowly missed renewal a fair opportunity to secure alternative placement. Firms that enter the EPP must notify the SRA within five business days.
The Cessation Period is a further 60 days that begins where the EPP expires without a new qualifying policy incepting. Cover continues under the last-named insurer on MTC terms, but the firm may not take on new instructions. It can only work on existing matters to the extent necessary to discharge existing obligations. Combined with the 30-day EPP, the total continuation is 90 days from policy expiry.
Not necessarily. Where the surviving firm qualifies as a successor practice under the SRA definition, that firm's qualifying insurance responds to prior practice claims and separate run-off is not mandatory. Whether a merger qualifies as successor practice depends on how the deal is structured and how the successor firm is held out publicly and to regulators. Where the merger does not qualify, the disappearing firm's last-named insurer must provide the six-year run-off in the ordinary way.
No. The run-off obligation is a contractual duty imposed on the qualifying insurer under the SRA MTC. Striking the incorporated practice off the Companies House register does not release the insurer from that duty and does not release the individual principals from their conduct obligations. Any premium payable for the run-off placement is a debt that will be pursued in the ordinary way.
Premium is set by the last-participating qualifying insurer under the terms of the incumbent policy. In broad terms the drivers are the firm's last annual premium, the risk profile of the work carried on (with conveyancing and probate exposure attracting a higher multiplier), the firm's claims history, and whether the insurer chooses to spread the premium or take it as a single payment at cessation. Because these are commercial and case-specific variables, firms should ask the incumbent insurer for its run-off basis before making cessation decisions rather than at the point of cessation.
If the firm ceases, the six-year run-off obligation on the last-named insurer arises regardless of the future employment status of the individual principals. An individual moving into employment does not remove that obligation, because the run-off protects the historic work of the ceased firm and the clients who instructed it. Where a former sole practitioner joins another firm and that firm is being held out as a successor practice, the successor practice rules may apply — but that is a specific test that needs to be documented.
For the broader sector context, see the Ultimate guide to UK solicitors' professional indemnity insurance 2026. For the underlying MTC framework, see the SRA MTC minimum terms and conditions explained. For a focused walk-through of the six-year run-off obligation, see solicitors PI run-off — six years explained. Sole practitioners considering these questions may find professional indemnity insurance for sole-practitioner solicitors useful, and firms weighing broker routes should read professions direct writers cannot cover.
This page is a plain-English commentary on the SRA Indemnity Insurance Rules and the Minimum Terms and Conditions as they stood at the date of last review. It is not legal advice and does not constitute a policy or contract of insurance. Solicitor firms should always take independent advice on the specific facts of a cessation, merger or run-off, and should read the current version of the SRA Rules and the terms of their qualifying insurance policy before making a decision.
Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Firm reference number 724952.