Legalize / Ireland / Statutory Instrument

S.I. No. 617/2007 - The Solicitors Acts 1954 to 2002 (Professional Indemnity Insurance) Regulations 2007

Type Statutory Instrument

Publication 2007-09-11

Last updated 2020-10-13

State In force superseded text

Text As published

Source Irish Statute Book

articles 15

This is the act as published. Later amendments are not folded into the text below: each one is a separate act in this repository and an entry in this law's history.

6 amending acts · 2020-10-13, S.I. No. 429/2020 - Solicitors Professional Indemnity Insurance Regulations 2020

Reform history JSON API

“Employee” means any person, other than a Principal, employed or otherwise engaged in the Firm’s Practice, including, without limitation, solicitors, registered lawyers, other lawyers, trainee solicitors, consultants, associates, locum staff members, persons seconded to work in the Firm’s Practice or persons seconded by the Firm to work elsewhere, office and clerical staff or otherwise;

“Firm” means:—

(a) the Partnership (as constituted as at the commencement of the Coverage Period) which, or sole practitioner who, contracted with the Insurer to provide the Insurance, and

(b) the Partnership referred to in paragraph (a) as constituted from time to time, whether prior to or during the Coverage Period;

“Firm’s Practice” means the practice carried on by the Firm at the commencement of the Coverage Period and the continuous legal practice preceding and succeeding this practice;

“Insurance” means the professional indemnity insurance or coverage required by each Firm pursuant to the Regulations;

“Insured” means:—

(a) the Firm,

(b) each trustee, nominee, service or administration company owned by the Firm and/or the Principals of the Firm from time to time,

(d) each Principal or former Principal of the Firm from time to time,

(e) each Employee or former Employee of the Firm from time to time, or

(f) the estate or legal personal representatives of any deceased former Principal or Employee of the Firm;

“Insurer” means the underwriter of the Insurance or the provider of the coverage the subject of the Minimum Terms and Conditions and where the context so requires includes the SMDF;

“Investment Advice” has the meaning ascribed to such term in the Regulations;

“Investment Business Service” has the meaning ascribed to such term in the Regulations;

“Law Society” means the Law Society of Ireland;

“Lead Insurer” means the Insurer named as such in the contract of insurance but if contrary to clause 3.6.2 no Lead Insurer is named as such, means the first-named Insurer on the relevant certificate of insurance;

“Legal Services” means services of a legal or financial nature and includes any part of such services, and for the avoidance of doubt, includes (without limitation):—

(a) any Investment Business Services or Investment Advice provided by a Firm,

(b) acting as personal representative or trustee,

(d) acting as commissioner for oaths,

(e) acting as liquidator or receiver,

(f) acting as company secretary,

(g) acting as director of any company owned by the Principals of a Firm that provides trustee, nominee, administration or other services,

(h) acting as arbitrator or mediator, and

(i) acting on a pro bono basis;

“Minimum Terms and Conditions” means these minimum terms and conditions;

“Partner” means a partner in a Firm;

“Partnership” means an unincorporated firm;

“Preceding Practice” means each practice to which the Firm’s Practice is a Succeeding Practice;

“Principal” means:-

(a) in relation to a Partnership, any person that is a partner of that Partnership and any person held out as a partner,

(b) in relation to a sole practice, any person that is a sole practitioner of that practice, including, for the avoidance of doubt a sole practitioner who employs one or more solicitors, registered lawyers or other lawyers;

“Regulations” means the Solicitors Acts 1954 to 2002 (Professional Indemnity Insurance) Regulations 2007;

“Self-Insured Excess” means an amount that the Insured is required by the terms of any contract between the Insured and the Insurer to pay to the Claimant in the event of a Claim;

“SMDF” means the Solicitors Mutual Defence Fund Limited; and

“Succeeding Practice” means a practice that satisfies any one or more of the following conditions in relation to another practice (such other practice being a Preceding Practice for these purposes):—

(a) it is held out as being a successor to the practice or part thereof of the Preceding Practice by whatever means such holding out occurs, or

(b) it is conducted by a Partnership that has a majority of Principals that are identical to those persons that were Principals of any partnership that conducted the Preceding Practice, or

(d) it is conducted by a Partnership in which the sole practitioner conducting the Preceding Practice is a partner and where no other person has been held out as a successor to the Preceding Practice, or

(e) it is carried on under the same name as the Preceding Practice or a name which substantially incorporates the name of the Preceding Practice, or

(f) it is carried on from the same premises as the Preceding Practice, or

(g) the Partnership which, or sole practitioner who, conducts the practice has acquired the goodwill and/or assets of the Preceding Practice, or

(h) the Partnership which, or sole practitioner who, conducts the practice has assumed the liabilities of the Preceding Practice;

but notwithstanding the foregoing a practice shall not be treated as a Succeeding Practice for the purposes of the Minimum Terms and Conditions pursuant to paragraphs (b), (c), (d), (e), (f), (g) or (h) if another practice is or was held out by the owner of that other practice as the Succeeding Practice.

2In the Minimum Terms and Conditions, unless the context otherwise requires:—

(a) words and expressions shall have the same meaning and shall be construed consistently with the same words and expressions in the Solicitors Acts 1954 to 2002 (Professional Indemnity Insurance) Regulations 2007;

(b) the singular includes the plural, and vice versa;

(d) references to a “person” include any individual or company;

(e) references to a “company” include any body corporate; and

(f) headings are inserted for convenience only and are not an aid to interpretation.

3In the Minimum Terms and Conditions, where they apply to coverage issued by the SMDF:-

(a) the definition of the term “Insured” as set out herein shall apply to identify the persons and entities required to be the subject of coverage issued by the SMDF pursuant to the Regulations;

(b) the terms “Insurance”, “Insurer”, “insure” and other cognate terms shall be construed, where those terms apply to the SMDF and to coverage issued by it on the terms of the Minimum Terms and Conditions, to include and to refer to such coverage.

4Nothing in the Minimum Terms and Conditions shall be construed to negative any discretion that the SMDF or the Solicitors Mutual Defence Fund Limited on its behalf may have, whether under statute, its organisational documents or otherwise howsoever to determine in its discretion whether to indemnify a Firm or a member or any other person.

2 Scope of Cover

1The Insured

The Insured must include, and coverage under the Insurance must extend to, all those persons and entities set out in clause 1 under the definition of “Insured”.

2Civil Liability

The Insurance must indemnify each Insured against civil liability incurred by an Insured arising from any provision of Legal Services provided that:—

(a) a Claim in respect of such civil liability is first made against the Insured during the Coverage Period; or

(b) such civil liability arises from Circumstances first notified to the Insurer during the Coverage Period.

3Defence Costs

The Insurance must indemnify the Insured against Defence Costs in relation to:—

(a) any Claim referred to in clauses 2.2, 2.4 and 2.5; or

(b) any Circumstance first notified to the Insurer during the Coverage Period;

and the Insurance shall provide that such Defence Costs will be met by the Insurer as and when they are determined, due and payable.

4Preceding Practice

4.1The Insurance must indemnify each Insured against civil liability to the extent that such liability arises from any provision of Legal Services in connection with a Preceding Practice, provided that:-

(a) a Claim in respect of such liability is first made against an Insured during the Coverage Period; or

(b) a Claim in respect of such liability is first made during or after the Coverage Period and arises from Circumstances first notified to the Insurer during the Coverage Period.

4.2For the purposes of such cover as is contemplated in clause 2.4.1, the Insurance must include:—

(a) each Partnership or sole practitioner who carried on the Preceding Practice;

(b) each trustee, nominee, service or administration company owned by the persons referred to in paragraph (a) from time to time;

(d) each Principal and former Principal of any Partnership referred to in paragraph (a);

(e) each Employee and former Employee of any Partnership or sole practitioner or company referred to in paragraph (a) and (b); and

(f) the estate or legal personal representatives of any person referred to in this clause 2.4.2 who is deceased or legally incapacitated.

4.3The Insurance may permit the Insurer to charge an additional premium in respect of coverage for a Preceding Practice provided pursuant to this clause 2.4, but the Insurance may not provide that the Insurer can decline to indemnify the Insured or cancel, terminate or avoid the Insurance due to non-payment of any such additional premium when due.

5Succeeding Practice

5.1Where there is a succession to the Firm’s Practice the Insurance must indemnify each Insured against civil liability arising from any provision of Legal Services in connection with a Succeeding Practice to the Firm’s Practice, provided that:—

(a) a Claim in respect of such liability is first made against an Insured during the Coverage Period; or

(b) a Claim in respect of such liability is made during or after the Coverage Period and arises from Circumstances first notified to the Insurer during the Coverage Period.

5.2For the purposes of such cover as is contemplated in this clause 2.5 the Insurance must include:-

(a) each Partnership or sole practitioner who carries on the Succeeding Practice;

(b) each trustee, nominee, service or administration company owned by the persons referred to in paragraph (a) from time to time;

(d) each Principal and former Principal of any Partnership referred to in paragraph (a);

(e) each Employee and former Employee of any Partnership or sole practitioner or company referred to in paragraph (a) and (b); and

(f) the estate or legal personal representatives of any person referred to in this clause 2.5.2 who is deceased or legally incapacitated.

5.3The Insurance may permit the Insurer to charge an additional premium in respect of coverage for a Succeeding Practice provided pursuant to this clause 2.5, but the Insurance may not provide that the Insurer can decline to indemnify the Insured or cancel, terminate or avoid the Insurance due to non-payment of any such additional premium when due.

3 Minimum Level of Insurance Cover

1Minimum Level of Cover

The Amount Insured for each and every Claim (exclusive of Defence Costs) must be at least €2,500,000 (two million five hundred thousand euro).

2Cover for Defence Costs

There must be no limit on the cover for Defence Costs.

3Proportionate liability for Defence Costs

The Insurance may provide that liability for Defence Costs in relation to a Claim that exceeds the Amount Insured is limited to the proportion of such Defence Costs that the Amount Insured bears to the total amount paid or payable to dispose of that Claim.

4No retrospective dates

The Insurance must not exclude or limit the liability of the Insurer in respect of Claims arising from incidents, occurrences, facts, matters, acts and/or omissions that occurred prior to any specified date.

5No other limits

The Insurance may not apply any monetary exclusions or limits except as provided for by clauses 3.1 and 3.3 and where the Insurance is underwritten on a co-insurance basis, to the extent provided for in clause 3.6.2. For the avoidance of doubt, this clause 3.5 shall not be construed to prevent an Insured and an Insurer from agreeing that the cover shall provide for a Self-Insured Excess where this is otherwise permitted under these Minimum Terms and Conditions.

6Co-Insurance

6.1The Insurance may be underwritten by more than one Insurer, each of which must be a Qualified Insurer and the Insurance may in such circumstances provide that the Insurer shall be severally liable only for its respective proportion of liability in accordance with the terms of the Insurance and shall state the respective proportions of liability of each of the relevant Qualified Insurers.

6.2Where the Insurance is underwritten jointly by more than one Insurer, the Insurance must state which Qualified Insurer shall be the Lead Insurer and in addition to any proportionate limit of Defence Costs in accordance with clause 3.3, the Insurance may provide that each Insurer’s liability for Defence Costs is further limited to the extent of the proportion of that Insurer’s liability (if any) in relation to a relevant Claim.

4 Self-Insured Excesses

1Self-Insured Excess

The Self-Insured Excess (if any) applicable to the Insurance is a matter of contract to be determined between the Insurer and the Firm in each case.

2Effect of Self-Insured Excess

2.1The Insurance must provide that the Self-Insured Excess does not reduce or limit the liability of the Insurer contemplated by clause 3.1.

2.2The Self-Insured Excess must not apply to Defence Costs.

2.3The Insurance may provide for multiple Claims to be treated as one Claim for the purposes of the Self-Insured Excess on such terms as the Insurer and the Firm may agree.

2.4In the case of Insurance written on an excess of loss basis, there shall be no Self-Insured Excess except in relation to the primary layer.

3Payment of Self-Insured Excess to Claimant

In the event that an amount which is within the Self-Insured Excess is not paid by a Firm to a Claimant within 30 Working Days of its becoming due, the Insurer must redress the default on the part of the Firm and make payment thereof to the Claimant, and in such circumstances, the Insurance may provide that the Insurer shall be entitled to recover any amount so paid from the Firm.

5 Special Conditions

1Minimum Terms and Conditions must prevail

1.1The terms and conditions of the Insurance must comply with the Minimum Terms and Conditions as and to the extent prescribed by the Regulations.

1.2Any provision of the Insurance that is inconsistent with the Minimum Terms and Conditions shall either be severed from the terms of the Insurance or the Insurance shall be rectified so as to comply with the Minimum Terms and Conditions.

1.3The Insurance must provide that the Minimum Terms and Conditions shall always prevail in the event of a conflict between the terms and conditions of the Insurance and the Minimum Terms and Conditions.

2No cancellation

The terms of the Insurance must provide that the insurance or coverage cannot be cancelled unless:

(a) the Firm’s Practice is merged into a Succeeding Practice, provided that the Succeeding Practice has Insurance in compliance with the Minimum Terms and Conditions as and to the extent prescribed by the Regulations, or

(b) replacement Insurance complying with the Minimum Terms and Conditions as and to the extent prescribed by the Regulations commences (but only where any replacement Insurance is not or would not in the event of cancellation of the original Insurance be provided wholly or partly by the Assigned Risks Pool).

The terms of the Insurance must further provide that any cancellation must not prejudice the accrued rights and obligations of the parties thereto as at the effective date of cancellation.

3No avoidance or repudiation

The Insurance must provide that the Insurer is not entitled to avoid or repudiate the Insurance on any grounds whatsoever including, without limitation, where there has been non-disclosure or misrepresentation by the Insured, whether such non-disclosure or misrepresentation is or is alleged to be innocent, negligent or fraudulent.

4Rights of Insurer

Without prejudice to clause 5.3, the Insurance may provide that the Insurer is entitled to recover any outstanding premium or additional premium amounts from the Firm in any circumstance where (but for the operation of clause 5.3) the Insurer would have been entitled to avoid or repudiate the Insurance.

The Insurance may further provide that, in any situation where the Insurer becomes aware that there has been fraudulent non-disclosure or fraudulent misrepresentation to the Insurer in connection with a placement or renewal of Insurance for a Firm, the Insurer may refer the conduct of any relevant Principal of that Firm to the Law Society to permit the Law Society to take action against that Principal under The Solicitors Acts 1954 to 2002 or otherwise.

5No set-off

The Insurance must provide:—

(a) that any indemnity amount payable to the Insured by the Insurer must be paid only to the relevant Claimant or as the Claimant may direct, and

(b) that the Insurer is not entitled to set off against any such indemnity amount any payment owing to the Insurer by the Insured, including, without limitation, any payment of premium due to, or any payment required to be made by the Insured to reimburse, the Insurer.

6No other policy to bar recovery

Save to the extent permitted under clause 7.4, the Insurance must provide that no rights of recovery available to a Firm under another policy of insurance may bar recovery under the Insurance.

7Contribution where Succeeding Practice exists

Where there is a Succeeding Practice in relation to the Firm’s Practice during the Coverage Period, and as a result more than one Qualifying Insurance covers a Claim or Circumstance, the Insurance may provide that contribution between Insurers shall be determined in accordance with the relative numbers of Principals of the owners of the respective constituent practices immediately prior to the relevant succession.

8No denial or reduction

The Insurer shall not on any grounds whatsoever, including but not limited to the following:—

(a) any failure to notify a Claim or Circumstance within a prescribed period or at all,

(b) any breach of any term or condition of the Insurance, or

be entitled to reduce or deny its liability under the Insurance, except in circumstances where a prescribed exclusion contemplated by clause 7 applies.

9Coverage Period

The Coverage Period must run from the date of inception of the relevant Insurance and must expire on the following 30 November.

10Contesting Liability

A Firm or an Insured shall not be required against its wish to contest the issue of liability in any legal or arbitration proceedings arising from any Claim unless a solicitor or a member of the Irish Bar (as mutually agreed upon between the Firm and the relevant Insurer, or failing agreement, to be appointed by the Chairman of the Bar Council) shall advise that such proceedings or arbitration should be contested.

6 Run-Off Cover

1Cessation of Firm’s Practice

Where each of the following conditions is met:—

(a) the Firm’s Practice ceases during or on expiry of a Coverage Period, and

(b) there is no Succeeding Practice in relation to the Firm’s Practice that holds Qualifying Insurance in respect of the Firm’s Practice

then the Insurance must provide run-off cover for the first six calendar years from the date upon which the Firm’s last Coverage Period expires, such cover to be provided on the basis of the Minimum Terms and Conditions as they stand as at the inception date of the relevant Policy. Where the Insurance was provided on a co-insurance basis and the conditions in (a) and (b) above are satisfied, each relevant Insurer shall provide its proportionate share of such run-off coverage on the basis of the Minimum Terms and Conditions as they stand at the inception date of the relevant Policy.

2Extent of Coverage

The run-off cover referred to in clause 6.1 must indemnify the Insured in accordance with the Minimum Terms and Conditions as and to the extent prescribed by the Regulations.

3Succeeding Practice

The Insurance must provide that where there is a Succeeding Practice in relation to the Firm’s Practice, run-off cover will not be activated, provided that the Succeeding Practice has Insurance in place in compliance with the Minimum Terms and Conditions as and to the extent prescribed by the Regulations.

4No Cancellation

The Insurance must provide that the run-off cover is not subject to cancellation on any basis whatsoever, save that it may be cancelled on terms to be agreed between the Insurer and the Firm where the following conditions are met:-

(a) the Firm has obtained Insurance in accordance with these Minimum Terms and Conditions as and to the extent prescribed by the Regulations on the date of cancellation of the relevant run-off cover, and

(b) the Qualified Insurer or Qualified Insurers under the replacement Insurance referred to in paragraph (a) have confirmed in writing to the Firm and to the Qualified Insurer or Qualified Insurers under the relevant run-off cover that they are providing Insurance on the basis that the Firm’s Practice is to be treated as a continuation of the Firm’s Practice prior to the cessation thereof and that accordingly they will be liable for any Claims against the Firm arising from matters that occurred prior to the cessation; and

(c) the Qualified Insurer or Qualified Insurers under the replacement Insurance referred to in paragraph (a) have provided any required confirmations of coverage to the Law Society pursuant to the Regulations.

5Run-Off Premium

The Insurance may provide that run-off cover is to be provided by the Insurer on such terms as to the payment of premium or additional premium relating thereto as may be set out therein (save that the Insurance may not permit cancellation of run-off cover for failure to pay premium or additional premium required to be paid in connection therewith).

7 Exclusions

1No other exclusions

The Insurance must not exclude or limit the liability of the Insurer on any basis whatsoever save where and to the extent that any Claim or related Defence Cost is proved to have arisen from one or a number of the matters set out in this clause 7.

2Death or bodily injury

The Insurance may exclude all and any liability of any Insured for causing death or bodily injury, save that the Insurance must cover liability for psychological injury or emotional distress (including but not limited to stress-related claims).

3Property

The Insurance may exclude liability of the Insurer to indemnify for any act or omission which results in or contributes to damage to, or destruction or physical loss of any property of any kind whatsoever, other than property in the care, custody or control of any Insured in connection with the Firm’s Practice and not occupied or used in the course of the Firm’s Practice, unless such liability is occasioned by the Insured being in breach of professional duty in the performance of or failure to perform Legal Services.

4Previous cover

The Insurance may exclude liability in respect of Claims where another professional indemnity insurance contract for a period earlier than the Coverage Period entitles the Insured to be indemnified in respect of the same Claim. Save as specified in this clause 7.4, the Insurance must comply with clause 5.5.

5Fraud or dishonesty

The Insurance may exclude liability of the Insurer to indemnify any particular person to the extent that any civil liability or related Defence Costs arise from dishonesty or a fraudulent act or omission committed or condoned by that person provided that the Insurance must nonetheless cover each other Insured and the Insurance must provide that no dishonesty, act or omission will be imputed to another Insured unless it is committed or condoned by that Insured, or in the case of a company, by all the directors and officers of that company.

6Trading debts

The Insurance may exclude liability of the Insurer to indemnify any Insured against any trading loss or personal debt incurred by the Insured.

7Partnership Agreement

The Insurance may exclude liability of the Insurer to indemnify the Insured against any actual or alleged breach or other relief in respect of disputes relating to the membership of and rights and obligations relating to membership of, the Firm, or disputes relating to or arising out of the partnership agreement between any two or more persons comprising or formerly comprising the Firm.

8Solicitors Acts

Save as specifically provided in this clause, the Insurance may generally exclude liability of the Insurer to indemnify the Insured against any loss occurring as a result of any process or proceedings brought against the Insured by or on behalf of the Law Society or any other person so entitled to ensure compliance with, or consequent on the breach (or alleged breach) by the Insured of any provisions of The Solicitors Acts 1954 to 2002 or any regulations made thereunder or in respect of misconduct (including, for the avoidance of doubt, any costs incurred by an Insured in defending or resisting proceedings seeking an award against that Insured of the nature described in sub-clause (c) of the definition of “Claim”). However, the Insurance must specifically indemnify each Insured for any awards made under the provisions of The Solicitors Acts 1954 to 2002 for compensation or restitution to clients or any other obligations that may be imposed on solicitors or registered lawyers by statute from time to time to compensate or make restitution to clients.

9Insured acting as their own lawyer

The Insurance may exclude liability of the Insurer to indemnify the Insured against any liability arising in respect of a transaction where the Insured has acted as his or her own lawyer save and except where another solicitor or registered lawyer in the Firm concerned has bona fide acted at arm’s length for the Insured concerned in respect of any such transaction or where the Claim is by a bona fide third party in respect of such transaction.

10Claims/Exposure to risk outside Ireland

The Insurance may exclude liability of the Insurer to indemnify the Insured against any loss occurring or any liability arising in connection with:—

(a) any part of the Firm’s Practice carried on from offices of the Firm located outside the Republic of Ireland, or

(b) any advice given or action taken or omitted to be taken by the Insured in relation to any law other than the law of the Republic of Ireland (which includes European Union law where the same forms part of the law of the Republic of Ireland).

11Employment

The Insurance may exclude liability of the Insurer to indemnify the Insured against any Claim or Circumstance arising out of:—

(a) a wrongful dismissal, or

(b) any other alleged or actual breach, or any other relief in respect of any contract of employment (including but not limited to a stress-related claim brought by an Employee against a Firm where such claim arises out of the employment relationship between that Employee and the Firm)

where such dismissal or breach is alleged or such relief is sought against the Insured.

12Contracts

The Insurance may exclude liability of the Insurer to indemnify the Insured against:-

(a) wrongful termination by the Insured of, or

(b) any other actual or alleged breach by the Insured of, or

any contract for supply to or use by the Insured of services and/or materials and/or equipment and/or other goods.

13Directors liability

The Insurance may exclude liability of the Insurer to indemnify any natural person in their capacity as a director or officer of a company, other than an administration, nominee, service or trustee company in respect of which coverage is required to be extended pursuant to these Minimum Terms and Conditions, except that:—

(a) the Insurance must cover any liability of that person which arises from a breach of duty in the performance of or failure to perform Legal Services, and

(b) the Insurance must cover each other Insured against any vicarious or joint liability.

14War, Terror, Asbestos, Radiation

The Insurance may exclude liability of the Insurer to indemnify any Insured in respect of losses directly or indirectly caused by:—

(a) war, riot, civil commotion and other hostilities,

(b) terrorism,

(c) asbestos or any actual or alleged asbestos related injury or damage involving the use, presence, existence, detection, removal, elimination or avoidance of asbestos or exposure to asbestos, and

(d) ionising radiation or contamination by radioactivity from any nuclear fuel or from any nuclear waste from the combustion of nuclear fuel; or from the radioactive, toxic, explosive, or other hazardous properties of any explosive nuclear assembly or nuclear component thereof

provided that in each case any such exclusion or endorsement does not exclude or limit any liability of the Insurer to indemnify the Insured against civil liability or related Defence Costs arising from any actual or alleged breach of duty in the performance of (or failure to perform) Legal Services or failure to discharge or fulfil any duty incidental to the Firm’s Practice.

8 General Conditions

1General Conditions

The Insurance may contain such general conditions as are agreed between the Insurer and the Firm, but the Insurance must provide that the special conditions required by clause 5 prevail in the event of any inconsistency.

2Reimbursement

2.1The Insurance may provide that each Insured who committed or condoned an innocent or negligent non-disclosure or misrepresentation or other innocent or negligent breach of the terms and conditions of the Insurance will reimburse the Insurer to the extent that is just and equitable, having regard to the prejudice caused to the Insurer’s interests by such non-disclosure, misrepresentation or breach, provided that no Insured shall be required to make any such reimbursement to the extent that any such breach of the terms or conditions of the Insurance was in order to comply with any applicable rules or codes laid down from time to time by the Law Society.

2.2The Insurance may provide that each Insured who committed or condoned a dishonest or fraudulent non-disclosure or misrepresentation or other dishonest or fraudulent breach of the terms and conditions of the Insurance will be required to indemnify the Insurer in full in respect of any sums paid by it in or in connection with the discharge of any Claim pursuant to the Insurance.

2.3The Insurance must provide that no non-disclosure, misrepresentation, breach, dishonesty, act or omission will be imputed to a company unless it was committed or condoned by, in the case of a company, all directors and officers of that company.

2.4The Insurance must provide that any right of reimbursement contemplated by this clause 8.2 against any Employee, each former Employee, and each person who becomes an Employee of the Firm during the Coverage Period, or their personal representatives, is limited to the extent that is just and equitable having regard to the prejudice caused to the Insurer’s interests by that person having committed or condoned (whether knowingly or recklessly) dishonesty or any fraudulent act or omission.

3Reimbursement of Defence Costs

The Insurance may provide that each Insured will reimburse the Insurer for Defence Costs advanced on that Insured’s behalf that the Insurer is not ultimately liable to pay.

4Reimbursement of the Self-Insured Excess

The Insurance may provide for those persons who are Principals of the Firm at any time during the Coverage Period to reimburse the Insurer for any Self-Insured Excess paid by the Insurer on an Insured’s behalf.

5Reimbursement of monies paid pending dispute resolution

The Insurance may provide that each Insured will reimburse the Insurer following resolution of any coverage dispute for any amount paid by the Insurer on that Insured’s behalf that, on the basis of the resolution of the dispute, the Insurer is not ultimately liable to pay.

9 Dispute Resolution

1Arbitration

The Insurance must contain the following arbitration clause:

“All disputes and differences arising under or in connection with this Policy shall be referred to the arbitration of a sole arbitrator to be agreed between the parties or, failing agreement between the parties within fourteen days of either party having made a request in writing to the other party to concur in the appointment of an arbitrator, a person to be nominated by the Chairman for the time being of the Chartered Institute of Arbitrators (Irish Branch) upon the application of either party.

Every or any such reference shall be deemed to be a submission to arbitration within the meaning of the Arbitration Acts, 1954 to 1998 or any Act amending same and shall be an arbitration conducted in Dublin, Ireland in the English language and governed by the Arbitration Acts, 1954 to 1998”.

2Related Disputes

The Insurance must provide that any dispute between the Insured and the Insurer as to coverage of any Claim or Circumstance under the Insurance shall be heard and determined in conjunction with any other related dispute between any insured party and that party’s insurer.

3 Conduct of Claims

The Insurance must provide that pending resolution of any coverage dispute the Insurer shall conduct any Claim against the Insured, advance Defence Costs to the Insured and if appropriate compromise and/or pay any Claim against the Insured.

The Insurance may provide that the Insured shall be required to afford reasonable co-operation to the Insurer in relation to the handling of any Claim against the Insured, subject to the Insurer agreeing to meet the Insured’s reasonable costs of such co-operation, and the Insurance may further provide that the Insurer shall be entitled to recover from the Insured by way of damages a sum equal to the Insurer’s loss arising from or connected with the Insured’s failure to co-operate as required by the Insurance. For the avoidance of doubt, the Insurance may not permit the Insurer to refuse to pay any claim, or to cancel, terminate or avoid the Insurance, due to the Insured’s failure to co-operate as required by the Insurance.

APPENDIX 2

RISK MANAGEMENT AUDIT TERMS OF REFERENCE

(a) Each risk management audit report should estimate the number of files held by the firm and break these down statistically, giving the percentage of total files and the percentage of gross fees of the firm falling under such different categories of business as may be appropriate.

(b) Each risk management audit report should give an account of the methods of file maintenance and post and communications delivery used by the firm and should confirm:—

(i) that all filing is up to date and is contained in fire-proof storage facilities; and

(ii) that provision has been made for back-up storage of all electronic files and communication records held by the firm.

(c) Each risk management audit report should give details of any diary system used by the firm and set out details of how the diaries of any solicitor, registered lawyer, principal or other person employed by or engaged in the practice of the firm (including any consultants) is managed and monitored during any absences.

(d) Each risk management audit report should set out a list of the principals of the firm and of every staff member employed by or engaged in the practice of the firm (including any consultants) and should list and summarise:—

(i) their roles and years of service;

(ii) their qualifications;

(iii) any other relevant information.

(e) Each risk management audit report should include an account of interviews held with each principal of the firm and any other staff member employed by or engaged in the practice of the firm believed by the risk management auditor to be relevant to obtain a proper view of the levels of risk management pertaining within the firm.

(f) Each risk management audit report should include a list of the files closed within the firm during the 12 months preceding the date of the risk management auditor’s visit to the firm and these files should be examined by the risk management auditor to obtain a summary view of them from a risk management perspective.

(g) Each risk management audit report should include an account of an examination by the risk management auditor of the firm’s accounting system, indicating that access to ledgers, account cards or any relevant electronic record storage system was obtained, and further indicating any areas of concern that arise from a risk management perspective.

(h) Each risk management audit report should indicate whether a centralised record of undertakings given by the firm is maintained, and should include an examination of such record, indicating any areas of concern that arise from a risk management perspective.

(i) Each risk management audit report should give an account of any files identified by the risk management auditor as being of concern from a risk management perspective, and should report as to the extent of liability involved in each case.

EXPLANATORY NOTE

(The note that follows does not form part of the Regulations and is provided for guidance only.)

1Introductory Commentary

1The Law Society introduced compulsory professional indemnity insurance coverage for the solicitors profession in 1995 (under The Solicitors Acts 1954 to 1994 (Professional Indemnity Insurance) Regulations 1995). The 1995 Regulations operated to require practising solicitors to maintain a prescribed level of professional indemnity insurance coverage for practice years commencing on or after 1 January 1996. The 1995 Regulations were subsequently amended by The Professional Indemnity Insurance (Amendment) Regulations 1998, The Solicitors Acts 1954 to 1994 (Professional Indemnity Insurance) (Amendment) Regulations 1999, The Solicitors Acts 1954 to 1994 (Euro Changeover) Regulations 2001; The Solicitors Acts 1954 to 2002 (Professional Indemnity Insurance) (Amendment) Regulations 2004 and The Solicitors Acts 1954 to 2002 (Professional Indemnity Insurance) (Amendment) Regulations 2005.

2The Law Society established a Professional Indemnity Insurance Task Force to examine the area of professional indemnity insurance. The Report of the Professional Indemnity Insurance Task Force was presented to the Council of the Law Society at its meeting on 13 July 2007, together with revised draft Regulations and associated documentation, which the Council adopted at that meeting. The principal purpose of the revised Regulations is to make provision to remedy existing perceived gaps in the system of professional indemnity insurance coverage for solicitors for the better protection of the profession and its clients.

2 Regulation 1, General

1The revised Regulations come into effect on 1 November 2007. The 1995 Regulations as amended are revoked (subject to transitional provisions) on 1 January 2008.

2Solicitors and registered lawyers in practice prior to 1 November 2007 continue, by virtue of the provisions of the 1995 Regulations as amended, to require coverage on an individual basis for the full practice year commencing on 1 January 2007 and ending on 31 December 2007. “Firms” (as defined, see Regulation 2) are required to maintain coverage under the revised Regulations with effect from 1 November 2007 and for all indemnity periods thereafter. The transitional provisions (see Regulation 3) are designed to avoid any unnecessary duplication of coverage requirements.

3 Regulation 2, Interpretation

1This Regulation sets out certain definitions that are of significance in the context of the revised Regulations. Not every definition will be the subject of commentary herein.

1.1“ARP eligibility criteria”

To be eligible to apply for coverage under the assigned risks pool, a firm must satisfy these criteria. The firm cannot have been in the pool for more than twenty four of the preceding sixty months and cannot be a successor to such a firm. Where a firm fails to comply with the requirements of Regulation 10 relating to risk management audits or is the subject of an adverse risk management audit report under Regulation 11, the PII Committee may direct that it is no longer eligible for membership.

1.2“defaulting firm”

A firm becomes a defaulting firm for the purposes of the Regulations where (i) it does not hold qualifying insurance with a qualified insurer, it is eligible to apply for coverage under the assigned risks pool and it has failed to apply for such coverage; or (ii) it does not hold qualifying insurance with a qualified insurer, it is ineligible to apply for coverage under the assigned risks pool and it has not ceased its practice.

1.3“defaulting run-off firm”

A firm that ceases practice where it is required to maintain run-off cover by virtue of the revised Regulations but fails to establish such coverage either from insurers or under the assigned risks pool.

1.4“eligible firm”

An eligible firm is one that is entitled to apply for coverage under the assigned risks pool. To be eligible, a firm must either satisfy the ARP eligibility criteria (see paragraph 3.1.1) or hold an ARP eligibility dispensation.

1.5“firm”

One of the principal changes under the revised Regulations to the pre-existing system of professional indemnity insurance coverage for solicitors is the move from an individual basis of coverage to a firm basis of coverage. This definition identifies those types of practice entity that qualify as “firms” for the purposes of an obligation to maintain insurance coverage. The definition is sufficiently comprehensive to extend to all legal partnerships, whether comprised solely of solicitors, solely of registered lawyers, partly of one or partly of the other, and even a partnership including foreign qualified lawyers that are not registered lawyers (should such be permissible). The definition also extends to sole practitioners, whether or not those persons employ other solicitors or registered lawyers. It is sufficiently comprehensive to extend to sole practitioners that are employed by, for example, commercial enterprises (although legal services provided as part of an employment solely to an employer do not require to be the subject of compulsory coverage).

1.6“practice”

This definition is sufficiently comprehensive to extend to any business consisting of the provision of legal services (as defined) from an establishment in the State. Note that services involving the provision of legal advice in relation to foreign law are not covered, nor are services provided through an establishment outside the State (such as an overseas office of an Irish firm).

1.7“qualifying insurance”

This term is used to identify coverage incorporating the revised minimum terms and conditions, attached to the Regulations as Appendix 1. Qualifying insurance can consist of one or a number of coverages issued by different insurers, such that the insurance can be written on a co-insurance basis. Similarly, the term is defined to include coverage issued by the SMDF.

1.8“qualified insurer”

To be a qualified insurer, a commercial insurer must hold the necessary authorisation to conduct insurance business (as an “authorised insurer”) and must have entered into an agreement in terms prescribed by the PII Committee defining the terms on which it is permitted to provide such coverage to firms. The SMDF is a qualified insurer where it has entered into a similar agreement.

1.9“run-off period”

This term defines the period during which run-off cover must be maintained by a firm that ceases practice. Cover must be maintained for a six year period after cessation of practice, but if a firm ceases practice during an indemnity period, cover must be maintained for six years after the end of the relevant indemnity period. Thus a firm ceasing practice on 1 December 2008 would be required to maintain run-off cover until 30 November 2014, whereas a firm ceasing practice on 1 January 2009 would be required to maintain run-off cover until 30 November 2015.

4 Regulation 3, Maintenance of Insurance

1Regulation 3(a) is the principal operative provision of the revised Regulations. It requires each “firm” (see commentary under Regulation 2 above) carrying on a “practice” (see commentary under Regulation 2 above) on or after 1 November 2007 to maintain “qualifying insurance” (see commentary under Regulation 2 above) with a “qualified insurer” (see commentary under Regulation 2 above). Regulation 3(j) provides that each firm is required to maintain such insurance from the date when its practice commences (if that is during an indemnity period) or from the beginning of any indemnity period during which the firm carries on practice (where it commenced practice prior to the beginning of that indemnity period).

2Solicitors currently have coverage arrangements that renew either on 1 November or 1 January, depending on the provider. An objective of the revised Regulations is to standardise coverage arrangements, such that all coverages renew on a single date. The date selected is 1 December, and all coverage renewals will be standardised to take effect on 1 December from 2008 onwards by virtue of Regulation 3(k). Accordingly, under Regulation 3(b), firms may elect either to take out qualifying insurance under the revised Regulations with effect from 1 November 2007 until 30 November 2008, and then to renew that insurance for each twelve month period commencing on 1 December thereafter, or to take out qualifying insurance under the revised Regulations with effect from 1 January 2008 until 30 November 2008, and then to renew that insurance for each twelve month period commencing on 1 December thereafter. Firms will decide which option to select depending on the renewal date of coverage for the individual solicitors currently engaged in their practices.

3It should be noted, under Regulation 3(c), that a firm that elects to take out coverage under the revised Regulations from 1 January 2008 will only be deemed to have satisfied the overarching obligation to have coverage under Regulation 3(a) where each individual solicitor or registered lawyer engaged in that firm’s practice at any time between 1 November 2007 and 31 December 2007 holds the necessary coverage on an individual basis under the 1995 Regulations. Similarly, under Regulation 3(d), an individual solicitor or registered lawyer with an obligation to maintain coverage under the 1995 Regulations between 1 November 2007 and 31 December 2007 will be regarded as having satisfied this obligation where that person did not engage in practice other than for the account of a firm during that period and that firm maintained coverage under the revised Regulations during that period.

4Employed solicitors are not required to maintain insurance cover under Regulation 3(a) by virtue of Regulation 3(i), provided that they only provide legal services to or for their employer who is not a solicitor. The Society will require confirmation in writing of this fact in a format to be prescribed.

5The Regulations impose an obligation on all firms to provide evidence to the Society on request that it is complying with its obligations under Regulation 3, and to provide specific confirmation of coverage within ten days of the commencement of the relevant indemnity period. The form of confirmation of coverage is set out as Schedule 3 to the Pool Participation Agreement to be entered into by all qualifying insurers. Under Regulation 3(m), principals of firms are responsible for ensuring that the firm complies with its obligations under the Regulations to maintain the necessary coverage.

5 Regulation 4, Self-Insured Excesses

1Firms are permitted to agree self-insured excesses with their insurers under the revised Regulations without restriction (contrary to the former position under the 1995 Regulations). However, the insurers must undertake to remain liable to claimants for the self-insured excess amount such that if the firm defaults in payment to claimants, the claimant will be protected.

2Firms that wish to take advantage of this option should take note of their obligations under Regulation 4 to make prompt payment of the amount of the excess to claimants and the obligation imposed on principals of firms under Regulation 4(c) to ensure that this occurs.

6 Regulation 5, Run-off Coverage

1Firms that cease practice without there being a succeeding practice must maintain run-off coverage under the revised Regulations. Where the firm’s insurance prior to its cessation of practice was formerly held with a qualifying insurer, the run-off cover in question must be provided by an insurer, while where the firm’s insurance prior to its cessation of practice was held with the assigned risks pool, the run-off cover must be provided by the pool.

2Regulation 5(b) defines the scope of the run-off cover to be maintained. Cover must incorporate the minimum terms and conditions, if taken out with a qualifying insurer or insurers, or must be on like terms to the coverage formerly held through the assigned risks pool. The obligation to maintain run-off cover continues throughout a “run-off period” (see commentary under Regulation 2).

3Firms are required to provide confirmation that run-off cover is being maintained pursuant to Regulation 5 by virtue of Regulations 5(c) and 5(d) and principals of firms are responsible for ensuring that firms comply with these obligations by virtue of Regulation 5(e).

4It should also be noted that the provision of run-off coverage will become a mandatory requirement of each coverage to be issued by qualifying insurers under the revised Regulations (see clause 6 of the revised minimum terms and conditions). Although a firm will not be required to take out such coverage with its existing insurers should it identify commercially preferable arrangements, its existing insurers will have an obligation to provide such coverage and thus no firm should find itself in a position where it ceases practice without run-off coverage being available to it, either from its existing insurers or from the assigned risks pool.

5Any firm that for any reason fails to maintain run-off coverage when required to do so under Regulation 5(a) will be deemed to be a “defaulting run-off firm” (see commentary under Regulation 2 above) for the purposes of Regulation 5(f). Regulation 5(f) requires the ARP manager to make arrangements for coverage under the assigned risks pool to extend to such firms. Coverage under the assigned risks pool will therefore extend to benefit claimants against such a defaulting run-off firm, for the protection of such a firm’s clients.

6Firms should note that the ARP manager will be entitled to recover premium amounts from defaulting run-off firms and their principals in respect of the coverage extended under Regulation 5(f). The premium amounts to be charged are expected to be significantly in excess of premium rates set in the commercial market for run-off coverage, and it is expected therefore to be in the interest of firms to make arrangements for run-off coverage with their insurers, rather than allowing themselves to become covered as defaulting run-off firms.

7 Regulation 6, Insolvency of Insurers

The insolvency of insurers is a rare event. In such circumstances clients require protection, and therefore Regulation 6 of the revised Regulations provides for each firm to ensure that replacement coverage is thereupon established with an insurer that is unaffected by insolvency. Firms should note that under Regulation 6(a) the responsibility to establish replacement coverage falls upon the firm in question, is not contingent upon the firm being required to take any action by the Society and that the responsibility to take action arises from the date upon which the insolvency event occurs, not the date on which the firm becomes aware of the insolvency. Firms should therefore be alert to the circumstances of their particular insurers and should not wait to take action until notified by the Society of an insolvency.

8 Regulation 7, The Assigned Risks Pool

1Wherever a firm is required to maintain qualifying insurance under the revised Regulations and does not have such insurance in place, that firm is required by virtue of Regulation 7(a) to apply to enter the assigned risks pool if it is eligible to do so. The criteria of eligibility are incorporated in the definition of “eligible firm” (see commentary under Regulation 2).

2Regulation 7(c) sets out the method of application to the assigned risks pool. Regulation 7(d) requires firms to provide the ARP manager with any information required to progress the firm’s application for membership. It will be for the ARP manager to determine the appropriate level of premium to be paid for coverage under the assigned risks pool, and Regulations 7(e), 7(k), 7(l), 7(m) and 7(n) make provision for this.

3Firms should note that where they have submitted an application for coverage under the assigned risks pool, it is the firm’s responsibility to ensure that this application has been received and to obtain an acknowledgement of this fact by virtue of Regulation 7(f). Firms should also note the general responsibilities of principals under Regulation 7(o) in respect of assigned risks pool coverage.

4Retrospective coverage under the assigned risks pool is not permissible by virtue of Regulation 7(h)(ii) and coverage will terminate automatically on the occurrence of a number of events set out in Regulation 7(i)(i) to (iii), including the firm ceasing to satisfy the relevant eligibility criteria.

9 Regulation 8, Membership of Assigned Risks Pool

1Any firm that ceases to be eligible for coverage under the assigned risks pool (for example because it has spent twenty four of the preceding sixty months covered under the pool arrangements) must either obtain qualifying insurance outside the pool or must cease its practice, by virtue of Regulation 9(a). Regulation 9(b) permits firms to leave the pool at any time following provision to the Society of evidence that the firm holds satisfactory coverage outside the pool.

2The effect of Regulation 9(c) is that a firm may not be permitted to obtain coverage under the assigned risks pool where it is a successor firm to a firm that would not itself have satisfied the eligibility criteria (thus, where Partnership ABC had spent more than twenty four of the preceding sixty months covered under the pool arrangements, thereby becoming ineligible, ABC may not be permitted to reconstitute itself as Partnership ABCD and claim to be a different firm thereby becoming eligible). The PII Committee will have power to treat an applicant as a successor to the practice of an ineligible firm and thereby itself ineligible.

3Firms should note that the consequence of making an application to enter the pool where the firm is, or is deemed to be, ineligible is that the firm may be required to indemnify the Society and the ARP manager in respect of their costs of dealing with any such application. This provision is set out in Regulation 9(d).

10 Regulation 9, Defaulting Firms

10.

1The Regulations provide for the protection of clients by ensuring that coverage will be available in respect of the acts or omissions of firms that have not fulfilled their obligations to take out qualifying insurance or to apply for coverage under the assigned risks pool. Thus, the ARP manager is required under Regulation 9(a) to make arrangements to ensure that “defaulting firms” (see commentary under Regulation 2) are covered in all circumstances where coverage would have extended under the minimum terms and conditions.

10.

2Firms that become defaulting firms for the purposes of the Regulations will be required to pay ARP default premium, and it is anticipated that the level of such premium will be such as to properly reflect the relevant firm’s failure to comply with its obligations under the Regulations to maintain coverage and the resulting increased risk to the assigned risks pool. The ARP manager has power to set the level of ARP default premium pursuant to Regulations 9(b) to 9(h).

11 Regulation 10, Risk Management Audits

11.

1An important part of the scheme of the Regulations is to encourage those firms that, for whatever reason, are covered under the assigned risks pool to address any issues in their practice that have caused them to be unable to obtain insurance outside the pool. The Society will encourage this by causing such firms to submit to a risk management audit pursuant to Regulation 10(a). The PII Committee may require multiple such audits.

11.

2Firms should note the responsibilities of principals in relation to risk management audits, which include ensuring that the risk management auditor is given access to all premises where the firm engages in practice, all records and documents requested and permission to interview principals and staff of the firm. Principals that fail to comply with their responsibilities will be subject to sanctions under Regulations 10(b) to 10(e).

11.

3Firms must indemnify the Society in respect of the costs of a risk management audit exercise pursuant to Regulation 10(f). Regulation 10(g) provides that any firm that fails to comply with its obligations under a risk management audit may be treated as ineligible for coverage under the assigned risks pool. The terms of reference of a risk management audit are as set out in Appendix 2 to the Regulations.

12 Regulation 11, Risk Management Audit Reports

12.

1Each risk management audit process will involve the submission to the ARP manager and the PII Committee of a written report by the relevant risk management auditor. The report must address the matters set out in the definition of “risk management audit report” in the Regulations.

12.

2Regulation 11 prescribes a process by which the PII Committee will review and invite submissions from the firm concerned relating to, any risk management audit report received. Following consideration by the PII Committee of any such submission received, the PII Committee has extensive powers by virtue of Regulation 11(e) to, inter alia, direct the firm to comply with prescribed risk mitigation measures, or in an extreme case, to direct that the firm should no longer be eligible for coverage under the assigned risks pool.

12.

3Firms are required to indemnify the Society in relation to the costs of steps taken under Regulation 11(e)(ii) (additional supervision) or Regulation 11(e)(iii) (ineligibility) and firms should note the responsibility of principals to ensure that firms discharge their obligations thereunder.

13 Regulation 12, Responsibilities of Principals

Principals have extensive responsibilities under the Regulations as will be apparent from the foregoing notes, but Regulation 12 states explicitly that principals are responsible for ensuring that all firms of which they are principals comply with all of their obligations under the Regulations and Regulation 12(a) explicitly deems it misconduct for a principal to fail so to procure. Regulations 12(b) to 12(e) set out certain further provisions relating to the responsibilities of principals under the Regulations.

14 Regulation 13, PII Committee

Regulation 13 makes provision for the establishment and composition of the PII Committee of the Society for the purposes of supervising the administration of the Regulations.

15 Regulation 14, Provision of Information

This Regulation requires firms and principals to provide any claimant against the firm with details of that firm’s insurance coverage, and permits the Society to maintain a register of coverage reported by firms and to permit inspection of such register.

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