S.I. No. 351/2018 - Solicitors Professional Indemnity Insurance Regulations 2018

• (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 Special Purpose Fund).

6.2.2 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.

6.3 No avoidance or repudiation

Without prejudice to clause 6.17, 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.

6.4 Rights of Insurer

6.4.1 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.

6.4.2 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 2015 or otherwise.

6.5 No 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.

6.6 No other policy to bar recovery

Save to the extent permitted under clause 6.4, the Insurance must provide that no rights of recovery available to a Firm under another policy of insurance may bar recovery under the Insurance.

6.7 Contribution 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 (1) 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.

6.8 No denial or reduction

Subject to clause 2.2, 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

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

• (c) any failure to pay any part of the premium in relation to the Insurance;

be entitled to reduce or deny its liability under the Insurance, except in circumstances where a prescribed exclusion contemplated by clause 6 applies.

6.9 Coverage Period

The Coverage Period must run from the date of inception of the relevant Insurance and must expire no later than 24 months from the date of inception of the relevant Insurance.

6.10 Contesting 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 Chairperson of the Bar Council of Ireland) shall advise that such proceedings or arbitration should be contested.

7 EXCLUSIONS

7.1 No 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 (1) or a number of the matters set out in this clause 6.

7.2 Death 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).

7.3 Property

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.

7.4 Previous 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 6.4, the Insurance must comply with clause 5.6.

7.5 Fraud or dishonesty

The Insurance may exclude liability of the Insurer to indemnify all Insureds under the relevant Insurance to the extent that any civil liability or related Defence Costs arise from the dishonesty of or a fraudulent act or omission committed or condoned by any Insured.

7.6 Trading debts

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

7.7 Partnership 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 (2) or more persons comprising or formerly comprising the Firm.

7.8 Solicitors Acts

Save as specifically provided in the Regulations and/or the Minimum Terms and Conditions, 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 2015 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 (b) of the definition of “Claim”).

7.9 Insured 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.

7.10 Claims/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 (for this purpose the law of the Republic of Ireland includes European Union law where the same forms part of the law of the Republic of Ireland).

7.11 Employment

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.

7.12 Contracts

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

• (c) any other relief claimed against the Insured

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

7.13 Directors’ 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.

7.14 War, 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, and

• (b) terrorism, and

• (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.

7.15 Undertakings to Financial Institutions in respect of Commercial Property Transactions

Certain capitalised terms in this clause are defined in clause 6.16.

• (a) Undertakings to Financial Institutions in respect of Commercial Property Transactions before 1 December 2009

The Insurance may exclude the liability of the Insurer to indemnify all Insureds under the relevant Insurance in respect of Claims arising directly or indirectly as a result of the provision by any Insured of a Relevant Undertaking in the course of a Commercial Property Transaction, before 1 December 2009, to a Financial Institution or to any director, officer, employee, agent or advisor of a Financial Institution, where:—

• (i) the Relevant Undertaking was given by that Insured (acting either for a client borrower alone, or for a client borrower and a Financial Institution jointly) in connection with the provision by the relevant Financial Institution of financial accommodation to that Insured’s client to permit that client to effect the relevant Commercial Property Transaction; and

• (ii) such Claims are made by a Financial Institution; and

• (iii) to the extent that the Insurer can demonstrate (and for the avoidance of doubt, the burden of proof in this regard shall rest with the Insurer) any civil liability or related Defence Costs arise from any dishonest, fraudulent, criminal or malicious act or omission by that Insured, or any acts or omissions which were done by that Insured knowing them to be wrongful.

For the avoidance of doubt, nothing in this clause 6.15(a) shall be construed to permit liability to be excluded in circumstances where any Relevant Undertaking is provided to a Financial Institution in the course of the Insured’s sole representation of that Financial Institution as the Insured’s own client.

• (b) Undertakings to Financial Institutions in respect of Commercial Property Transactions on or after 1 December 2009 but before 1 December 2010

The Insurance may exclude the liability of the Insurer to indemnify all Insureds under the relevant Insurance in respect of Claims arising directly or indirectly as a result of the provision by any Insured of a Relevant Undertaking in the course of a Commercial Property Transaction, on or after 1 December 2009, to a Financial Institution or to any director, officer, employee, agent or advisor of a Financial Institution, where the Relevant Undertaking was given by that Insured (acting either for a client borrower alone, or for a client borrower and a Financial Institution jointly) in connection with the provision by the relevant Financial Institution of financial accommodation to that Insured’s client to permit that client to effect the relevant Commercial Property Transaction.

For the avoidance of doubt nothing in this clause 6.15(b) shall be construed to permit liability to be excluded in circumstances where any Relevant Undertaking is provided to a Financial Institution in the course of the Insured’s sole representation of that Financial Institution as the Insured’s own client.

• (c) Undertakings in breach of the Commercial Property Regulations on or after 1 December 2010

The Insurance may exclude the liability of the Insurer to indemnify all Insureds under the relevant Insurance in respect of Claims arising directly or indirectly as a result of any Insured acting in breach of the Commercial Property Regulations.

7.16 Interpretation of Clause 6.15

For the purposes of clause 6.15 the following terms have the following meanings:

“Accountable Trust Receipt” has the meaning ascribed thereto in the Commercial Property Regulations;

“Certificate of Title” has the meaning ascribed thereto in the Commercial Property Regulations;

“Commercial Development” has the meaning ascribed thereto in the Commercial Property Regulations;

“Commercial Property Transaction” has the meaning ascribed thereto in the Commercial Property Regulations;

“Relevant Person” has the meaning ascribed thereto in the Commercial Property Regulations;

“Relevant Undertaking” has the meaning ascribed thereto in the Commercial Property Regulations;

“Representative” has the meaning ascribed thereto in the Commercial Property Regulations;

“Residential Property” has the meaning ascribed to such term in the Commercial Property Regulations;

“Residential Property Transaction” has the meaning ascribed thereto in the Commercial Property Regulations;

“Solicitor” has the meaning assigned to it in Section 3 of the Solicitors (Amendment) Act, 1994 and includes two (2) or more Solicitors acting in partnership or association; and

“Undertaking” has the meaning ascribed to such term in the Commercial Property Regulations.

7.17 Misrepresentation and Non-Disclosure

The Insurance may exclude liability of the Insurer to indemnify all Insureds under the relevant Insurance in respect of any Claim by a Financial Institution in circumstances where the Insurer can demonstrate (and for the avoidance of doubt, the burden of proof in this regard shall rest with the Insurer) that any Insured was guilty of any material misrepresentation or material non-disclosure in placing the Insurance, save that liability shall not be excluded on the grounds of innocent misrepresentation or innocent non-disclosure on the part of the Insured. For the avoidance of doubt, the effect of this clause 6.17 shall be that no such Claims shall be valid as against a Participating Insurer.

7.18 Financial Sanctions

The Insurance may exclude liability of the Insurer to indemnify the Insured against any Claim to the extent that payment of such Claim would cause the Insurer to breach any United Nations resolutions or the trade or economic sanctions, laws or regulations of the European Union or any other jurisdiction applicable to the Insurer, such that the Insurer would be exposed to a sanction, prohibition or restriction.

7.19 Insolvency of Financial Institution

The Insurance may exclude liability of the Insurer to indemnify an Insured against any Claim arising as a result of the insolvency of a financial institution which holds client money in a Client Account of an Insured or arising from the failure of such financial institution generally to repay monies on demand.

8 GENERAL CONDITIONS

8.1 General 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.

8.2 Reimbursement

8.2.1The 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.

8.2.2 The 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.

8.2.3 The 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.

8.2.4 The Insurance must provide that any right of reimbursement contemplated by this clause 7.2 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.

8.3 Reimbursement 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.

8.4 Reimbursement 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.

8.5 Reimbursement 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.

8.6 Claims Reports

The Insurer shall provide a report (a “Claims Report”) to any Firm to which it has issued a Policy either in the then current or in any previous Indemnity Period, within a reasonable time from receiving a request to do so, setting out (as applicable), as at the date specified in the Claims Report:—

8.6.1 a summary of each Claim of which the Insurer is aware made against the Firm under each Policy; and

8.6.2 the amount reserved by the Insurer against each Claim; and

8.6.3 the basis on which each such amount is calculated (for example, whether the figure represents a loss actually incurred, an estimate of probable maximum loss, or any other basis of reserving); and

8.6.4 whether or not each such amount includes Defence Costs; and

8.6.5 whether each such amount includes or is in excess of the amount of any excess or deductible that may apply in relation to such Claim, and the amount of any such excess or deductible; and

8.6.6 any amounts paid out in relation to each Claim, in each case indicating whether such sums include any excess or deductible due from but not paid by the Firm.

8.7 In providing Claims Reports, the Insurer shall use its reasonable endeavours to provide all of the information set out in clause 7.6, but shall not be required to provide any part of that information to the extent that doing so would not be reasonably practicable having regard to the manner in which Claims information is stored on the computer systems of the Insurer.

9 DISPUTE RESOLUTION

9.1 Arbitration

The Insurance must contain the following arbitration clause:

All disputes and differences arising under or in connection with this Policy, including any dispute or difference regarding a failure on the part of an Insurer to confirm cover, shall be referred, by written notice from either party, to the decision of a sole arbitrator, as may be nominated by agreement between the parties to the arbitration, or failing such agreement within 14 (fourteen) days of a written notification being made by one (1) of the parties to the arbitration, by an arbitrator, appointed by the Chairperson for the time being of the Chartered Institute of Arbitrators (Irish Branch) or in the event of his being unwilling or unable to do so, by the next senior officer at the Chartered Institute of Arbitrators ~ Irish Branch who is willing and able to make the appointment, provided always that this provision shall apply also to the appointment (whether by agreement or otherwise) of any replacement arbitrator where the original arbitrator (or any replacement) has been removed by order of the High Court or refuses to act or is incapable of acting or dies.

Every or any such reference shall be deemed to be a submission to arbitration within the meaning of the Arbitration Act 2010 or any act or statutory provision amending same and shall be an arbitration conducted in Dublin, Ireland in the English language and governed by the Arbitration Act 2010 , save as to the extent provided in this clause.

The parties to an arbitration under this arbitration clause shall notify the PII committee in writing of the arbitration within twenty-eight (28) days of the date of the arbitrator’s final award.

The aforesaid notification in writing to the PII Committee shall include such information regarding the arbitration as may be determined by the PII committee from time to time, including but not limited to:-

• (i) The subject matter of the dispute or claim the subject matter of the arbitration; and

• (ii) The parties to the arbitration; and

• (iii) The nature of the reliefs sought; and

• (iv) Whether a Direction has been sought and/or granted; and

• (v) A summary of the final decision of the arbitrator; and

• (v) Such other information as may be determined by the PII committee from time to time.

The parties acknowledge that the PII committee shall have the power to direct the parties to any arbitration to provide such other information to the PII committee as may be determined by the PII committee from time to time.

The arbitrator shall have the power to direct, on an interim basis pending hearing or resolution of any arbitration without prejudice to any issue in dispute between the Insured and the Insurer, that the Insurer shall conduct any claim against the Insured, and/or advance Defence Costs to the Insured and/or, if appropriate, compromise and/or pay any Claim against the Insured, and/or such further or other interim relief as the arbitrator deems apposite; such a direction by the arbitrator to be known as a Direction.

The arbitrator may make a Direction, where in his sole discretion he considers that it is fair and equitable in all of the circumstances for such a Direction to be given. Such a Direction may be made following an application by the Insured, after allowing both the Insured and the Insurer an opportunity to make submissions as to whether such a Direction should be made, and where applicable, after receiving responses to any questions that the arbitrator may have regarding inter alia the degree of engagement between the Insurer and the Insured prior to the application for a Direction, and/or the degree to which the Insured has cooperated with the Insurer in relation to the provision of information and documentation relating to the Claim, and/or the degree to which the Insurer has theretofore assisted the insured with the Claim.

9.2 Related 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.

9.3 Conduct of Claims

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 Insurer.

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.