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  6. Will our PII cover a LeO compensation award of £50,000?

Will our PII cover a LeO compensation award of £50,000?

The Legal Ombudsman has the power to award compensation up to £50,000. I am concerned about how my firm would pay such a large amount if awarded. Will our professional indemnity insurance cover any such award?

The SRA Minimum Terms and Conditions of Professional Indemnity Insurance 2013 binds all participating insurers providing cover for solicitors.

Clause 1.8 deals with awards by the Legal Ombudsman (LeO) as follows:

“The insurance must indemnify each insured against any amount paid or payable in accordance with the recommendation of the Legal Services Ombudsman, the Office for Legal Complaints (including the Legal Ombudsman pursuant to section 137(2)(c) and section 137(4)(b) of the LSA) or any other regulatory authority to the same extent as it indemnifies the insured against civil liability provided that the insurer will have no liability in respect of any determination by the Legal Ombudsman pursuant to section 137(2)(b) of the LSA to refund any fees paid to the insured.”

Under Section 137(2)(b) of the Legal Services Act 2007, LeO has the power to direct that the fees of the solicitor are limited as LeO may direct.

Whilst LeO will look into complaints relating to poor service, it is worth noting that the same issues may also give rise to an allegation of professional negligence.

You should work with both LeO and your PII insurer to ensure that both complaints and potential claims are handled appropriately.

It may be necessary to consider notifying your PII insurer at an early stage in appropriate cases in addition to working with LeO to resolve any service element of the complaint.

The fact that a complaint may give rise to issues of professional negligence does not prevent a firm from using its internal complaints handling procedure or LeO investigating the complaint.

Where appropriate, it is important that both these processes are undertaken in parallel to ensure a speedy resolution.

Paragraph 7.6 of our practice note on handling complaints outlines the potential professional indemnity insurance implications of saying sorry while handling a complaint.

For more information, see our practice note on handling complaints, information on LeO's website or contact the Practice Advice Service.

Disclaimer: While every effort has been made to ensure the accuracy of the information in this article, it does not constitute legal advice and cannot be relied upon as such. The Law Society does not accept any responsibility for liabilities arising as a result of reliance upon the information given.

Have you got a practice question? Call the Practice Advice Service on 020 7320 5675 or email practiceadvice@lawsociety.org.uk

The Practice Advice Service is staffed Monday to Friday from 9am to 5pm.

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