The number of law firms closing due to difficulties obtaining professional indemnity has fallen from a high of 65 in 2019/20 to 34 in 2022/23 (to the end of October).

This is amongst the findings of research conducted by Hazlewoods Chartered Accountants and Business Advisers.

Hazlewoods attributes this trend to a to both the falling price of PI insurance, as well as the growth in carriers offering the cover.

PI cover is mandatory for law firms, and one of their top three expenses, alongside staffing and property.

Ian Johnson, Partner at Hazlewoods, says: “Law firms will be very glad that PII premiums appear to have begun to soften – some firms had been finding coverage difficult, even at very high prices.”

“It’s still a very tough market for firms that insurers see as higher-risk – such as those that handle larger volumes of conveyancing work – but for others the cost of PII appears to have settled somewhat.”

Separate research conducted by broker Howden found that 66% of its law firm clients achieved a rate decrease in their PII premiums in October 2023, as more firms negotiated lower fees with their providers.

---