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Why you should Sign Up for a Professional Indemnity Cover

Consideration was given for the editing and publication of this post.

Recently, the Solicitors Regulation Authority announced that it would allow freelance lawyers to operate without meeting the minimum levels of insurance covers.

The announcement changed the current demand for freelancers to sign up for indemnity cover by letting them provide legal services without it.

The proposal only applies to freelancers working outside a regulated firm as most firms working with freelancers are providing a PII and compliance cover for the lawyers.

What is a Professional Indemnity Cover? 

It is a cover designed to protect a consultant solicitor from claims made by unhappy clients and ensure the consequences to the business and the lawyers' ability to practice are not crippling.

Freelancing is a risky venture that leaves lawyers vulnerable to lawsuits and loss of income, among other unfortunate incidences. Additionally, most clients regard freelancers as small and lacking in the ability to fight back. More specifically, the PII comes in handy when a client accuses you of making a mistake (intentional or unintentional) in your work, not completing work on time or according to the client' expectations and any loss of income experienced by the client. 

In case a client makes any of these claims, the PI cover compensates him or her and caters to all additional costs. The policy differs from one company to another, but most providers offer a team of legal experts to defend the freelancer.

Most freelancers assume the cover is expensive, but it is a compelling way of keeping your practice afloat. For example, if a freelancer provides legal services to a client who declines to pay the invoiced amount, the insurer steps in to reimburse the amount or negotiate friendlier terms of payment by the client. 

The PII cover also comes in handy when a client sues the freelancer for late delivery of work, leading to loss of income. The insurer resolves the problem by compensating the client and covering the legal fee. Here are more reasons freelancers should sign up for a professional indemnity cover. 

The certainty of Legal Protection 

Having a professional indemnity cover is not a legal requirement, but freelancers sign up for protection against legal costs, potential damages and expenses.

Large settlements are made against professionals for what most clients regard as a breach of duty. Even if you successfully defended the claim, you still incur a significant amount of legal costs for hiring a lawyer to defend you and pay the damages to the client. 

Contractual Requirement 

Clients demand a PI cover before dealing with freelancers because they are often liable for negligence and failure to provide professional duties despite exercising the required level of duty and care. Even an honest mistake makes a freelancer responsible for professional negligence. 

Brand credibility 

A PII cover protects the client and the freelancer. As such, the soliciting profession as a brand remains credible to clients and the entire society.
Passion for law founders cite that the cover makes clients confident of the freelancer’s services regarding his standard of professionalism and ensures the flexibility of a consultant solicitor is not at the expense of the clients.