As a welcome relief to reading the Consultation Paper, further rumours from the grapevine.
Looks like the SRA may have the bit between their, er teeth regarding client risk. We have today heard a rumour that another firm, this time in the midlands, has got into trouble for leaving clients high and dry with regard to adverse costs and own disbursements. The firm in question didn't take out any After the Event insurance and, to keep the cases, failed to apply to any relevant BTE provider either (their argument was that they knew what they were doing and After the Event Insurance (ATE insurance) was too complicated). They relied upon their considerable expertise but didn't explain all of the risks the client was facing by them not taking out after the event insurance (they obviously haven't heard about Adris v Royal Bank of Scotland
...and they are a big firm - doing 100 cases a month. Assuming claims take 18 months on average to settle, and a potential downside of say, £8,000 per case if lost, that's a risk portfolio of £14,400,000 (100 x 18 months x £8000). I wonder if the partners thought about it that way.
Anyway, they are now looking for ATE Insurance policies and are having to write to all of their clients to explain what has happened (so I suspect some clients will now lose confidence and jump ship). Oh yes, and the partners are facing disciplinary proceedings.
You have been warned.
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