Many firms opting for self regulation & management of risk
Few UK law firms are outsourcing work despite client pressure to reduce cost, according to the annual Legal Risk survey on professional indemnity and risk management.
Among the top 100 firms contacted in the seventh annual survey, only four per cent are outsourcing legal process and 2% are outsourcing advice.
Nearly a tenth of firms changed broker this year, with the same number changing insurer. Marsh is the most popular broker, attracting a third of the market. A quarter of law firms chose Aon, and 19% chose Lockton. Among insurers, Travelers rules the roost with 32% of top 100 firms, QBE is in second place with 17.5% (down from 22% of the market last year) and Libra has 16%. Only seven per cent of firms increased their cover this year. Half of the firms surveyed allocate responsibility for risk management to a partner, while a third rely on a risk management specialist. 60% of firms have audit committees.
One in five of the top 100, and 45% of the top 30, firms have “lifeboat”—or asset protection—policies to protect the personal liabilities of members of limited liability partnerships. Conversion to limited liability status has taken place at 86% of the top 100 firms, with a further four per cent planning to convert in the next 12 months. Legal Risk partner, Frank Maher says: “This year’s survey shows that firms are at the beginning of the cycle of immense change being heralded by the Legal Services Act, new forms of regulation and client pressures for cost cutting through outsourcing. On a positive note the pressures on costs and reduced staff numbers have not impacted on the size of risk and compliance teams, perhaps influenced by the large number of Top 100 firms who may want to follow the self-regulation model recommended by Lord Hunt.”
