‘Deep pocket’ professional indemnity claims could ‘re-emerge’ this year due to economic ‘headwinds’, according to DAC Beachcroft’s ‘Informed insurance’ predictions for 2024
The potential is ‘real’ due to ‘the highest quarterly insolvency numbers since Q2 2009’ when the last economic downturn was at its peak combined with an ‘apparent slowing in the real estate sector’ and consequent defaults, climate change risks, sustainability demands from clients, and concerns about cyber risks.
The firm’s insurance specialists also warn it is ‘likely that claims will be made against solicitors arising from new requirements under the Building Safety Act 2022’, regarding cladding and fire-related remediation work. Conveyancers who mistakenly identify a property as protected when it’s not could be caught out. DAC says: ‘The risk for solicitors is checking whether the information provided is accurate.
‘Solicitors acting for sellers may be put under pressure to sign undertakings, pursuant to which strict liability for errors would result—something to be avoided!’
Another cause of professional negligence claims is ‘the lack of clarity around the threshold for improper conduct’ regarding Strategic Litigation Against Public Participation (SLAPPs).
DAC recommends firms and in-house teams ‘upskill’ their climate-related advice or else face increasing claims in this area. It suggests not only extra training for solicitors in this area but also ensuring clients are clear about the ‘limits of the advice they will receive and when they may need to instruct a specialist’.
Also lurking in the undergrowth for solicitors this year is generative artificial intelligence (AI), which will ‘fundamentally alter the practice of law’ but also bring ‘the prospect of claims’. The risk of ‘hallucinations’ where AI invents content means lawyers must verify all content, and there are further risks such as breach of confidentiality, intellectual property infringement, breaches of cybersecurity and privacy laws and publication of defamatory content.
View more at: https://insurance.dacbeachcroft.com/predictions/professional-liability.
