The case for Professional Indemnity Insurance for Costs Lawyers
Having Professional Indemnity Insurance (PII) is crucial to practising as a qualified and regulated Costs Lawyer. This is a vital consideration to prevent potentially damaging or even catastrophic financial exposure.
The minimum limit of indemnity, as required by the Costs Lawyer Standards Board (CLSB), is £100,000 but in reality this can be far from sufficient and it is vitally important to cover for full liability. Costs Lawyers must ensure they assess all financial risks associated with the work being undertaken; and that PII is in place to an appropriate level.
The impact of widely-publicised lawsuits in recent years, such as Andrew Mitchell MP v News Group Newspapers Ltd (2013), has put the spotlight on the need for greater attention to be paid to the level of potential exposure when dealing with such high liability cases.
How Much Cover Do I Need?
In 2014, changes were made to the CLSB’s rules regarding insurance, making it the responsibility of the Costs Lawyer to acquire a level of insurance commensurate with the financial risk of the work they are undertaking.
At the time, the CLSB noted that although £100,000 was the minimum required limit of indemnity, financial risk had increased for those undertaking costs budgeting and management work and that there was a responsibility for the insured to assess their financial exposures.
The regulator said “Subsequent case law clearly demonstrated the courts are adopting a strict application of costs budgeting and costs management rules”, and that “a Costs Lawyer