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PII insurance 'highly consequential' – IBA

The International Bar Association (IBA) has published an international set of principles on professional indemnity insurance (PII) for the legal profession.

The Bar Issues Commission Policy Committee and the Legal Policy and Research Unit formed a working group to raise awareness of the concept. It has now published a report to assist bar associations and regulatory bodies in addressing three principal issues, namely:

• Should such insurance be mandatory and, if so, under what conditions?
• Whether an attorney covered by PII should be mandatorily disclosed?
• If so, to whom should it be disclosed – the client, public or a regulatory body?

Lack of global uniformity

PII is intended to provide coverage for lawyers, and those acting under their direction, for errors and omissions relating to their provision of legal advice and other engagements in the practice of law, the IBA points out in the report.

However, during research for the report, the Working Group found little global uniformity about the requirement of a lawyer to hold PII, and where a requirement did exist, there was no consistency in terms of the extent or scope of the coverage.

‘Highly consequential’

The Chair of the Bar Issues Commission Ken Murphy remarked: “Professional indemnity insurance is highly consequential for everyone involved with the legal profession, but there is comparatively little awareness of the framework or concept at a global level.

“It is my hope that, following the extensive work carried out by the Working Group, the principles laid out in this new report will provide bar associations and regulatory bodies with some guidance around the issues involved in professional indemnity insurance.”

Co-chair Steven M Richman added: “We acknowledge that individual bar associations and regulatory bodies are best placed to assess the needs of their jurisdictions, considering their capacity and available resources.

“However, the core principles of the legal profession are shared across the world, and this report seeks to provide a framework for evaluating the issues surrounding professional indemnity insurance to assist bar associations and regulatory bodies in determining the answers to the questions posed by the report. My special thanks to Anurag Bana of the LPRU for his work on this.”

Surprising US findings

A 2014 survey undertaken by The Council of Bars and Law Societies of Europe (CCBE) found that most European countries have mandatory PII but, in the US, which is one of the largest legal markets in the world, only two states (Idaho and Oregon) require lawyers to hold PII.

Malpractice insurance is mandatory in Canadian and Australian provinces and states, but far less common across Africa, Asia and South America.

The IBA report outlines a set of eight principles on which bar associations and regulatory bodies should focus, namely:

1)  Independence,

2)  Competence,

3)  Integrity,

4)  Risk,

5)  Responsibility,

6)  Communication,

7)  Confidentiality, and

8)  Maintaining public confidence.