Nearly 40% of Costs Lawyers working in costs firms or as sole practitioners now have professional indemnity insurance (PII) at the highest level of cover of £2m or more, new figures from the Costs Lawyer Standards Board (CLSB) have shown.
The minimum level of cover prescribed in the practising rules is £100,000 but, since the CLSB began collating the data in 2014, the percentage of those not working in solicitors’ firms with just the minimum cover has fallen from 22% to just under 10%.
During the same period, those with £2m+ has virtually doubled to a little under 40% – the highest figure yet.
The CLSB’s annual snapshot of the profession said that, to improve its understanding of the profession’s risk profile, last year it looked at the risk of under-insurance.
“In a sample of Costs Lawyers we looked at in more detail, the vast majority appeared to have adequate insurance in terms of monetary cover per claim, but this more detailed look also suggested that it is possible that very few Costs Lawyers have obtained specific insurance against cyber risks.
“Whether or not this is of concern depends on the risks of each particular lawyer; that is, whether their clients are in any event covered by insurance held by a firm the lawyer is working in or for, and what safeguards they have in place.
“In 2021, we began working with the National Cyber Security Centre – a government agency that provides cyber security guidance and support – to raise awareness of cyber risks within our regulated community and promote free online training for small businesses. We will continue this work in 2022.”
The report recorded how the number of Costs Lawyers in each type of practice has fluctuated year on year but, overall, the proportions of Costs Lawyers working for costs law firms and as sole practitioners have fallen, while the number working in firms regulated by the Solicitors Regulation Authority (SRA) has increased.
Since 2018, more Costs Lawyers have been working in SRA-regulated firms than any other type of organisation. In 2021, 45% worked for a solicitor’s firm, 3.7% in-house, 39% for a costs firm and 12% were sole practitioners.
In each of the last two years, around half of all Costs Lawyers were instructed exclusively by other lawyers and 10% worked solely for corporate clients. Four in five received no instructions from lay (individual) clients; of those that did, for most they accounted for no more than 10% of their caseload.
Between 2012 and 2020, the proportion of the profession undertaking exclusively legal aid work doubled from 2.5% to 5%. This has dropped slightly in 2021 to 4.7%. The number of Costs Lawyers who do not undertake any legal aid work has continued to increase from 39% in 2012 to 71% in 2021.
The CLSB said: “This might suggest that legal aid work is becoming increasingly specialist. Evidence from our coronavirus impact surveys carried out in 2020 and 2021 suggests that Costs Lawyers specialising in legal aid are more concerned about the future viability of their practice than practitioners specialising in other areas.”
Last year, the CLSB asked for the first time whether Costs Lawyers held a current practising certificate from any other legal regulator. This showed that 13 were also solicitors and 13 chartered legal executives, while one was regulated as a foreign lawyer by the Law Society of Scotland.