Law Society research has found a growing divide in the PII market with smaller firms and black and minority ethnic (BME) firms finding renewal tougher than the wider profession.

The survey found more BME firms (16%) than wider profession firms (6%) were not offered cover by their previous insurer. BME firms were notified of a decision by insurers later than the wider profession (56 days compared to 44 for the wider profession). The survey said: “It may be that the set of criteria being applied by insurance firms when deciding whether to provide insurance and at what price is in some circumstances having a disproportionately adverse affect on BME firms.” But according to Afua Hirsch, writing in the ‘Guardian’, BME lawyers are claiming racial discrimination in being refused compulsory insurance. “Some minority ethnic lawyers have seen their professional indemnity insurance rise by 800%, despite having no complaints or claims against them.”

The survey states that “it is difficult to explain these differences given the diverse risk profiles of these firms, the small sample sizes and a lack of understanding of the actuarial models used by insurers to assess firms’ insurance risk.” It finds that BME firms are more likely to undertake work in immigration and crime than the wider profession, and less likely to undertake work in probate, wills and trusts. Immigration work made up a higher proportion of BME firms’ total gross fee income (21%), than the wider profession (3%). BME firms are more likely to identify themselves as High Street firms (68%, compared to 53% of the wider profession) and based in Greater London (50%, compared to 18% of the wider profession). “BME firms were also more likely to have a foreign sounding name (42%, compared to 3% of the wider profession).”

Law Society chief executive Desmond Hudson says: “We are particularly concerned by indications of different treatment of BME-owned firms. This is an issue where we are taking urgent steps to clarify and resolve the matter.” Accordingly an action plan has been drawn up with five key stages. Firstly, solicitors will be asked to send information about their experience of the PII renewal round if they believe they have been discriminated against in some way. Secondly, there will be urgent discussions with the Association of British Insurers about the ways in which BME solicitors appear to have been disadvantaged during the 2009 renewal round with a view to erasing that disadvantage this year. Then the formal advice of the Equality and Human Rights Commission will be sought further to earlier informal discussions, followed by a review of the way that insurers assess risk. Finally there will be discussions with the SRA about steps it can take with Qualifying Insurers to eradicate discrimination.

The full text of “Professional indemnity insurance survey; 2009-10 renewal” can be found at:-

http://www.lawsociety.org.uk/new/documents/2010/pii_survey_april2010.pdf

Criminal firms have seen the introduction of fixed fee schemes for police work and a standard fee system in magistrates courts following a review of legal services by Lord Carter three years ago. Now the consultations on proposals for competitive tendering by criminal defence work firms have come to an end, with solicitors’ firms across the country voicing strong opposition to the proposed system.

The Law Society, the Bar Council and the Criminal Bar Association are all gravely concerned about BVT as currently proposed by the LSC, involving a limited scheme which would cover lower crime work in police stations and the Magistrates’ Courts. This would probably be extended should it prove successful. BVT involves competitive tendering based on price for criminal defence work, as solicitors’ firms will bid for blocks of work, with the lowest bidder getting the work. Strong concerns are expressed that criminal legal aid firms could be drastically reduced, meaning the number of firms available to clients will diminish, as the already financially vulnerable supplier base is put at risk. “The widespread use of BVT is likely to… deny clients access to many competent and dedicated solicitors who want to serve them. The bidding processes proposed are opaque and not suited to the commissioning of professional services, where the freedom of the individual is put at risk”, said Paul Marsh, Law Society President.

In their response to the proposals, the Law Society said that they will have a hugely detrimental impact on the quality of representation in police stations, and thereby damage the criminal justice system as a whole. Of equal concern is the failure to conduct a full and proper impact assessment, taking account of the potential disproportionate impact on women and BME practitioners. Desmond Browne QC, the Chairman of the Bar, said that “we cannot afford to sacrifice the present robust system for a scheme which lacks all economic justification, and which will have a disproportionate impact on BME practitioners. The LSC’s failure properly to assess the impact on BME practitioners is potentially discriminatory and may be unlawful; it has a statutory duty to avoid discrimination and promote equality of opportunity, and it has comprehensively failed to comply with this requirement”.

Speaking at a conference organised by the Legal Action Group to celebrate 60 years of legal aid, justice department minister Lord Bach said that BVT is “not a simple cost cutting exercise. It’s aimed at securing a sustainable, effective and efficient supplier base”. In an interview with the ‘Guardian’ he acknowledged that his policies are deeply unpopular among many former colleagues, adding that “I have to do what I can to ensure the legal aid is spent in the best possible way, and that’s what I’m trying to do.”

The Law Society’s response to the Legal Services Commission’s consultation on best value tendering for CDS contracts 2010 can be found at:-
http://www.lawsociety.org.uk/secure/file/180185/e:/teamsite-deployed/documents/templatedata/Internet%20Documents/Government%20proposals/Documents/bvt_response180609.pdf

The Solicitors Regulation Authority (SRA) regulates more than 100,000 solicitors in England and Wales. “Our purpose is to protect the public by ensuring that solicitors meet high standards, and by acting when risks are identified. We are the independent regulatory body of the Law Society of England and Wales.” But there have been repeated complaints that black and minority ethnic (BME) firms have been disproportionately targeted for interventions, and that complaints and disciplinary proceedings have been handled in a discriminatory way. Lord Ouseley, former head of the Commission for Racial Equality, was jointly commissioned by the SRA and the Society of Black Lawyers to conduct an independent investigation into the SRA’s treatment of BME solicitors and firms.

His report has just been published and it makes very uncomfortable reading for the SRA. Lord Ouseley says “it is the issue of disproportionality that has focused the concerns of BME solicitors.” Why are they over-represented in all aspects of regulation as depicted in the statistics produced by the SRA? He highlights two areas of concern in that BME solicitors are more subject to forensic investigations than white solicitors and, as a consequence, are disadvantaged considerably through the non-disclosure of information about allegations made about them. He finds that “not sufficient leadership emphasis has been given to the values of equality and diversity (which) leaves the SRA open to the charge of institutional racism.”

One of his more damning conclusions is the “level of prejudice and bias which exists among personnel” and the “evidence of some stereotyping being applied.” He cites case evidence of BME solicitors who are often assumed to be guilty of complaints or allegations made against them. They are more vulnerable as sole practitioners or practising in firms with four or fewer partners, firms which tend to score higher in the SRA’s risk assessment and therefore feature more in regulatory work. Another reported disadvantage is the failure to deal effectively and independently with complaints made by BME solicitors and staff of alleged discrimination in the way they have been treated by the SRA. “The processes applied seemed designed to ensure that the outcomes are virtually always against the complainer.”

Lord Ouseley makes 40 specific recommendations and “urgent, active and swift implementation is the most important.” The full text of the 106 page report can be found at:
http://www.sra.org.uk/documents/SRA/equality-diversity/ouseley-report.pdf