Mergers and acquisition (M&A) activity in the legal sector is showing no signs of slowing down. Strategic combinations, firms looking to scale up or broaden their geographical footprint to gain a competitive advantage continue to be on the agenda for many. But the Professional Indemnity (PI) implications are too often considered late—leaving firms exposed or underprepared. This briefing sets out what firms need to know to get PI right during M&A.
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A change in legal entity structure may trigger successor practice rules—impacting liability, continuity of cover, and responsibility for legacy claims.
Failure to properly disclose or structure the transaction could lead to non-compliance with SRA obligations or coverage disputes.
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In the absence of run-off you need to understand the premium impact in advance of inheriting the claims history so early engagement and advice from your broker is key.
Being acquired & purchasing elective run-off?It is important that each party’s responsibilities in respect of legacy claims, pre-acquisition liabilities and excess payments are clearly defined.
Acquiring a firm that would significantly change the risk profile?? The acquired firm may materially change your areas of practice and it is vital that you understand how this may impact the way in which underwriters will view the risk profile in advance of any deal.
03
Can you demonstrate sufficient due diligence to give you and your insurer the necessary comfort around the quality of work previously undertaken by the firm you are looking to acquire?
Can you provide a clean audit trail of the transaction timeline, key parties, and liabilities being transferred or ring-fenced?
Have you confirmed how legacy liabilities will be handled—and which entity is the successor?
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At Willis, we guide firms through:
“A well-planned M&A strategy isn’t complete without a PI strategy. Engage early. Ask hard questions. Get it right the first time.”
Jonny Burt | PI Legal Services, FINEX GB
“A well-planned M&A strategy isn’t complete without a PI strategy. Engage early. Ask hard questions. Get it right the first time.” Jonny Burt, PI Legal Services, FINEX GB
