Proctor : March 2016
We find that the end of the financial year is the most active time for practice changes including purchases, mergers, amalgamations, takeovers, transfers, splits of partnership, entity transitions (for example, firm to ILP), principals (or former principals) leaving or joining, dissolutions or the recommencement of a former practice. Given this, it is an opportune time to remind practitioners that as part of their due diligence prior to undertaking such changes they should consider the potential impact of the prior law practice (PLP) rule which seeks to maintain equity in the insurance scheme by ensuring a practice (and its relevant successor) retains responsibility for the insurance consequences of a claim made against it. There are potentially significant financial consequences (in terms of future insurance levies and payment of excesses) which should be borne in mind when considering such changes. Because of these consequences, law practices are strongly encouraged to: • Be familiar with the policy wording and Indemnity Rule (including Rule 10(6)) and the implications they may have. • Contact Lexon to discuss your particular circumstances. • Take independent legal advice where required. • Consider contractual terms for adjustments/ indemnities to provide some recourse in the future. • Obtain a written authority and direction for Lexon to disclose the claims history and insurance history of any practice which you may be acquiring etc. Note – this will only reveal existing matters. Lexon offers law practices what is known as an Acquisition Endorsement which enables a practice acquiring another practice to limit the impact of new claims that arise out of closed matters previously handled by the acquired practice. The Acquisition Endorsement provides the following benefits: • Such claims are excluded from any future claims loading calculations. • The applicable excess for such claims will be that of the acquired practice (which will often be lower than would otherwise be the case). • No deterrent excess will apply irrespective of the circumstances. More information on the PLP concept and the Acquisition Endorsement can be found in detailed information sheets available on the Lexon website. Getting ready for the end of year – practice changes (mergers, acquisitions, splits and dissolutions) March hot topic Lexon Insurance Pte Ltd ARBN 098 964 740 Incorporated in Singapore Registration No: 200104171C • Lexon set up Lexon Legal to provide legal counsel at the earliest stages of appropriate matters with a view to either completely avoiding claims or mitigating their effect. This flexibility to offer effective legal advice at the earliest possible juncture is something we expect will provide additional comfort for our insureds. Lexon Legal’s principal, Chris Coyne, is available to provide early intervention assistance to practitioners free of charge when they are concerned a claim event may have occurred. Chris can be contacted via our claims team or direct at Chris.Coyne@lexonlegal.com.au. • Over 90% of practices insured in Queensland have one or two principals. Managing risk and providing claims support for such a large number of small practices led to Lexon developing its unique risk workshop model. At the same time, the remaining 10% of practices employ nearly 50% of all practitioners and this means Lexon also delivers bespoke claims and risk management solutions to meet their particular requirements. Ensuring that we adequately cater to the needs of all practices, irrespective of size or location is an exciting challenge which drives our continual innovation. Did you know? Lexon Insurance Pte Ltd is a wholly owned subsidiary of Queensland Law Society.