What is run-off cover for solicitors and how is it different from other professions?
Key Facts
- Unlike most professions, solicitor firms automatically receive run-off cover under the SRA Minimum Terms and Conditions when they cease practice but the cost remains payable by the firm and can be recovered by the insurer
- A standard run-off policy runs for six years and typically must be paid in full upfront if there’s no successor practice
- Premiums generally range from around 225% to 350%+ of the firm’s last annual premium
- The Solicitors Indemnity Fund (SIF) covers long-tail claims that arise after the six-year run-off period expires
When a solicitor firm closes, the professional indemnity liability for past work doesn’t close with it. Run-off cover for solicitors is the insurance that protects against claims made after a firm has ceased trading and unlike most professions, solicitors have specific regulatory obligations that make this area both more structured and more complex than firms often realise. Alexandra Henley, professional indemnity specialist at Konsileo, sees the same mistake repeatedly: firms leaving the run-off conversation too late.
How does solicitor run-off cover differ from other professions?
For most professional services firms, run-off cover must be specifically purchased. Failure to arrange it carries regulatory risk but no automatic protection.
Solicitors are different. Run-off cover forms part of the SRA Minimum Terms and Conditions, which means participating insurers are required to provide it automatically even without the premium being paid upfront. However, the premium remains payable by the firm, and insurers will pursue recovery of those costs. That automatic protection is unique to the legal sector and gives solicitor firms a baseline that most other professions don’t have.
Does the SRA’s six-year automatic run-off mean solicitor firms don’t need to plan for it?
Not at all and this is where firms frequently get caught out.
If a firm closes without a successor practice, a six-year run-off policy typically needs to be purchased and paid for in full at the outset. The cost can be significant: premiums generally range from around 225% of the firm’s last annual premium up to 350% or more, depending on the insurer. That’s a substantial sum to find at a moment when the business is no longer generating income.
Arranging finance once a firm has stopped trading is difficult. Firms that haven’t set funds aside in advance can find themselves in a genuinely difficult position facing a mandatory insurance obligation with no straightforward way to meet it.
What is the Solicitors Indemnity Fund and does it offer extra protection?
The Solicitors Indemnity Fund (SIF) provides an additional layer of protection for claims that arise after the mandatory six-year run-off period has expired. It recognises that PII claims can surface many years after an error occurred long after the compulsory cover has run its course.
In practice, the SIF acts as a safety net for long-tail claims that wouldn’t otherwise be covered. It’s a protection that most other professions don’t have access to, and it’s worth understanding as part of any conversation about long-term liability exposure.
What happens to PII liabilities when a solicitor firm merges or is acquired?
This is one of the most consequential, and most misunderstood areas of solicitor run-off.
Does the acquiring firm inherit the liability?
When a firm closes, merges, or is acquired, the question of whether a successor practice has been created determines who carries responsibility for historic PII liabilities. If a successor practice exists, the acquiring firm and its PII insurer typically inherit responsibility for the predecessor firm’s past work removing the need for separate run-off cover.
A straightforward example: if ABC Law closes and DEF Law acquires its business, clients, and ongoing matters, DEF Law becomes the successor practice. DEF Law’s insurer could then become responsible for claims arising from ABC Law’s historic work.
What can go wrong
When this is handled badly, firms can inadvertently inherit liabilities they weren’t expecting. There can also be significant complications where the acquiring firm’s insurers are unwilling to accept the predecessor’s risk profile. A criminal law firm acquiring a conveyancing practice, for example, is taking on a very different exposure and its existing insurer may be unwilling to cover those historic conveyancing liabilities or may only do so on materially different terms.
Understanding whether a successor practice has been created, and ensuring all parties are clear on how historic liabilities will be managed, needs to happen early in any acquisition or merger conversation, not as an afterthought.
What’s the most common run-off mistake solicitor firms make?
Leaving the conversation too late.
Many firms assume they’ll arrange run-off cover when the time comes, without fully understanding the cost, the funding requirements, or whether a successor practice may be in play. By the time the question becomes urgent, the options have narrowed and the cost has become harder to manage.
Run-off should be part of long-term business planning, not a last-minute item at the point of closure. Firms should understand their insurer’s run-off terms, consider setting funds aside over time, and take advice well in advance of any merger, acquisition, or retirement.
The earlier those conversations happen, the more options a firm has.
Alexandra Henley — Professional Indemnity, Konsileo
26th August 2026
