Information for New Law Practices
Guide for Principals
Information for New Law Practices
All legal practitioners practising as principals of a law practice (unsupervised) in New South Wales (NSW) are required to hold or be covered by Professional Indemnity Insurance (PII) pursuant to section 45 of the Legal Profession Uniform Law (NSW). Insurable solicitors in the Australian Capital Territory (ACT) are required to hold an approved professional indemnity policy under section 311 of the Legal Profession Act 2006 (ACT). Law practices in the Northern Territory (NT) are required to hold an approved professional indemnity policy under s376 of the Legal Profession Act (NT) 2006
Lawcover is responsible for arranging PII on behalf of NSW and NT solicitors and is an approved professional indemnity insurer for ACT solicitors. Lawcover PII provides law practices with cover up to $2 million each claim under a PII policy underwritten by Lawcover Insurance. PII policies are issued to law practices, not individual solicitors. All new law practices in NSW, ACT and NT must take out a PII policy.
Lawcover determines the premium, issues your PII policy, manages claims and provides practice support services. The PII policy sets out the extent of cover and contains certain conditions and exclusions. A sample 2023/24 PII policy can be viewed here.
What is a new law practice?
A new law practice requires a new insurance policy and needs to pay a premium. A new law practice is one that is not a reconstitution of an existing practice, as determined by Lawcover.
If the new law practice is not a continuation of an existing practice that has paid its premium (see “Law Practices with a Prior Practice”), then it is a new law practice. The insurance year is effective from 1 July to 30 June in each year. New law practices commencing after 1 July are charged a premium based on their estimated gross fee income (GFI) for the period from commencement to 30 June.
Once the law practice has paid its premium, Lawcover will inform the relevant Law Society, which will then issue practising certificates to the principals and solicitors.
How to set up a new law practice in NSW
How to set up a new law practice in the ACT or the NT
You can then contact our Insurance Services team at firstname.lastname@example.org or 1800 650 748 in order to arrange for an information pack to be sent to you. This pack contains full details of how to complete your law practice’s insurance application and arrange your PII. If you are ready to do this now, please click here.
Lawcover’s 2023/24 Insurance Renewal
– Now Open
Lawcover’s Professional Indemnity Insurance Application
– Apply Now
Law practices with a prior practice
The PII policy covers the former principals and employees of any prior practice that has been succeeded by a new law practice applying for insurance.
If your law practice acquires or takes on the majority of principals, legal staff, client files, assets or liabilities of a law practice, or holds itself out as a successor to another law practice, then Lawcover will likely consider that the other law practice is a prior practice of your law practice.
Factors Lawcover will consider in determining what constitutes a prior practice are contained in the PII policy. If a new law practice has a prior practice, it:
The effects of this are:
Please see “Considerations when acquiring an existing law practice” below.
You may not have to pay an additional premium if your new practice succeeds a prior practice which has already paid its premium for that insurance year.
No claims discount
Even if you do not have a prior practice Lawcover may, on a discretionary basis, grant you a no claims discount if:
Considerations when acquiring an existing law practice
If you are considering whether to acquire the majority of client files, legal staff or principals of an existing law practice, the claims experience of that law practice will very likely form part of the claims history of your law practice upon acquisition. So before acquiring a law practice, or before bringing a new solicitor into your law practice, enquire into the professional standing and performance of that law practice or solicitor.
Lawcover provides a helpful guide to assist principals in conducting due diligence when considering whether to merge with or acquire a law practice. The “Due Diligence Guide for Principals” is accessible here.