Professional indemnity insurer The St Paul is launching a new product especially for law firms that convert to limited-liability partnership (LLP) status.
Securing limited liability by converting to LLP status is increasingly popular for law firms. But as well as losing unlimited liability, LLP members lose joint and several liability with their partners.
If the LLP’s insurance protection is insufficient to cover a claim, the assets of an individual being sued, and those of their family, could still be at risk.
To guard against this possibility, some LLPs create discretionary trust funds for the benefit of members’ dependents. However, a trust fund requires large sums of money, despite the fact that it might never be needed.
The St Paul has developed the ‘Lifeboat’ policy, replicating a fund’s support without the costs. Lifeboat sits behind a trust and gives protection when it is needed.
Jonathan Davies at The St Paul, who developed Lifeboat, said: “It provides an insurance solution to one of the problems of converting to LLP status.”
Allen & Overy private client partner Richard Turnor welcomed the policy. “There’s a real need for protection for those who are personally exposed to risk,” he said. A&O became an LLP on 1 May.