When the Solicitors Regulation Authority (SRA) intervenes in a law firm, attention understandably focuses on the immediate regulatory consequences: closure of the practice and the transfer of files and client money to an intervention agent. Less attention is given to what follows for professional indemnity insurers, who may still be required to investigate, defend and resolve claims against a firm that no longer exists in any meaningful operational sense.
In this article, we will explore key issues for insurers arising from an intervention, including:
Recent years have seen a notable increase in interventions. The Axiom Ince intervention in October 2023 remains the standout example: the SRA ultimately intervened following suspected dishonesty and breaches of the SRA Accounts Rules and later reported an estimated £64 million client account deficit. This prompted major scrutiny of both the firm and the regulator’s response. The SRA intervened into PM Law on 4 February 2026 following its sudden closure and later confirmed concerns around a potential fraud and missing client money. In just the last fortnight, the legal press has reported a series of further interventions, including three firms shut down in a single week.
This reinforces that intervention remains a live and recurring claims risk rather than an exceptional event. As a result, insurers and panel firms are increasingly dealing with claims where the insured no longer controls its own files, former partners may be unavailable or unwilling to assist, and authority to provide instructions or approve settlement is unclear. In some cases, the intervention may also leave insurers facing six years of compulsory run-off cover under the SRA Minimum Terms and Conditions, meaning claims can continue to emerge long after the practice itself has ceased trading.
This creates a practical problem that is often underestimated. Insurers are expected to assess liability, respond to claimants and make sensible commercial decisions, but they may be doing so without access to the underlying documents, or even a clear route to obtaining them. The difficulty is not simply delay; it is the challenge of defending and resolving claims where the evidence, authority and infrastructure of the former practice have effectively disappeared.
An intervention is when the SRA steps in and effectively takes control of a solicitors’ practice because it considers it necessary to protect clients or the public. Intervention commonly happens where there are concerns about dishonesty, missing client money, serious breaches of the SRA Accounts Rules, abandonment of the practice, insolvency, death/incapacity of a sole practitioner, or other serious regulatory failures.
The immediate effect is that the firm effectively ceases to practise. The SRA takes possession or control of client files, client money, accounting records, deeds and wills. Bank accounts are commonly frozen. An intervention agent (usually another firm of solicitors) is often appointed to secure files, deal with client money issues, notify clients and manage urgent live matters.
Former partners, directors or employees may no longer be available. Some individuals may have become the subject of regulatory investigation themselves. The firm may have entered insolvency.
Despite this, insurers remain responsible for handling existing claims and those that emerge after intervention. Claimants do not disappear because the practice has closed. If anything, intervention often prompts new claims, particularly where concerns arise regarding client money, conveyancing transactions and probate administration.
Insurers are therefore left defending claims against a firm that may no longer have any practical ability to assist.
The scope of the retainer, the advice given, attendance notes, correspondence and evidence of instructions are frequently central to liability, causation and quantum. After intervention, access to that material can become significantly more difficult.
Intervention agents are required to manage large volumes of files across multiple matters. Records may be incomplete or disorganised. Native electronic documents may be missing or inaccessible, particularly where systems were poorly maintained before intervention.
This creates obvious difficulties for insurers. Without a complete file, it may be impossible to establish whether advice was given, what instructions were received, whether warnings were provided, or how client money was handled. Of course, the absence of documents does not mean that negligence occurred, but it makes defending a claim significantly more difficult.
Insurers should therefore seek to understand at an early stage how the firm actually operated, rather than focusing solely on whether the physical file can be retrieved. In many claims, particularly conveyancing, probate and client account disputes, the key evidence may sit within case management systems, accounting platforms, email archives and third-party portals rather than the traditional paper file. Insurers should ask who controlled those systems, whether access remains possible and whether native electronic records have been preserved.
Problems can include deleted emails, inaccessible cloud systems, personal devices, WhatsApp communications, archived paper files, lost accounting systems and third-party portals. Insurers may be asking for documents that no longer exist, or the intervention agent may only have partial access.
Insurers might be willing to fund reasonable steps to preserve or recover access where key evidence is located in inaccessible case management systems or accounting platforms. That might include paying for temporary licence renewals or the instruction of an IT specialist to recover and preserve electronic data where appropriate. The cost of obtaining access could be lower than the risk created by defending claims without the underlying evidence.
The fact that the firm has closed or been intervened does not waive privilege and nor does it give insurers a general right to inspect files in order to investigate potential exposure. Legal professional privilege usually belongs to the client and duties of confidentiality continue to apply.
Intervention agents must therefore approach disclosure cautiously. Client consent is usually required before files can be released. In some situations, authority may also be needed from former principals of the firm. Again, this can present a practical challenge for insurers, particularly where the former principal is no longer easily contactable or is uncooperative.
Files may contain documents relating to multiple clients or transactions, particularly in conveyancing, probate or trust matters. Those materials require review for relevance, privilege and third-party confidentiality before disclosure can take place. This can frustrate insurers’ attempts to obtain early information, but it reflects a necessary safeguard rather than mere administrative delay.
Even where liability appears clear, a separate problem often arises: who has authority to make decisions? Who can approve admissions or authorise settlement? Following intervention, the answer is not always straightforward.
Importantly, the intervention agent does not step into the shoes of the insured for the purpose of litigation strategy or settlement authority.
The former firm may have entered liquidation or administration, in which case authority may rest with a liquidator, administrator or trustee rather than former partners. In other cases, former partners may dispute responsibility, deny authority or simply be uncontactable.
This creates obvious practical difficulty, particularly where insurers wish to pursue early commercial settlement but cannot obtain clear authority to do so. Questions of actual versus apparent authority can arise, especially where former principals continue corresponding after intervention or insolvency.
Insurers should be cautious about assuming that historic decision-makers retain authority simply because they previously dealt with the matter.
Many post-intervention claims involve allegations relating to client money: missing completion funds, unpaid SDLT, probate funds not accounted for, trust monies incorrectly transferred, or shortages in client account.
These cases present particular difficulty because intervention frequently takes place precisely because there are concerns about financial irregularity.
The SRA Accounts Rules require firms not only to safeguard client money, but also to remedy any breach promptly, including replacing any improper withdrawal or shortage in client account. Following intervention, that obligation can become practically difficult to satisfy. There may be no functioning client account, incomplete ledgers and uncertainty as to what happened to funds. Even where insurers are willing to facilitate settlement of a claim arising from a breach of the SRA Accounts Rules, questions may remain as to where funds should be properly paid and whether that payment fully resolves the underlying issue. Paying compensation to a claimant does not necessarily remedy the breach or satisfy the obligation to replace missing client money promptly.
Post-intervention claims can require insurers to approach liability, authority and settlement differently. The legal issues may be familiar – duty, breach, causation and quantum – but the practical ability to investigate them is often fundamentally altered. In many cases, the immediate challenge is not establishing negligence, but ascertaining what happened at all. That uncertainty affects reserves, defence costs and settlement strategy. Early investigation, realistic expectations and proportionate decision-making are therefore critical.
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