The SRA position
Successor practice under the SRA rules: what happens on closure
Updated
A firm that closes either buys six years of run-off cover or is succeeded by a practice that takes on its liabilities. The SRA's own guidance sets out both routes.
If there is no successor practice
The insurer on cover at the date the practice closes must provide run-off cover for six years from the expiry of the policy.
Source: SRA guidance: closing down your practice
If there is a successor practice
The SRA says that if a firm takes the successor route, the successor practice assumes liability for the closing firm as a prior practice and must cover claims made about it.
Source: SRA guidance: closing down your practice
The notice the insurer gives
The Law Society says the insurer must tell the SRA about its decision within seven days.
Source: Law Society: run-off cover
If the firm cannot renew
A firm that cannot take out a new policy has a 30-day extended policy period in which it may practise as normal, then a 60-day cessation period in which it may take no new instructions. The SRA's guidance describes 90 days of extra cover in all.
Source: SRA guidance: closing down your practice
Closing the firm
The SRA's firm closure notification form should be sent no more than seven days before the firm intends to close, and records must be kept for at least six years.