Reservation of Rights
The insurer continues funding or managing the liability defence while separately questioning whether the policy ultimately provides indemnity.
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Insurer-Appointed Solicitors
Already Have Solicitors Appointed by Your PI Insurer?
That may be exactly what the professional liability claim needs. But it is still important to understand who the solicitors act for, what they are instructed to deal with, what authority the insurer has under the policy and whether anything important sits outside that retainer.
Insurance Dispute Service does not exist to duplicate work that appointed solicitors are already doing well. We can provide independent claims analysis and litigation support around the professional file, insurance position and wider commercial issues where the insured wants a clearer understanding of the whole picture.
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A Useful Starting Point
Insurer-appointed solicitors are not automatically a problem.
Professional indemnity insurers regularly instruct experienced lawyers to defend claims against their insureds. That can give the professional access to specialist defence expertise without having to fund the entire legal response personally.
The issue is not who introduced the solicitor. The issue is whether everyone understands the retainer, responsibilities, insurance position and decision- making structure.
The right question is not “Can I trust the insurer’s solicitor?”
It is: Who is the client? What is the solicitor instructed to do? What information can be shared? Who controls settlement? Has indemnity been confirmed? And is anybody independently dealing with the insurance-coverage position if that becomes disputed?
Three Connected Relationships
Do not treat the insured, insurer and solicitors as though they are the same party.
Their interests may be closely aligned throughout the claim. But each occupies a different position and the precise legal relationships depend upon the policy and retainer.
01 / THE INSURED
The professional or business facing the claim
Its concerns may include liability, financial exposure, reputation, regulatory consequences, client relationships, business continuity and preserving professional indemnity cover.
02 / THE INSURER
The organisation providing contractual insurance protection
Its rights and obligations come primarily from the insurance contract. The policy may contain provisions concerning notification, defence costs, cooperation, settlement, claims control and consent.
03 / THE SOLICITORS
The legal professionals instructed under the retainer
Who their client or clients are, who can provide instructions and what information may be reported should be established from the retainer and applicable professional obligations rather than assumed.
Start With the Retainer
Who exactly is the solicitor acting for?
The fact that the insurer selected or is paying the solicitors does not answer every question about the professional retainer. The engagement should identify the client or clients and how instructions and reporting will operate.
If the insured is the solicitor’s client, that professional
relationship carries duties which do not disappear simply
because an insurer is funding the defence.
01
Who does the engagement letter identify as the client?
The insured business, an individual professional, the insurer or more than one party may be relevant depending upon the particular arrangement. Do not guess from who is paying the invoice.
02
Who may provide instructions?
The SRA Code requires solicitors to act on instructions from their client or someone properly authorised to provide instructions on that client’s behalf.
03
What is the scope of the retainer?
The solicitor may be instructed to defend the liability claim without being retained to advise the insured independently about a separate coverage dispute with the insurer.
04
What reporting has been agreed?
The retainer should be understood alongside any authority or consent dealing with communications and reporting to the insurer which is funding or managing the claim.
05
Could a conflict arise later?
Solicitors are subject to professional conflict rules. If interests which were originally aligned later diverge, the ability of the same solicitor to continue acting for all relevant clients may need to be reconsidered.
What Are They Dealing With?
Defending the claimant and advising on insurance cover are different jobs.
The appointed solicitors may be doing exactly what they were retained to do: defending the professional negligence or liability claim. That does not automatically mean they are also advising the insured on every separate issue involving the insurance policy.
- Responding to allegations made by the claimant
- Advising on liability and causation
- Working with professional or technical experts
- Managing pre-action correspondence or court proceedings
- Negotiating the underlying claim where instructed
- Considering the amount of alleged loss
- Reporting to relevant parties in accordance with the retainer
- Separate insurance coverage advice only if within the retainer
Check What Is Inside the Retainer
Underlying liability defence
Usually central
Evidence and expert strategy
Likely
Claimant negotiations
Check authority
PI coverage dispute
Do not assume
Independent advice about insurer conduct
Check
Wider commercial or regulatory issues
Check scope
When Alignment Can Change
Most claims begin with a common objective: defend the claim properly.
Difficulties can arise where another issue develops and the insured’s commercial, professional or insurance interests no longer point in exactly the same direction as the insurer’s claims strategy.
Coverage Refusal
The insurer indicates that some or all of the liability, defence costs or insured parties fall outside the policy.
Settlement Strategy
The insurer may view settlement commercially while the professional places additional weight on reputation, professional standing or the effect of an admission.
Policy Limit Pressure
Defence costs and damages may threaten to exhaust or materially erode the available insurance, leaving the professional with potential uninsured exposure.
Multiple Insureds
Different directors, partners, professionals or entities may initially appear aligned but later adopt different factual or liability positions.
Regulatory or Reputation Issues
The professional may need to consider consequences extending beyond the damages claim, including regulatory obligations, client relationships and future professional standing.
If the Insurer Is Questioning Cover
The lawyer defending the claimant’s case may not be the person advising you against your insurer.
That distinction becomes particularly important where the insurer has issued a reservation of rights or is considering whether indemnity should be refused.
A professional facing that situation needs to know: who is defending the negligence claim and who, if anyone, is independently examining the insurance-coverage dispute.
Insurer Reserving Its Rights →
Liability question
Did the professional breach a duty and cause the claimant’s
loss?
Coverage question
Does the professional indemnity policy respond to that
liability?
Separate evidence
Notification, renewal, prior knowledge and policy wording may
have little to do with whether the professional was negligent.
Separate interests
The insured may need advice about the insurer’s position
which sits outside the underlying liability defence.
Settlement & Control
Who decides whether the claim should settle?
Professional indemnity policies commonly contain provisions dealing with claims control, cooperation, settlement and consent. The precise contractual position must come from the individual policy.
A commercial insurer may understandably consider the economics of continuing to defend a claim. The professional may also be thinking about reputation, professional findings, future regulatory consequences or an uninsured financial exposure.
What settlement rights does the policy give the insurer?
Read the actual claims-control and settlement provisions before assuming either side has unrestricted authority.
Does the insured have a consent right?
Some policy wordings may contain consent provisions or mechanisms dealing with disagreement about settlement.
Could settlement affect professional reputation?
The commercial value of settlement and the professional impact of the allegation may not always be identical considerations.
Is there uninsured exposure?
An excess, policy limit, excluded head of loss or coverage reservation may give the insured a direct financial interest in the outcome.
Information & Confidentiality
Understand what information is being shared and on what basis.
An insurer funding a defence will commonly require information about the claim. But the solicitor’s professional duties and the terms of the retainer remain important.
The SRA Code requires solicitors to keep the affairs of current
and former clients confidential unless disclosure is required
or permitted by law or the client consents.
01
Read the engagement and reporting terms
Establish what the insured has agreed may be reported to the insurer and how the information-sharing arrangement is intended to operate.
02
Understand who each communication is for
A report prepared for an insurer, advice given to the insured and correspondence with a claimant may perform very different functions.
03
Take extra care once coverage becomes contentious
Information about when the insured first knew of a problem or what happened at renewal may become relevant to the insurer’s coverage position as well as the liability defence.
04
Do not create different factual accounts
A coherent evidence-based chronology is particularly important where the claimant, insurer, solicitors and experts may each be examining overlapping documents.
Watch the Financial Exposure
An insured claim can still leave the professional financially exposed.
The existence of appointed solicitors does not necessarily mean that every cost and every potential liability will fall within unlimited insurance protection.
The insured should understand the available limit, excess, treatment of defence costs and any disputed or uninsured part of the claim.
Policy limit
How much indemnity is available for this claim and any related
claims?
Defence costs
Do legal and expert costs erode the limit or sit outside it
under this particular wording?
Excess
What financial amount remains directly with the insured?
Uncovered allegations
Is the insurer disputing cover for only part of the claimant’s
case?
Multiple claims
Could aggregation or other claims reduce the insurance
available?
Above-limit exposure
Could damages and costs realistically exceed the remaining
policy protection?
Questions Worth Asking Early
You should be able to understand the structure of your own defence.
These are not accusations. They are practical questions which help clarify who is doing what before the case becomes more complicated.
01
Who exactly is your client?
Ask the solicitor to explain the parties identified in the retainer if that is not already clear.
02
What are you instructed to advise me about?
Clarify whether the retainer is limited to defending the claimant’s allegations or extends to other issues.
03
Has my insurer confirmed indemnity?
Appointment of solicitors should not simply be assumed to mean that every coverage issue has been finally resolved.
04
Is any reservation of rights still outstanding?
If so, identify who is responsible for addressing the separate coverage issue.
05
Who has settlement authority?
Understand the policy wording and what consultation or consent is required before settlement decisions are made.
06
What information is being reported to the insurer?
Understand the reporting structure and the authority under which information is shared.
07
How much insurance remains available?
Consider limits, defence costs, excesses and any disputed element of cover.
08
Is there anything important outside your retainer?
That might include coverage, regulatory consequences, wider commercial issues or independent review of the evidence.
Independent Support Does Not Mean Starting Again
Sometimes the useful role is alongside the appointed defence — not instead of it.
A professional may be perfectly content with the appointed solicitors but still want independent help understanding the documents, insurance position or strategic picture.
That can be particularly useful where the business itself has substantial knowledge of the events but needs help organising that material into a clear case.
Independent review of the allegations and professional file
Chronology and evidence organisation
Review of the PI coverage position
Identification of issues outside the existing legal retainer
Preparation of structured material for lawyers or experts
Specialist Direct Access barrister input where appropriate
How IDS Can Help
Add clarity without duplicating the legal defence.
Where solicitors are already instructed, the first question is what work is already being done. Any IDS involvement should then be defined around work which genuinely adds value.
01 / REVIEW
Understand the whole position
Review the allegations, defence strategy, professional file and insurance position to identify which issues are already being addressed and which are not.
02 / EVIDENCE
Strengthen the factual file
Organise documents, chronology and factual material so important evidence can be identified and communicated efficiently.
03 / COVERAGE
Examine the insurance position
Where indemnity is reserved or disputed, analyse the policy issues separately from the claimant’s liability case.
04 / STRATEGY
Prepare specialist input
Where appropriate, structure focused questions or case material for expert analysis or specialist Direct Access barrister advice.
Common Questions
Insurer-appointed solicitors and professional claims
Are insurer-appointed solicitors acting for me or for the insurer?
The answer should be established from the particular retainer rather than assumed. Where the insured is a client, the solicitor owes professional duties to that client. Some arrangements can involve more than one client, in which case conflict and confidentiality rules become particularly important.
Does the insurer paying the solicitor mean the insurer controls everything?
Not automatically. The insurance policy may give the insurer important contractual rights over claims handling, expenditure or settlement, while the solicitor also remains subject to their own professional obligations. Both the policy and retainer should be understood.
Should I communicate directly with the appointed solicitor?
If you are the client, communication with your solicitor is a normal part of the professional relationship. You should understand who is authorised to provide instructions and any reporting arrangements agreed with the insurer.
Can the solicitor send information about me to the insurer?
That depends on the retainer, authority given and applicable professional duties. The SRA Code requires solicitors to keep client affairs confidential unless disclosure is required or permitted by law or the client consents.
What if my insurer has reserved its rights?
Then the underlying liability defence and the insurance coverage position should be distinguished carefully. Confirm whether the appointed solicitors are also instructed to advise you independently on the coverage issue or whether that sits outside their retainer.
What if I disagree with the insurer about settlement?
The starting point is the policy wording, including any claims control, cooperation, consent or settlement provisions. Your own financial, professional and regulatory exposure should also be understood before important decisions are made.
Can I simply replace the insurer-appointed solicitors?
You can obtain independent advice, but whether an insurer must fund a different firm or permit another defence arrangement depends on the policy, circumstances and contractual position. It should not be assumed that there is an unrestricted right to replace panel solicitors at the insurer’s expense.
Can IDS work alongside solicitors who are already appointed?
Potentially, yes. IDS can provide defined claims analysis, case preparation and litigation support where that work genuinely adds value and does not duplicate the solicitor’s existing role.
Important information
The relationship between an insured, insurer and appointed solicitors depends upon the individual insurance policy, retainer, instructions and circumstances. This page does not assume that every insurer-appointed solicitor acts under the same arrangement.
SRA-regulated solicitors are subject to professional duties including acting on valid client instructions, acting in the best interests of their clients, managing conflicts of interest and protecting client confidentiality. How those duties apply depends upon who the client or clients are in the individual matter.
An insurer may also have contractual rights under the insurance policy concerning claims control, cooperation, defence expenditure and settlement. Those rights should be identified from the actual wording.
Insurance Dispute Service provides insurance dispute analysis, claims analysis, case preparation and litigation support. It does not replace the professional duties of instructed solicitors and does not undertake reserved legal activities unless appropriately authorised to do so.
Public Access enables suitably registered barristers to accept direct instructions. Conduct of litigation is a separate reserved legal activity requiring appropriate authorisation.
This page provides general information and is not legal advice. No particular outcome is guaranteed. Policy requirements, limitation, pre-action deadlines and court deadlines should be checked for the individual claim.
Solicitors Already Appointed?
You may not need another defence team. You may need a clearer view of the whole position.
If insurer-appointed solicitors are already defending the claim, we can look at the professional file, insurance position and wider issues to identify whether any important part of the case sits outside the existing retainer.