Is PII Forcing Law Firm Partners into Early Retirement?

Legally reviewed by: Wesley Thompson Jul 2026 In: Legal Regulation

For many senior partners at smaller law firms, retirement has always been a matter of timing. But for a growing number across England and Wales, the luxury of choice is being taken away by the realities of professional indemnity insurance.

When PII becomes unaffordable or simply unattainable, closure can happen faster than most partners expect. And with it comes a set of regulatory obligations that many senior partners are not prepared for.

What Is Happening in the Solicitors PII Market Right Now?

The solicitors’ PII market is currently described as broadly “soft,” meaning premiums have eased and more insurers are competing for business. However, that headline conceals a much more complicated picture for certain types of firms, especially with a dwindling number of SRA approved participating insurers.

The Law Society Gazette reports that current conditions are “more akin to a short-lived spring tide,” with brokers warning that higher-value claims and increasing SRA regulatory activity will eventually lead to a return of harder conditions. More pressingly, some firms are already feeling that pressure now.

Smaller practices, conveyancing-heavy firms, and those with a difficult claims history are finding cover significantly harder to place, and in some cases prohibitively expensive. The Law Society Gazette has reported on cases where indemnity costs more than doubled in a single year, with one firm principal describing the increases as simply “unmanageable.”

Further, the Solicitors Journal has also confirmed that, unsurprisingly, law firm closures consistently spike around the annual PII renewal period. This is a pattern that repeats year after year in SRA data.

How Many Law Firms Are Actually Closing?

According to the SRA’s own published data, 532 firms closed in the 12 months to the end of November 2025, while just 315 new firms opened in the 12 months to the end of January 2026. The SRA’s data also shows a consistent peak in closures around the annual renewal season, with October and September recording some of the highest monthly figures.

The Solicitors Journal has reported that 81 firms closed specifically due to partner retirements in a recent period, most of them smaller practices, with succession planning described as “still a struggle for smaller law firms.” Senior partner retirement was identified as the single biggest driver of closures overall.

These are not firms in crisis. Many are otherwise healthy practices whose partners have run out of road, and where PII costs or renewal difficulties have brought forward a decision that might otherwise have been years away.

Why PII Problems Can Bring Retirement Forward

When a firm struggles at renewal, the next steps happen very quickly. If cover cannot be secured within the initial extended policy period, SRA rules require the firm to enter a 60-day cessation period. During that window, no new instructions can be taken on, and the firm must plan either an orderly closure or a merger, ensuring client files are compliantly handled.

For partners who were already thinking about retirement, this can be the moment that makes the decision for them.

The Issue of Run-Off Cover

What can often tip the scales between a managed wind down and finding an acquirer is the matter of run-off cover. This is a six-year mandatory insurance policy every firm must have in place when it closes. The Law Society confirms that run-off premiums are unregulated and typically cost around 50% of what annual PII cover would have cost over the same period. Its typical to see the average run-off premium at 300% of the last annual premium paid.

As the Law Society Gazette has noted, for firms in difficulty at renewal time, closing sooner while premiums are still manageable can actually be the more financially sound decision than renewing and facing even higher run-off costs further down the line.

Unfortunately, many partners do not realise they are in that window until it has almost closed.

What Are the SRA Reporting Obligations When a Firm Closes?

Under SRA’s Rules, firms must inform the SRA as soon as reasonably practicable if they intend to close, merge, or change their structure.

Beyond that initial notification, a closing firm must also:

Arrange six years of run-off PII cover and ensure premiums are paid before the cessation date
Notify the SRA and provide ongoing reporting
Make compliant arrangements for all client files, client money, and outstanding matters
Notify the Information Commissioner’s Office under UK GDPR obligations
Address any TUPE obligations if staff are transferring to another firm
Deal carefully with the successor practice question, covering who takes on responsibility for historic claims

The successor practice question in particular often catches firms out. If run-off cover is not properly arranged, the insurer of any successor practice may become liable for claims against the closed firm, which can have serious consequences for whoever takes on those client relationships.

What Is a Successor Practice and Why Does It Matter?

In summary, the successor practice can be any firm that takes on the clients, work, or goodwill of a closing firm. Whether a successor practice exists, and who it is, has direct implications for which insurer bears responsibility for future claims.

Getting this wrong is one of the most common and costly mistakes firms make when closing. To mitigate any mistakes, the process requires careful regulatory analysis from an expert in regulatory law.

Wesley Thompson, Head of Regulatory at Cartwright King, on the Current Picture

Wesley Thompson, Head of Regulatory (National) at Cartwright King Solicitors, works with firms going through exactly these situations and has seen this pattern play out with increasing regularity:

“A tough market at the moment is seeing deals fall over and pushing firms into wind-down situations. These circumstances prompt mandatory reporting to the SRA. Having a specialist handle this will give you more time to concentrate on your business. We’re assisting firms in navigating successor questions and to ensure a smooth and compliant closure.”

Wesley’s team works directly with firms and their principals throughout the closure and wind-down process, covering SRA notifications, successor practice analysis, run-off arrangements, and file transfer obligations, so that partners can focus on their clients and their own next steps.

How Cartwright King Can Help Your Firm

Cartwright King’s regulatory team has extensive experience advising law firms through closure, merger, and restructuring at every stage. Wesley and the team has worked with a wide range of regulators and regulated practices across England and Wales, with a detailed understanding of the SRA’s Rules, Accounts Rules, and Minimum Terms and Conditions for PII.

Whatever stage you are at, getting specialist regulatory advice early makes the whole process significantly easier to manage.

If your firm is facing PII renewal difficulties or you are considering your options ahead of retirement, speak to our regulatory team today.

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