No, you don’t. Professional indemnity insurance is specialist insurance to cover you in cases where your company has provided negligent advice or services to a customer, and the customer seeks redress for your failings.
Solicitors who work out of a solicitors firm have to hold high levels of professional indemnity insurance, which usually costs many thousands of pounds, but this is because they are providing advice to members of the public and individual clients, and regulators have determined that clients need lots of protection in case of incompetence on the part of their professional advisers.
If you have your own in-house legal adviser working directly for you on a part-time, ad-hoc or fulltime basis, then they are providing you specifically with legal advice for you to act upon if you wish. If you decide to act upon it and the advice as negligent, then that is your own issue and nobody else’s.
If someone else acts upon the advice of your in-house lawyer, i.e., a third party, then this is where the insurance kicks in. However, because you are using an in-house lawyer who is specifically providing you with advice, and not third parties, you do not need professional indemnity insurance.
In fact, most in-house lawyers across the country who work for firms big and small, do not usually have their own professional indemnity insurance, simply because they do not need it. Quite a few will not have a practising certificate, because again they don’t actually need to practise and provide advice to individuals if they’re working on an in-house basis providing advice specifically to their employer or contractor (i.e. if they are a sub-contractor).
It seems to be a bit of a red herring for quite a few companies who seem to think they need professional indemnity insurance to take on an in-house lawyer. Funnily enough, they don’t think the same when taking on an accountant or some other professional working in the business, but only solicitors. I think part of the problem with this is that there is so much information online about professional indemnity insurance for solicitors that there is a considerable amount of confusion as to exactly what is needed and why.
The easiest way to sum it up is to say that professional indemnity insurance is in place in solicitors firms, and solicitors charge an hourly rate based on the fact that if they get the advice wrong to you and you act upon it, and suffer finance loss, you have a claim against them for negligence. If an in-house lawyer provides you with duff advice and you act upon it, then chances are you will not be able to get any compensation for it, because you were the person who recruited the in-house lawyer in the first place. This is why there is such a substantial difference in the hourly rates of solicitors firms compared with hourly rates of individual solicitors working for you as a contractor or part-time employee on an in-house basis.
So, essentially your decision on whether to take on an in-house lawyer or use an external firm of solicitors should not be based on whether or not one has professional indemnity insurance and one does not, but more on the relative skill levels you are going to get from each of the two options, and whether or not you want recompense if things go wrong.
If you would like to discuss using an in-house lawyer on an ad-hoc basis, please get in touch with www.interimlawyers.co.uk, specialists for in-house and private practice solicitors for over 20 years.