Race bias claim over insurance for minority ethnic lawyers

The Law Society is looking at allegations that firms have suffered discrimination over professional indemnity insurance

Robert Heslett, the Law Society president, says he is 'concerned by indications of different treatment' of black and minority ethnic firms. Photograph: Sarah Lee for the Guardian

Black and minority ethnic lawyers are being refused compulsory insurance in what they describe as blatant race discrimination in the legal profession.

Some minority ethnic lawyers have seen their professional indemnity insurance rise by as much as 800%, despite having not received any complaints or claims against them. The controversy has prompted new plans to protect them.

"This year my insurance jumped from £6,000 to £24,000," said Dele Ogun, a partner at Akin & Law LLP. "I have never seen anything like this before. I cannot begin to explain why a firm like ours, which has built up experience over 13 years, with not a single claim, has had its premiums hiked like this.

"Insurers say they are having to claw back the losses they have made on collapsing conveyancing practices, but that does not even begin to explain the disparity between ethnic minority firms and the rest of the profession."

Another firm said its insurer had refused to renew the firm's cover. "We established in 2007; we have had no complaints and no claims against us, yet all our insurers, including our previous one, would not give a quote," said Laitan Eyiowuawi, a partner at Crowther solicitors in the City of London.

A study by the Law Society published last month found that minority ethnic firms were being treated differently by insurance companies, with 16% not offered cover by their previous insurer, compared with 6% in the rest of the profession.

The study also found that the firms were notified of insurers' decisions later than the rest of the profession, making it harder for them to look elsewhere for insurance.

The increasing disquiet among minority ethnic practitioners comes amid changes affecting areas of law in which they are more likely to practise.

Figures show that minority ethnic firms are likely to practise in certain areas, including immigration and crime, and have an average annual gross income of £280,000 compared with the £400,000 average across law firms as a whole.

"The starting point for a lot of BME [black minority ethnic] firms is that we don't generate as much fees as white firms, so any major increase in overheads can bring us out of business," Eyiowuawi said.

"If we go out of business, then there is also an access to justice question – many of our clients want to instruct people who look like them but it is becoming harder and harder for minority firms to operate."

Ogun said: "Insurance is compulsory, and firms are literally feasting on minority practices that have no choice but to pay these premiums.

"As if that were not bad enough, those responsible for regulating the insurance arrangements that are exposing us to these kind of arbitrary and uncontrolled hikes have not protected us."

The Law Society said it was looking urgently at the problem, and last week joined with the Black and Minority Ethnic Forum of solicitors to create an action plan to protect minority lawyers.

"The Law Society is committed to working closely with the insurance markets, solicitors and the SRA [Solicitors' Regulation Authority] to try to address the root causes of the problem," Robert Heslett, the president of the Law Society, said.

"We are particularly concerned by indications of different treatment of BME-owned firms. This is an issue where we are taking urgent steps to clarify and resolve the matter."