LSRA Annual Report 2024 | What the rising complaint trends mean for PI Insurers in Ireland

The recently published Legal Services Regulatory Authority (LSRA) Annual Report 2024 (the “Report”) contains important regulatory insights that impact solicitors and their professional indemnity (PI) insurers[1].

This is the sixth year that the LSRA has reported on its complaints handling activities since it began receiving and investigating complaints against solicitors on 7 October 2019, following the commencement of Part 6 of the Legal Services Regulation Act 2015 (the “Act”).

The Report shows that the number of complaints against solicitors increased sharply by 14% in 2024 when compared with 2023, with a significant increase in complaints by financial institutions in respect of solicitors’ failure to comply with undertakings.

Under Part 6 of the Act, the LSRA can receive and investigate three types or grounds of complaint:

• that the legal services provided were of an inadequate standard;
• that an amount of costs sought by the legal practitioner for legal services was excessive;
• that an act or omission of a legal practitioner constitutes misconduct under the Act.

Complaints of Misconduct | A sharp increase

Under the Act, Misconduct is broadly defined and includes an act or omission which involves fraud or dishonesty, or which is likely to bring the profession into disrepute. It also includes the provision of legal services which were of an inadequate standard to a substantial degree, or the seeking of grossly excessive costs.

A total of 1,267 components of misconduct were recorded across all complaints received in 2024. These were classified under a range of categories based on the alleged acts or omissions of the legal practitioners. Of these, 461 (36%) related to conduct likely to bring the profession into disrepute, and 168 (13%) involved a failure to comply with an undertaking given to a colleague or financial institution. A further 114 (9%) involved a failure to communicate, 113 (9%) related to a failure to hand over a file or other deeds and documents, 92 (7%) involved fraud or dishonesty and 69 (5%) related to a conflict of interest.

Mixed Complaints

Prior to 2023, a complaint was recorded as relating to one category only, even if it related to multiple areas.  The 2024 Report shows a shift in complaint recording which reflects a growing complexity in client dissatisfaction and also poses a challenge for PI insurers and underwriters as multi-faceted complaints can indicate that if the matter is not resolved before the LSRA this can lead to more protracted and complicated claims against solicitors.

Rise in Complaints | What does this mean for Insurers?

The LSRA’s rising complaint figures particularly around professional misconduct suggest there could well be a rise in claims against solicitors which insurers should monitor closely.

A claim in respect of misconduct is something insurers should be wary of as it often leads to a significant indemnity exposure if not resolved before the LSRA.

A significant percentage of complaints reported in the 2024 annual report involve poor service and mixed services not just misconduct which raises the risk for insurers of potential performance-based negligence claims under PI policies.

Insurers should consider whether to indemnify solicitors for complaints before the LSRA as it may be a more cost-effective outcome than dealing with a High Court professional negligence claim down the line.

Complaints | Early-Stage Informal Resolution  

It is worthwhile noting, that the LSRA encourages early resolution of complaints where appropriate. After a complaint is determined to be admissible, the Act requires the LSRA to invite the parties to make efforts to resolve matters in relation to admissible complaints that relate to:

• legal services of an inadequate standard;
• excessive costs; or
• misconduct which, if substantiated, would constitute legal services of an inadequate standard to a substantial degree.

The LSRA have reported an increase of 30% of legal professionals engaging with the informal process to reach a resolution at the LSRA stage. A total of 1,474 complaints were closed during 2024, of which 22% of all complaints were resolved and closed with the assistance of LSRA trained mediators during the informal resolution process.

While the LSRA informal process does not eliminate the risk of court proceedings being issued against an insured solicitor, if a complaint is made to the LSRA in respect of an insured solicitor, it is worthwhile insurers working with solicitors during the informal resolution procedure in an effort to mitigate potential exposure.

Complaints | What’s Ahead?

The LSRA have identified three priority areas of reform of how Ireland’s complex conveyancing system operates (See: Consideration of a new profession of conveyancer: Report to the Minister for Justice) to enhance competition and increase efficiencies and transparency and how conveyancing services are provided by solicitors to consumers.

Its recommendations aim to:

• Digitalise the conveyancing system and ensure greater use of technology;
• Introduce enhanced transparency requirements for solicitors on the costs of conveyancing services; and
• Increase awareness among consumers to enable them to make informed decisions when seeking conveyancing services from solicitors.

Proactive Approach

Until such time as there is an overhaul to the conveyancing system in Ireland, as recommended by the LSRA, insurers, underwriters and brokers should work closely with property/conveyancing solicitors to ensure proactive compliance protocols and best practices are being implemented in respect of conveyancing and undertakings to include up to date registers for any undertaking provided to any lenders.

Reshaping Regulatory Claim Landscape

The LSRA’s evolving oversight of complaints is reshaping the regulatory claims landscape for solicitors in Ireland and by extension their insurers.

PI insurers can act early in the event an insured solicitor is the subject of a complaint to the LSRA and can intervene at this stage to support solicitors to ensure the complaint is dealt with before the LSRA in the best interests of the solicitor and by doing so this may prevent a costly PI claim in the future.

To learn more about how we can assist your business to navigate these evolving risks please contact Niamh Loughran or Michelle Keogh.

[1] LSRA-Annual-Report-2024-FINAL.pdf