The practice of “self insuring” is arguably the business of effecting or carrying out contracts of insurance and is subject to prior authorisation and regulation by the FSA. It is a prohibited activity for Solicitors under the SCOPE regulations.
A solicitors retainer is capable of being construed as a contract of insurance if he is deemed to have assumed any risk. For example the solicitor may agree to underwrite the disbursements which may render the retainer not only an illegal contract of insurance but also champertous and thus unenforceable for want of legality. In accordance with settled legal principles, a Court is entitled to look behind a de facto arrangement to elicit the true intention of the parties.
The only risk a solicitor is entitled to assume is that permitted by Section 58 Courts and Legal Services Act 1990.