Howden: What is Directors & Officers’ (D&O) Insurance – and why it matters for law firms
In today’s increasingly litigious and regulated environment, Directors & Officers’ (D&O) insurance is no longer a luxury—it’s a necessity.
For law firms, this type of cover is particularly critical. D&O insurance protects partners, directors, and senior managers from personal financial loss if they are sued or investigated in connection with their roles. This includes legal defence costs, regulatory investigation expenses, and even criminal proceedings.
In legal terms, these claims often arise from alleged “wrongful acts”—decisions or omissions that stakeholders, clients, or regulators believe have caused harm. For solicitors and law firm leaders, this could stem from anything ranging from employment disputes to regulatory breaches or client dissatisfaction.
Who Needs D&O Insurance in a Law Firm?
While the term “D&O” traditionally refers to corporate directors and officers, in the context of a law firm, this protection should extend to:
• Equity and managing partners
• Senior solicitors with decision-making authority
• Practice managers and compliance officers
Law firms face unique exposures. A partner might be accused of discrimination in a hiring decision, or a senior lawyer could be held liable for a breach of fiduciary duty. Even internal disputes between partners can escalate into legal claims. D&O insurance doesn’t prevent these issues—but it does provide a financial safety net and reputational shield when they arise.
Emerging Risks: AI and the Legal Profession
One of the most pressing new threats to law firm leadership is the rise of artificial intelligence (AI). As firms adopt AI tools for legal research, document review, and even client interaction, questions of liability become more complex.
• Who is accountable if an AI tool provides flawed legal advice?
• What happens if automation leads to redundancy claims or allegations of bias in decision-making?
These are not hypothetical concerns. As AI becomes embedded in legal workflows, partners and directors may find themselves personally named in claims related to its use. Importantly, AI itself cannot be held liable—leaving firm leadership exposed.
Why D&O Insurance is More Crucial Than Ever
The legal sector is under increasing scrutiny from regulators, clients, and the public. Allegations of misconduct, discrimination, or regulatory non-compliance can have devastating consequences—not just for the firm, but for the individuals at the top.
D&O insurance provides:
• Coverage for legal defence costs
• Protection during regulatory and criminal investigations
• Support in managing reputational fallout
In short, it’s a vital safeguard for those steering the firm through an evolving risk landscape.
There are a number of D&O policies available in the market which are specifically tailored to law firms, although scope of coverage and policy wordings can vary considerably.
Here at Howden we are able to advise you which would be most suitable for the particular profile of your firm. If you are interested in finding out more, contact us here.