An investigation by the Lawyers Secular Society has revealed law firms providing advice on ‘Sharia Law’ risk breaching their insurance and potentially their license to practise.
All law firms in Britain must be registered with the Solicitors Regulation Authority and have professional indemnity insurance for all their activities or else they are not allowed to work in the industry.
When applying for insurance, a firm must declare all the activities it provides advice on, be it conveyancing, criminal law or contracts. This ensures that the company – and its clients – will be covered by the insurance policy for its activities. But if the company omits advising on Sharia Law, then those activities will not be covered and they could be jeopardising their very status as a legitimate law firm.
It has significant financial consequences for firms and their professional staff and, in particular, compliance officers should a client sue a firm for negligent advice. Anyone advising on Sharia law but not covered by insurance means the law firm is unlikely to be able to meet the costs of that claim without the financial protection that insurance brings.
In a statement from the British Insurance Brokers’ Association, they say: “It is currently an obligation on any commercial entity that enters into a commercial insurance contract that they disclose any ‘material facts’ (a material fact is one which would influence an insurer in accepting a risk or in determining a premium) to their insurer and failure to do so may invalidate their insurance policy.
“It would certainly appear to be the case that solicitors that provide Sharia Law advice should disclose this to their insurer, so that the insurer understands the specialist area of the law in which they operate. This would equally apply to all areas of specialism e.g. employment law/contract law/family law etc.”
In contrast to providing advice on different legal systems, companies which provide advice on ‘sharia law’ often do so in a domestic British context even though it is not recognised in the English legal system. Advice is often called on by Muslim families over issues such as family law, wills and probate or arbitration. This is despite it being an uncodified set of ideas which, the LSS say is even strongly contested amongst Muslims themselves.
The LSS reported the case of one individual at a well-established insurance company with years of experience in working with the legal sector saying he had never heard of ‘sharia law’ being declared on even one insurance form. The society said that considering it is now common for English law firms to provide such advice, this evidence is “deeply troubling”.
They also wrote of one experienced insurance broker who was ‘adamant’ that sharia would certainly require specific declaration on an insurance form in order for it to be covered, and he also confirmed he had never seen or heard of such a declaration.
The Financial Conduct Authority told the LSS they would ‘be concerned’ from their own perspective if a law firm was providing sharia finance advice without having declared that to their insurance provider.
They stated that if a law firm was providing advice on sharia activities not falling under the FCA’s regulatory remit (for example, in the context of family law), and the law firm wasn’t covered from an insurance perspective for that specific activity, then that would be a clear risk for law firms and their clients.
Having spoken to a number of English law firms who openly provide advice on ‘sharia law’, the LSS found themselves hitting a brick wall when questioning if these firms declared their sharia activities on their insurance forms.
In a statement on their findings, they said: “One law firm simply said, “We comply with law”. The other law firms were unable to answer the question, or refused to answer the question, or hung up the phone abruptly.”
The LSS said they were “pleased to have kick-started an obviously awkward conversation” and said they could “safely conclude, as a bare minimum, that something is not quite right in the marketplace.”
“This is a serious issue and so we have brought it to the attention of the SRA and the Law Society,” said LSS Secretary Charlie Klendjian.
“Any law firm that provides advice on “sharia law” must now seriously consider, for their own sake as well as that of their clients, whether “sharia law” is really an appropriate area for that law firm to venture in to. If they believe it is, they must declare it to their insurers and they must be prepared to pay whatever the additional premium is. Similarly, the insurance industry must consider how, if at all possible, they can price the risk of advice on such a nebulous, shape-shifting and uncodified subject.”
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