Solicitors and insurers near deal on ‘unbundled services’ definition

Finalised definition of unbundled legal services expected this summer to boost clarity, access, and insurer confidence

Solicitors, insurers, and regulators are close to finalising a shared definition of “unbundled legal services” in a move designed to boost clarity and accessibility in the legal market. The Law Society, working with the Solicitors Regulation Authority (SRA) and the International Underwriting Association, aims to publish the agreed definition this summer, accompanied by fresh practitioner guidance.

This marks a significant shift in the Law Society’s approach, which has historically been cautious about unbundling – where solicitors handle only part of a client’s case, with the client taking on the rest themselves. The Society’s softened stance follows rising public demand for low-cost legal support and growing solicitor engagement with the model, especially in family and employment law.

A report released under the Law Society’s 21st Century Justice project showed that confusion surrounding unbundling continues to trouble both legal professionals and insurers. The problem lies partly in the lack of a consistent definition, leaving insurers unsure how to assess risk and price professional indemnity insurance (PII) policies accordingly.

“Some insurers were uncertain about whether firms they provided insurance for delivered unbundled services,” the report noted. It added that only a third of firms offering unbundled legal help had formally notified their insurer, creating pricing disparities across the sector.

Increased demand from consumers and support from the SRA and the previous government had already begun shifting the conversation. Figures from the Legal Services Consumer Panel show that nearly one in five clients used unbundled legal help in 2023.

Research by Mustard, commissioned by the Law Society, revealed that unbundling had financial benefits for firms too – it improved cash flow via faster payments and expanded client bases. But the model also brought heightened risks. These include “scope creep”, where clients mistakenly believe the solicitor’s responsibilities are broader than agreed, or negligence claims arising from unclear retainers.

Another key concern is that some clients may lack the legal understanding or procedural confidence needed to manage their part of the case, leading to poor outcomes or escalated disputes. Without clear contractual boundaries, solicitors may still be held accountable for aspects of the case they were not officially engaged to manage.

PII coverage is another grey area. If insurers are unaware that a solicitor is offering unbundled services, they may not price in the added risk – potentially pushing up premiums across the board. A standardised definition would allow insurers to request this information clearly in proposal forms and apply targeted risk pricing.

The report recommends adopting plain-language alternatives to improve consumer understanding. Options floated include “pay-as-you-go legal services”, “targeted legal services”, or “professionally assisted legal services”. However, it acknowledges that changing public terminology would require sector-wide cooperation.

While the report is based on a small sample, it highlights urgent structural problems. “The costs of insuring unbundled work are potentially being borne by solicitors across the profession, rather than by those firms that are offering unbundled services,” it said.

The Law Society now appears ready to embrace a market reality that many firms have already adopted in practice. The goal is a future where clients understand what they’re paying for, solicitors understand their liability, and insurers can quantify their risk with confidence.