The Malaysian Bar Professional Indemnity Insurance (“PII”) is a mandatory[1] scheme that indemnifies each Member of the Malaysian Bar[2] against civil liability[3]  practicing in West Malaysia and the Federal Territories.  Under this scheme, Members are insured under one uniform Master Policy and Certificate of Insurance with an approved insurer.  PII must be applied for / renewed every year before a Member can apply for his/her Sijil Annual and Practising Certificate.  The annual PII policy cover is for a period of 12 months, from 1 January to 31 December[4].
 
PII covers the advocates and solicitors and employees of a firm[5] as well as former Members of the Bar[6] or their estates and legal representatives.  PII protects lawyers against civil liability claims arising from their legal practice (including claims arising out of work undertaken on a pro bono basis[7]) and claims that are first made against them during the period of insurance[8].
 
It is crucial that lawyers notify the PII Scheme Insurance Broker, Marsh Insurance Brokers (M) Sdn Bhd (“Marsh”) in writing as soon as the lawyer is aware of a claim.  Once you become aware of a letter / notice of demand; writ / summons / counter claim / notice of 3^rd party proceedings; or a threat / intimation of a claim made against the firm or its lawyers, you must notify Marsh urgently without delay.  Circumstances that may lead to a claim (such as a complaint to the Disciplinary Board) or a discovery of a possible error / omission / dishonesty must also be notified to Marsh as soon as possible.  
 
Notifications must be made no later than 60 days upon awareness[9].  Failure to do so would be a breach of the policy terms and the insurer will have the right reduce its liability under the policy or may cancel the policy[10].  Any staff of the firm may send the notification in writing, provided that the lawyer(s) in the firm have been informed prior. 
 
As stated above, the insurance policy provides protection against civil liability claims.  “Civil liability” is defined as “liability pursuant to a claim made against you in a civil suit or action in a court of law in Malaysia[11]”.  Therefore:

1. the policy does not cover penalties for a lawyer’s criminal liability; and
2. the policy will cover matters arising from all levels of Malaysia’s hierarchy of courts.

The PII policy also covers the claimant’s costs, defence costs, and mitigation costs[12], subject to the firm:

1. providing prior written notice (during the period of insurance) to Marsh of:
   1. the potential claim or circumstance; and
   2. the costs required to mitigate the potential civil liability; 
   3. the probability of the eventual claim being made against the Member in the absence of the undertaking such mitigation action; and 
2. complying with the terms and conditions of the PII policy.

With regard to mitigation costs[13], do note that such costs are only covered provided that:

1. all mitigatory actions are done in compliance with the Rules and Rulings of the Bar Council; and
2. the insurer has expressly provided its agreement to the mitigation costs in writing.

However, the PII policy coverage will be forfeited for claims that are made fraudulently or illegally.[14]
 
The PII policy coverage encompasses any practice area[15] of the lawyer’s legal practice with the condition that the professional service is:

1. done in the normal course of carrying on the profession as a legal practitioner; and
2. done in an approved private practice anywhere in Malaysia as governed by and in accordance with the Legal Profession Act 1976.

This means that lawyers that who conduct professional services outside the ordinary course of carrying on the legal profession (eg as a Company Director) as well as lawyers who are paid by the Government or who work in companies as in-house counsel will not be covered under the PII Policy for services rendered in any of those capacities.
 
For Members of the Bar practising both civil and Syariah law, the PII policy will still provide indemnity for firms / lawyers who are advocates and solicitors in accordance with the Legal Profession Act 1976 in respect of claims arising from Syariah matters.
 
The PII policy only provides cover for firms / lawyers for claims in Malaysia.  For any award or judgment obtained outside Malaysia[16] against the insured firm / lawyer, the PII policy will cover the defence costs incurred in Malaysia to defend the enforcement of the award or judgment obtained outside.
 
For more information, please refer to the 2022 Master Policy and the 2022 Certificate of Insurance  issued by our PII Scheme Insurer, Pacific & Orient Insurance Co Bhd.