Practice Management: PII renewal, cladding investigation, and proposed restructure

You are a partner in Marlowe and Co LLP, an architectural practice of 12 staff (4 members and 8 employees), in its eleventh year of trading. The annual PII renewal is 6 weeks away. Two weeks ago your PII broker informed the partnership that one of the practice's previous projects, a £20 million private residential scheme of 48 apartments which reached Practical Completion 4 years ago, is the subject of a third-party investigation into cladding non-compliance. You were the Lead Architect. The investigation is at an early stage but a fire engineer's report has flagged that the external wall build-up may not meet the requirements of Approved Document B Volume 2 and that there is a possibility of EWS1 B2 rating. The insurer has been notified as a circumstance. The broker has now warned that the next renewal is likely to be at a materially higher premium (broker estimate: 60 to 90 per cent increase) and with a £500,000 retention (each-and-every claim deductible) for any claim arising from the named project, with cover otherwise on the prior terms. In an emergency partners' meeting yesterday, the senior partner proposed that the practice should restructure from an LLP into a private limited company, with the rationale of "limiting personal exposure" before the renewal completes. The bank is the LLP's main lender and has indicated that it will require partnership accounts before agreeing any restructure. ARB is also running a consultation on the introduction of mandatory continuing competence frameworks. The senior partner has asked you to advise the partners on the right way forward.