There is hardly a queue to pay compensation fund costs. This thorny issue has to be resolved at some point.
‘Things stay the same’ is hardly likely to be headline news, and so it proved for the compensation fund payments confirmed by the Solicitors Regulation Authority this week.
For the record, the regulator has confirmed all firms will be required to pay £548 next year to compensate clients stitched up by law firms. Individuals will continue to pay £32 each.
The compensation fund is one of the most divisive issues in the legal profession: clearly it has to be in place, or else faith in the profession (not exactly watertight as it is) will be eroded. Clients out of pocket and with no recourse to compensation would make for some pretty awful headlines.
But why should the good guys have to pay more to cover the dishonesty of others?
The SRA may have opted for the status quo in terms of fees, but the winds of change could be about to blow.
Most solicitors accept, albeit grudgingly, paying into the fund, but many that I speak to draw the line at a blanket fee for all firms no matter what risk they pose. Quite simply, if you’re a small firm doing non-contentious client work, why should you pay the same as, say, a conveyancing firm where the perils and cost of mistakes are all too obvious?
As an analogy, take the position of teenage drivers. The stats are clear that they are the most dangerous category of driver.
As a result they pay more for their insurance cover – underwriters loading costs onto a demographic more likely to incur them.
But if this is fairer on the supposedly safer older category, is it fair on a safety-conscious 18-year-old? Why should a higher risk profile amongst your peers be allowed to undermine your efforts to stay within the rules?
A conveyancing firm may be more likely to put pressure on the compensation fund, but a ‘clean’ conveyancing firm is no more a risk than a firm in a less contentious area. Is it really fair that they shoulder the burden of their rogue peers, while the legal profession as a whole claws back costs?
It’s a tricky question, but it’s one the SRA will have to answer at some point. A two-year review of the compensation fund will conclude at the end of 2015. There will be vocal calls from those middle-aged drivers to reduce their ‘insurance’ bill.
Someone has to pay for compensating clients who have been wronged – with financial pressures so acute on so many firms, there will be plenty who argue it shouldn’t be them.
John Hyde is Gazette deputy news editor