A new front has opened in the offensive to thwart the Solicitors Regulation Authority’s plan to run its own indemnity scheme as a replacement for the Solicitors Indemnity Fund.

The regulator has promised to end a decade of uncertainty by bringing protection for retired solicitors against negligence claims in-house once the SIF is wound up next year.

But the ‘Joint V Law Societies’ – the societies of Birmingham, Bristol, Leeds, Liverpool and Manchester – this week expressed ‘deep concern’ that the SRA failed to consult on other options and warned this is a ‘hasty decision that could be regretted both by consumers and the profession’.

In a joint letter to SRA chief executive Paul Philip, the societies said the regulator’s proposals were predicated on limited data and unreliable predictions of £400,000 savings.

On behalf of the five, Tony McDaid (pictured), president of Birmingham Law Society, said the regulator was ‘unlikely to have the required expertise in professional indemnity claims’ to run the scheme, and suggested this work would ‘bear no comparison with compensation fund claims’. 

Tony

Tony McDaid, president of Birmingham Law Society

A report from broker Willis Towers Watson, which accompanied the SRA consultations, was ‘replete with warnings that it is based on limited data in a compressed timeframe [and] cannot provide the evidential basis for a decision which may have substantial financial consequences for the profession’, he stated.

‘Professional liability claims-handling involves a very different skillset acquired through years of experience which will require recruitment and ongoing cost, yet the Willis report on which the SRA’s proposals are predicated envisages the SRA utilising or reallocating existing resources.’

The letter said there had been inadequate consideration of any alternative and pointed out that the transfer from SIF to the SRA was not raised in a consultation on run-off cover last November. The decision was therefore not compliant with section 28 of the Legal Services Act, which requires the SRA to act in a way which is transparent, accountable, proportionate, consistent and targeted only at cases in which action is needed.

The Law Society has said ‘in principle’ it backs an SRA-run consumer protection fund. But regulatory lawyer Frank Maher, from Liverpool firm Legal Risk, has suggested the SRA’s proposed scheme would be ‘unlawful’.

 

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