INDEMNITY INSURANCEOne of the most important matters the Law Society Council needs to settle early this year is future arrangements for professional indemnity cover.

The original intention was that the decision should be made this week by the Law Society Council and I would very much like to have achieved that.

However, as I explain below, we have been advised of another possibility which may have significant advantages for the profession.

The decision involves complex issues, of enormous significance for the long-term health of the profession, and it is essential the Council has all the information it needs to take the right decision for the future.The Council's objectives are clear.

We want to provide arrangements which will:-- reliably be available to all firms which have a respectable claims record;-- provide the level of protection which is necessary in the public interest;-- enable firms to have the maximum achievable choice about where to get cover;-- minimise the overall cost of indemnity cover to the profession.Achieving all these objectives is not easy.

There is inevitably a trade-off.

That is why the Council decided in September to examine the scope for co-existence between a mutual and a system of approved insurers.

We needed to know whether that option could be viable, and if so what arrangements were necessary to make it viable.

We instructed outside experts, Aon Insurance Brokers, to advise.Aon's advice was that a system of co-existence of this sort could be viable, but that a mutual which did not cover the whole profession would be more volatile than at present.

As a result, because the mutual does not have any reserves, some special measures were likely to be needed to ensure its viability.

The option Aon suggested was a levy, payable by all firms -- whether they used the mutual or the commercial market -- to build up reserves in the mutual so that it could survive in that competitive environment.

I expect many would find a levy of this sort deeply unattractive in principle, particularly if they wished to use the commercial market.

However, the retention of a mutual could be an important safeguard against a serious hardening of the commercial market.

The preliminary advice we have received is that the levy would be unlikely to exceed 5% of current premium levels, payable for the next three years.

However, more work is needed before the size of any levy would be known with confidence.Aon has also put forward another option, which was outside its original remit.

This would involve approved insurers competing not with a mutual fund, but with a master policy.

Aon maintains that in current market conditions a master policy could be introduced which provided:-- a long-term commitment to cover;-- agreement that all firms except those with deplorable claims records could be covered;-- overall level of costs similar to that provided by a mutual fund.This idea has not yet been fully formulated and we cannot yet be sure it is feasible.

I believe that it merits serious consideration and that the Council would be failing in its duty if it took a final decision before this option has been fully examined.

If it proves to be workable, it would give us similar advantages to the mutual, while transferring ultimate underwriting risk outside the profession.

Equally importantly, it would provide choice for those who prefer to make their own arrangements, without any need for a levy to build up funds in the mutual.I intend that the Council should take final decisions about this in the spring.

One important aspect will be to consider how best to test the profession's opinion on those new arrangements.

It will certainly be desirable to do this in one way or another, but we will probably not want to carry out a full-blown consultation of the normal sort, with the inevitable delay that would involve in settling final arrangements.

ACCESS TO JUSTICE BILLThe Law Society's justice task force has formulated a clear and firm response to the government's strategy on access to justice and this will be before the Council this week for endorsement.As I write, the committee stage debate in the House of Lords is under way on the Access to Justice Bill.

The Society has drafted more than 30 amendments to the Bill at this stage, and they have all been tabled for debate.Our amendments flow from the Society's opposition to restrictions on the number of legal aid providers.

Every firm that meets quality standards should qualify for a legal aid contract.

While we accept the government is right to seek value for money and quality in the provision of legal aid, we remain totally opposed to arbitrary and inflexible capping of the legal aid budget.

Our amendments also seek to ensure that decisions about funding are taken after proper consultation, are transparent and are subject to proper scrutiny by Parliament.In a civilised society, legal aid should be an entitlement not a discretionary benefit.

Legal aid underpins our system of justice.

It must -- like the justice system as a whole -- operate on a consistent national basis, not subject to regional vagaries.Our amendments also attack specific measures such as the proposal to allow conditional fees in matrimonial property cases and the proposal to remove personal injury cases from legal aid.This is only the beginning of the latest phase of our campaign to save legal aid.

The Society is determined that the government's agenda must be proper reform of legal aid and an expanded community legal service -- and is not a masked attempt to ration justice.