Indemnity court battle hots up with challenge to retrospective rule on mergersSOLICITORS INDEMNITY FUND: February 2001 date set for sole practitioner's test caseThe Law Society is facing a legal challenge to its rule-making functions governing the Solicitors Indemnity Fund (SIF) which could affect thousands of solicitors, it emerged this week.The development came as February 2001 was announced as the date of the first major interim application hearing - likely to raise many key issues about how the SIF was run - brought by Lesley Green & Co, the lead test case against the fund (see [2000] Gazette, 6 July, 5).In a further development last week, a fresh action was begun by the firm, challenging the Law Society's power to make indemnity rules with retrospective effect.

The firm is specifically challenging an amendment this year which would see solicitors retrospectively responsible for all claims against firms they have taken over.

Liability will attach even where expressly excluded in any contract to acquire the practice and when the former principals have left.

Ms Green's case will also question whether the SIF should be required to pay interest where it had failed to rectify contribution inaccuracies in a reasonable period of time.

Anti-SIF campaigner Wendy Gray, whose own case is stayed pending the outcome of Ms Green's, said: 'The Law Society should pay to have a court declaration to sort this matter out.

Solicitors should not be put to the costs of bringing it before the courts when it is the Law Society which has created the problem in the first place.'Russell Wallman, Law Society head of policy, said he was unable to comment on specific allegations as he had not yet seen them.

However, the Law Society had taken careful legal advice, both internally and externally, before making the rules this year, he said.In July, Ms Green, Ms Gray and fellow sole practitioner Jocelyn Taylor issued proceedings seeking declarations that they are entitled to practising certificates despite having refused in the past to pay SIF contributions.

All three also claim that the indemnity rules are anti-competitive and breach European law.Sue Allen