The first repayments of the multi-million pound surplus in the Solicitors Indemnity Fund (SIF) will be made in March.

The Law Society Council agreed in September 2005 to return £50 million in two tranches to firms that made contributions in each of the 2001/2002 and 2002/ 2003 indemnity years.


These represented the fourth and fifth years of the planned seven-year collection of the £454 million shortfall identified in 1997. However, the shortfall turned out to be smaller than anticipated.


The repayments were made possible after the Law Society entered into an adverse loss recovery programme with an insurer that crystallised at least £80 million. The first £25 million will now be paid in March, with the second tranche being returned in 2007.


The council also agreed to use the surplus to pay £25 million towards the Law Society's staff pension scheme to meet a demand from its trustees. Up to £25 million more will be contributed next year.


Andrew Darby, head of the Society's professional indemnity section, said it would be up to law firms to arrange distributions to partners.


SIF chairman Paul Marsh praised the efforts of its staff. 'Despite having been closed down, they have continued to manage the fund in the best interests of the profession.'