SIF and statute

1 am writing to correct inaccuracies raised by the comments of Russell Wallman, the Law Society's director of policy, in your 'indemnity update' (see [2000] Gazette 6th July, 5).Mr Wallman states that 'the Solicitors Indemnity Fund rules were made under the authority of statute which explicitly contemplated this statutory mutual method of providing cover', i.e.

the SIF scheme.

This is not correct.

Several features of the SIF were not contemplated by statute.

The statute allows the Law Society to set up 'a fund or funds'.

What Parliament had in mind at the time s.37 of the Solicitors Act 1974 was passed was an 'ordinary' mutual fund, that is to say one without a monopoly and one subject to government regulation like any other mutual fund or insurer.

The SIF was deliberately created by the Law Society in the mid 1980s as a de facto monopoly and in such a way as to get around insurance and DTI regulation.

This lack of regulation was an important factor in bringing about the disastrous consequences we all know about.

1 do not have any evidence of other 'statutory mutuals' sharing these characteristics with the SIF ever having been created.

1 would welcome any further information on this point.The litigation against the Law Society in respect of the anti-competitive issues relating to the SIF is not as 'doomed' as Mr Wallman would like to think.

There are a number of personal injury firms which have been hit hard by the Law Society's sudden change of the SIF's underwriting policy in 1999/2000 which are currently contemplating litigation.

Therefore, there may be other cases lining up behind the three solicitors who are currently suing the Law Society.

Those bringing the current action either had at all relevant times open market insurance (with an insurer which is now an approved insurer) or had overpaid the SIF, and all are being treated unfairly by the Law Society which is threatening the practising certificates of two of them.

For example, the Law Society has granted at least one practitioner a current practising certificate even though he has not paid the SIF or obtained a waiver.Why the Law Society is for a second time allowing these matters to degenerate to the level of litigation is the question that all solicitors should be asking.

Wendy Gray, Daltons, Petersfield

Law Society reply: It is absurd to suggest that Parliament did not contemplate the establishment of a statutory fund as the sole vehicle for mandatory professional indemnity cover.

The provisions of the Solicitors Act are perfectly clear.

Successive Masters of the Rolls have approved the arrangements.When solicitors refuse to pay the contributions due under the indemnity rules, the SIF has two choices.

It can either pursue the debts, or it can ignore them, and make the rest of the profession pay the sums properly due from the recalcitrant minority.

Why should the rest of the profession pay? The Society has no power to issue practising certificates to practitioners who are in breach of the indemnity rules.