Law firms will have to make no contribution to the Solicitors Indemnity Fund (SIF) next year, the council decided last week, while a working party is to discuss how the current surplus at the SIF could be used.

SIF chairman Paul Marsh told the council that he 'can't quite say' that solicitors will never again have to contribute to the fund, but the signs are good.

There was a nil contribution last year too.

The unaudited accounts as at 29 February 2004, incorporating estimates of claims liabilities, show a surplus of 36 million to cover unforeseen adverse developments.

A paper before council said: 'Whilst the fund's financial position is healthy, there remains some volatility in the figures and further collections in the future cannot be ruled out completely.'

The working party has been set up under Fiona Woolf - who will become Deputy Vice-President in July - to look at uses for the surplus.

Following a minor change to the Solicitors Indemnity Rules last week, if the SIF is wound up, the Society must apply any surplus 'if and to the extent the Society considers it reasonably practicable for the purposes of providing indemnity in any other way permitted by section 37(2) of the Solicitors Act 1974 and otherwise for the overall benefit of the solicitors' profession in such manner as it may decide'.

The change introduced the 'reasonable' qualification, subject to approval by the Master of the Rolls.