Solicitors face 15K poor service payouts

The Law Society Council last week voted to triple to 15,000 the maximum compensation solicitors can be ordered to pay clients who have received poor service.

The council also decided to increase contributions to the Solicitors Compensation Fund (SCF) to 824, rather than the proposed 980 - however, this is still 324 more than the current level.

The move to increase compensation for inadequate professional service complaints followed a recent recommendation from the Society's independent commissioner, Sir Stephen Lander.

The increase can only be implemented by the government laying a statutory instrument.

A Department for Constitutional Affairs spokeswoman described the vote as a 'positive development'.

Law Society chief executive Janet Paraskeva said the move is 'terrific news for consumers' and gives 'real redress'.

The council also decided to seek primary legislation which would allow it to develop more flexible methods of funding the consumer redress scheme, including the possibility of charging firms fees whether or not a complaint investigated by the Office for the Supervision of Solicitors (OSS) is upheld.

It also wants power to exclude from the scheme inappropriate categories of cases, such as complaints from corporate clients, who are not disadvantaged by the imbalance of power with their solicitor in the same way as individuals.

However, primary legislation could take a long time to secure, members warned.

The rise in contributions to the SCF - which compensates the victims of fraud by solicitors - arose from its reserves dropping too low as payouts rose (see [2003] Gazette, 17 July, 4).

The council approved a 65% rise to 824 for solicitors with seven or more years' post-qualification experience, while those with four to six years' experience will pay 412.

Solicitors up to three years qualified are exempt.

A Law Society spokesman said: 'The increase in the contribution to 824 is appropriate if the fund is to meet present as well as anticipated demands and have a safety margin.' The 980 plan was to allow for even greater security.

The council also voted to seek powers from the government that would allow it to set contributions to the SCF in a more flexible way.

This too will require primary legislation.

If given, the power could allow the Society to link contributions to the risk that each category of firm is perceived to pose to the SCF.

Meanwhile, the council agreed to raise the practising certificate fee from 700 to 790 to fund OSS reform.

Neil Rose