Solicitors' Indemnity Insurance Rules 2000 and accountants' reports

With effect from 1 September 2000, the Solicitors' Indemnity Fund has been replaced with a system requiring solicitors in private practice to arrange professional indemnity insurance with authorised insurers.

The same requirement will apply, with modifications, to European lawyers registered with the Law Society under the Establishment Directive.

The accounts rules have been amended to require the reporting accountant to check that the practice has indemnity insurance for the period covered by the accountant's report (excluding any period before 1 September 2000).

The reporting accountant will simply check for the period of the report that there is a certificate(s) or policy for the minimum cover (1 million for each and every claim) with a qualifying insurer.

A list of qualifying insurers is shown on the Law Society's Web site at www.indemnity.lawsociety.org.uk

Solicitors and registered European lawyers are required by the indemnity insurance rules to produce the relevant certificate(s) or policy to the reporting accountant.

The accountant is not expected to check the level of any excess, whether there is cover for prior and successor practices, or whether premiums have been paid.

The accountant is expected to make no more than a mechanical check as to the existence of the certificate(s) or policy.

He or she is not expected to conduct any investigation or look behind the certificate(s) or policy.

It is only if it came to his or her attention, from whatever source, that something was amiss, that the Law Society would expect the accountant to say so in the report.

Enquiries arising from these provisions should be made to the Law Society's professional ethics division, tel: 0870 606 2577.