In a year's time the Solicitors Indemnity Fund will begin to use a new method of calculating each firm's annual contribution.

The new method is called risk banding.

Based on current information, conveyancers' payment will almost double.You may have noticed that the annual gross fees returns you have recently completed asked you to apportion your work into 16 categories.

This will enable the SIF to calculate the potential risk arising from the type of work that each firm undertakes and adjust premiums accordingly.

For example, firms that mainly undertake criminal defence work generate only about one-tenth of the claims on the fund generated by conveyancing for the equivalent fee income.

Those who do mainly low risk work will see a dramatic decrease in their premiums but those who do high risk work will pay considerably more.

To no one's surprise the SIF has identified residential conveyancing as presenting the highest risk to the fund.For the conveyancers amongst us this comes as unwelcome news.

Times are tough enough without any additional burdens but the SIF's figures are difficult to argue with and, unless a miracle occurs, risk banding is on its way.

In an attempt to soften the blow the President and I have made a suggestion to the SIF which it accepts is in principle workable.

Briefly the idea is as follows.The SIF needs to collect just over £200 million from the profession to cover next year's anticipated claims.

About £50 million of those claims will arise from residential conveyancing.

We have suggested that this year every firm should be assessed on its gross fees in the normal way but instead of collecting £200 million, the SIF should collect just £150 million.The immediate effect of this would be that firms would be asked to pay only 75% of the premium which would otherwise be due from them.

The advantage to our profit margins and cash flows is obvious.

The extra £50 million required to cover conveyancing claims would be collected on a case by case basis over the following 12 months.The SIF has calculated that even after building in wide safety margins and the additional administrative costs involved (about 25 pence a case) this could be done by collecting a payment on completion of each residential sale and purchase of:-- £20 for properties prices up to £29,999-- £30 for properties between £30,000 and £49,000-- £40 for properties between £50,000 and £74,999-- £50 for properties over £75,000.There is one obvious objection.

Surely this simply pushes an even greater burden onto hard-pressed conveyancers.

Shouldn't the Law Society be helping, rather than making life harder? I can only emphasise again that the SIF is bringing in risk banding in any event.

If nothing is done, then in a year's time conveyancers will receive bills for indemnity premiums twice as high as they do at present.

That would leave many firms desperately trying to raise enough money to pay the bill.

The probability is that they would try to do it by cutting their prices even further to win market share at any cost.

What is already a vicious spiral would become a fatal one for many.There will be some firms that try to absorb the additional cost themselves.

I expect that the majority of firms will not be in a position to do so and they will have two main options.The first option is to continue to offer an inclusive price but to adjust it to take into account the payment that will need to be made to SIF on completion.

As all firms would be obliged to make the same payments to SIF the net effect should be to preserve firms' relative competitiveness.The second option would be to quote in the normal way for the work to be done by the solicitor while explaining to the client that there will also be an additional separate charge shown in the bill to cover the compulsory contribution the solicitor has to make to the indemnity fund -- for example, a conveyancing fee of £X plus £40 to the SIF.

This would keep the true cost of indemnity cover transparent and make it easier to take it fully into account.This approach is open to objections.

The SIF fears that the client might fail to appreciate that the sum is paid in respect of the solicitor's indemnity cover and might believe that he or she has paid for his or her own insurance cover, thus encouraging the client to make more claims.

There is also a potential PR problem.

Some clients might ask: 'Why am I paying to insure you against your own negligence?'My view is that these objections are exaggerated.

I believe that it can be explained to those clients who query the charge that all overheads are ultimately paid for by the client as part of the bill rendered to them and that the indemnity fund provides a unique level of protection to clients.

All we are doing is making the true cost of that cover as clear as possible.

After all, no client expects our fee to include the local search or Land Registry fee and no solicitor would dream of trying to absorb these in their own fees.This is not intended to be a solution to all the profession's problems but I believe it is a possible step towards helping us to identify our true costs and to budget for them when taking on work.

Of course there will be difficulties but none seems insurmountable.

Given a will this proposal could succeed.

The alternative for many of us is to pay twice as much next year in indemnity premiums.

Comments please to me, Robert Sayer, 113 Chancery Lane, London WC2A 1PL.