The Law Society and a consumer panel join forces to oppose the closure of SIF

Boyce: Profession happy to pay for SIF

The Law Society and the Legal Services Consumer Panel have joined forces to oppose the Solicitors Regulation Authority’s (SRA) plan to shut down the Solicitors Indemnity Fund (SIF).

The unprecedented joint statement argues for the continuation of SIF through an annual levy of £16 per lawyer or £240 per company.

SIF pays negligence claims filed against attorneys after the six-year liquidation period following the closure of a law firm.

It was due to close in 2017, but the SRA has extended the deadline three times, most recently last June, after warning that law firm owners faced an uphill struggle to find alternative cover. It is now due to close in September.

A consultation published last November said it “has become clear that the level of consumer protection” offered by extending the life of the SIF or replacing it with an alternative model would be “very low”, making it likely that would be “disproportionate to us”. to be delivered, through a regulatory mechanism”.

Actuaries estimated that, if SIF closed this year, an average of 45 claims after six years would be notified at an average cost of £36,800 each in 2023, falling to just 31 from 2029.

It was not the SRA’s job to help retired lawyers rest easy, officials said.

In its response to the consultation, the Law Society stated that the SRA has not demonstrated how the closure of SIF would have any benefit for consumers, either in terms of reducing the price of legal services or increasing the consumer choice.

Clients with legitimate claims would be unable to find redress, damaging the reputation of the profession, while “thousands of lawyers will be exposed to the risk of long-running claims”.

Although he admitted the risk of a successful claim was low, “the impact for individual solicitors found personally liable for claims of tens or even hundreds of thousands of pounds could be substantial”.

The Law Society said the SRA’s own analysis showed there was “a viable long-term model” for pursuing SIF through “a very modest levy” estimated at £16 per lawyer or £240 per company each year.

He called “misleading” the suggestion that the Law Society could offer a similar level of consumer protection through a newly created fund.

The panel’s response said the SIF should not be shut down, particularly while there were still assets within it, until other arrangements were made that would provide consumers with similar protection.

He argued that the SRA failed to ‘due regard to the statutory objectives of promoting and protecting the interests of consumers, the public or access to justice’.

The response continued: “When these are mentioned, the analysis is incredibly subjective and distorted to support the SRA’s preferred position.

“Equally disturbing is the prominence throughout the consultation paper on maintenance costs [post-six-years cover]without a fair and balanced analysis of the advantages or even the difficulties that would result from the removal of this protection.

“This is perhaps the aspect of the consultation that the panel finds most objectionable; the lack of empathy or understanding that behind every “low value” claim, regardless of the numbers, are real human stories of financial loss directly attributable to attorney negligence. »

The panel pointed to SRA data showing that about 11% of post-closure claims occurred more than six years after a business ceased operations.

She said she was “convinced” that notaries would pay a small fee to keep the SIF.

Law Society President Stephanie Boyce said: “It is a sign of the seriousness with which we are all concerned about the SRA’s proposal that the body representing the interests of consumers of legal services join the body representing the providers of these services to support the statutory regulator.

“Our profession is happy to pay for SIF. Any indirect cost to consumers will have negligible or no impact on the price of legal services – but even if they were, the increases would be minimal, measured in tens of pence.

Sarah Chambers, Chair of the Legal Services Consumer Panel, said: “It is true that the administration costs of this fund seem remarkably high given the number and level of claims paid.

“Nevertheless, we remain very concerned that the proposal to close the fund may be put forward without due regard to the impact on consumers of ‘unknown’ mistakes made many years ago, and how protection could be maintained by continuing the fund or replacing it with an alternative that offers a similar level of protection.The SRA should think again.