LAW SOCIETY TO LOBBY SRA
24 Feb, 2012
The Law Society is lobbying the Solicitors Regulation Authority (SRA) to extend a scheme that provides solicitors’ professional indemnity insurance (PII) run-off cover.
Run-off cover is necessary to cover claims that are made after a firm ceases to practise.
Currently, run off cover under solicitors’ compulsory PII policy is provided by their insurer and lasts six years from the end of the indemnity period in which a firm ceases to practise. After that contractual cover expires, any further claims are currently dealt with by a scheme managed by the Solicitors Indemnity Fund (SIF), and funded collectively by the entire profession. The SIF scheme will expire in 2017, but the Society, with the Law Society Council’s backing, is urging the SRA to extend it for another three years, until 2020.
A three year extension is considered advisable at this time as the Society needs to work further on the details of any extension with the SRA and SIF regarding the extent of any future cover and how it will be funded. A limited extension is desirable in terms of availability of SIF reserves and predicting claims development. The SRA may also need to consult on any future levy that may be required from the profession in order to support an extension of cover.
Law Society chief executive Desmond Hudson (pictured) said: “We are keen to work with the SRA on this matter, which is of paramount importance to retiring solicitors. Any solicitor retiring this year or in the future will have to foot the bill themselves should a claim emerge beyond 2017 after their six year contractual cover expires. A three year extension will give retiring solicitors some peace of mind in what are for many, uncertain times.”
The Society says that with some firms considering exit strategies and solicitors contemplating retirement in these difficult times there is a strong argument for the extension.
Hudson said: “Those considering an exit plan in the current climate will want to make an informed decision over potential costs emerging from the risk of future claims. The availability of the SIF run off cover will be a key factor to consider in making that decision. We urge the SRA to provide certainty to the profession about whether or not this cover will be continued.
”We very much hope they will agree with the Society that this is a valuable protection for retired solicitors.”
The Law Society has produced guidance for firms who are considering to cease practise and enter into run-off. For more information on run-off cover visit the Law Society’s run-off cover homepage.