Law Society to lobby SRA to extend run-off scheme
The Law Society is to lobby the Solicitors Regulation Authority (SRA) for an extension to the scheme that provides professional indemnity insurance (PII) run-off cover to solicitors.
The current position is that cover, which is needed to cover claims made after a solicitor’s firm ceases to practise, is provided by the solicitor’s PII insurer for six years from the end of the indemnity period in which a firm ceases to practise with further claims being dealt with by a scheme managed by the Solicitors Indemnity Fund (SIF), and funded collectively by the entire profession. Under existing plans the SIF scheme will expire in 2017. However, 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 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.
“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 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.
For more information on run-off cover visit the Law Society’s run-off cover homepage www.lawsociety.org.uk/practicesupport/regulation/pii/runoff.page.