Retired fear ruin when SIF closes


Retired solicitors say they are living in fear of historical negligence claims landing on their doorsteps, as the backstop for protecting them draws to a close.

The Solicitors Indemnity Fund is set to close from September – a move delayed by a year previously – as the safety net for claims against a firm dating past the six-year run-off date is whipped away.

After a law firm closes, run-off cover must be purchased to protect solicitors and their clients if a claim arises because of negligence. The SIF has been dubbed as a ‘sleep easy’ clause as it protects retired solicitors – or potentially their estates – from historical claims.

There are still concerns that no viable product has been made available for firms and solicitors to purchase supplementary cover. The Solicitors Regulation Authority, which took over administration of the fund from the Law Society, has no plans to do anything after September as it is no longer a regulatory issue.

The Society says it has ‘actively explored’ alternative solutions in the insurance market and is considering several alternatives. But Chancery Lane also warned last month that market conditions were ‘challenging’ and there was no guarantee of success.

In a professional update, the Society said: ‘It’s unlikely that any solution will provide comprehensive cover to all firms that closed without a successor practice, so it’s important that you carefully consider your exposure and any actions that you could take to protect yourself.’

Several retired solicitors have contacted the Gazette, worried about their potential exposure to historical claims. One former practitioner said: ‘The consequence of this is that I may, willingly or unwillingly, be uninsured, which means that anyone who may have a claim against my former firm could be left without a means of redress.’

READ  UK Covid policy for children in detention 'cruel and inhumane', says UN expert

While most claims against firms are covered by the six years of run-off, around 11% of claims are made after the mandatory period, potentially leaving owners personally liable. The most common types of legal work exposed to historical claims are conveyancing, wills and trusts, and child personal injury.

Frank Maher, a partner with north west firm Legal Risk, said retired solicitors are right to be concerned as SIF has continued to receive claims for firms whose six years run off has expired.  He added: ‘I believe some are substantial and many involve trusts and estates where claims can come in many years later.  So too can personal injury-related claims where the children or others under a disability are involved.  It is worth bearing in mind that you can have large claims from low value work – I have seen a multi-million pound claim arise from a personal injury case which had been settled for £2,000, and a £3m claim from a £25,000 conveyancing transaction.’



READ SOURCE

LEAVE A REPLY

Please enter your comment!
Please enter your name here