11/24/2022 | News release | Distributed by Public on 11/24/2022 06:44
Published 24 November 2022
In previous editions we have tracked developments as regards the planned closure of the Solicitors Indemnity Fund, and the repercussions for the profession. It has been an area of concern for many retired solicitors who worked for or ran firms that closed without a successor practice. They have been reliant upon the SIF to provide protection from professional negligence claims beyond the compulsory six year run-off period.
The broad interpretation of limitation dictates that claims can emerge years after the primary contractual six year period has expired, thus potentially outside any indemnity run-off term. However, post-SIF arrangements has been a problem that the interested parties have been unable to resolve and has resulted in the closure deadline being repeatedly pushed back whilst a solution is found.
Finally there are signs of positive movement ahead of the (current) intended closure of the SIF in September 2023, which extension itself was in return for the SRA's agreement to underwrite liabilities up to a total of £6m.
The need for continued consumer and public protection has resulted in the identification of more cost-effective and proportionate alternatives. In August, the SRA released a discussion paperdetailing the options, being the retention of the SIF (with reduced operating costs) or replacing it with a 'consumer protection arrangement', as either an automatic indemnity scheme (triggered on receipt of a valid claim) or a discretionary compensation fund (to which an application for grant would have to be made).
The SRA favours the 'new' route and has since announced that will create and operate an indemnity scheme, offering the same level of cover provided by the SIF, but which the SRA can monitor and control to achieve greater efficiencies and savings. It will take responsibility for all matters notified to SIF under the old arrangements prior to 30 September 2023, and all new claims thereafter. It will also retain the ability to seek the equivalent of 'excess' payments, although only where considered in all the circumstances to be "fair".
The SRA has explicitly recognised that there could be difficulties where a notified matter involves both a claim and a potential disciplinary issue, but is confident that it can ensure fair and effective processes and appropriate outcomes.
On 6 October, the SRA began another consultation period, open until 3 January 2023, inviting input upon its proposals before the intended implementation in less than a year. There will no doubt be competing views, not least continued unhappiness from some quarters that they are having to underwrite the alleged negligence of others, but for many who are retired from the profession or are considering doing so, it will be welcome news, particularly at a time when there are increasingly limited options to merge into a successor practice.
Next steps on the Solicitors Indemnity Fund (SIF) and consumer protection for negligence claims