The professional body has warned that scaling back insurance for law firms would make the marketplace “less safe” for consumers, after the Solicitors Regulation Authority (SRA) launched a consultation on the controversial proposals.
The Law Society of England and Wales today said “consumers could be left high and dry if the regulator pushes ahead” with plans to close the Solicitors Indemnity Fund, known as SIF.
The SIF provides additional ‘run off’ cover for law firms that close without a successor practice. The insurance, which is in addition to six year run-off cover provided by the law firm’s professional indemnity insurance, ensures ongoing protection for clients, partners and staff.
The SRA, which assumed responsibility for SIF funds in 2006, said only around 31 consumers would be likely to benefit every year from the cover according to a ten year forecast until 2033. Meanwhile, the SRA argued, the price of maintaining the cover would be around £2.4m annually – a cost, the SRA added, that would likely be passed on to consumers.
But the Law Society have pushed back, saying that removing the cover will have a “huge impact” on consumers, with the average successful claim from SIF exceeding £34,000.
The consultation, launched by the SRA yesterday, will run for until mid-February.