The SRA proposes to end indemnity cover for retired solicitors

The SRA has proposed to end the provision of post-six-year run-off cover because they judge the protection as disproportionately expensive. Run-off cover is insurance for claims made against a law firm after it has stopped doing business. This change would mean that the Solicitors Indemnity Fund would effectively close. Indemnity insurance protects solicitors against claims of possible negligence or failure to perform. However, if the Solicitors Indemnity Fund were to close the remaining funds would be handed to the Law Society.

If this were to happen and run-off insurance was to end, the profession would be left with two choices. The first would be to ask solicitors to pay for cover to reduce the expense. The second would be to leave retired practitioners to deal with any and all claims themselves.

Based upon the last ten tears, the SRA’s forecasts show that an average of 31 clients are likely to gain from the Solicitors Indemnity Fund each year. This results in an average of £34,600 being paid out which includes defense costs. Up to £2.4m a year will be required from the profession to continue the ongoing funding to the Solicitors Indemnity Fund each year. This expense would most likely be passed onto clients.

The SRA feels that they cannot keep extending the Solicitors Indemnity Fund as they have done in recent years. There will be a 12-week consultation where a discussion will be had about what will happen with the remaining reserves of the Solicitors Indemnity Fund if the six-year run-off cover is no longer provided. Transferring the remaining funds to the Law Society would at least enable them to use the funds to benefit the profession.

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