The Law Society has expressed disappointment at a decision by the Solicitors Regulation Authority (SRA) to reject calls to extend Solicitors Indemnity Fund (SIF) cover by a further three years to 2023.
SIF closed in 2000. Currently, however, any firm that has closed since September 2000 without a successor can resort to the SIF for any claim made after the six-year run-off period. This arrangement is due to end in 2020, and the SRA Board has now decided not to grant an extension.
Paul Philip, SRA Chief Executive, says: “We consulted on reducing the amount of run-off cover because many see it as a barrier to closing down, and that’s still something we want to look at. Extending cover through SIF would be contrary to that aim and would be suggesting that six years run-off cover is not enough.”
However, Law Society chief executive Catherine Dixon says: “The solicitor profession has funded protection for clients and for solicitors retiring from or leaving the profession via the SIF which pays compensation for claims brought after six years (which is the standard protection in solicitors’ insurance policies).
“We are disappointed that the SRA has decided not to extend SIF beyond 2020 even though solicitors had in the past been promised that this protection would continue. Without SIF, insurance will only cover clients and their solicitors for claims made within the insurance policy period, regardless of when the wrongful act gave rise to the claim took place.
“This means that claims brought outside the standard six year policy period will not be insured. This places those solicitors who are seeking to leave or who have left the profession at risk of liability and means that clients may not receive compensation in the event of negligence for claims are made after six years. The Law Society of England and Wales is considering whether there are any viability of options to replace the SIF beyond 2020.”
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