Society calls on SRA to extend run-off scheme
The Law Society has called on the SRA to extend the back-up scheme that provides extra run-off cover after the compulsory period of six years is over.
A spokesman for the society said run-off cover, which covers claims made after a law firm ceases to practise, lasts for six years under compulsory indemnity policies after the period in which the firm closed.
“After that contractual cover expires, any further claims are currently dealt with by a scheme managed by the Solicitors Indemnity Fund and funded collectively by the entire profession,” the spokesman said.
He said the society, with its council’s backing, is urging the SRA to extend the SIF scheme from 2017, when it is due to expire, until 2020.
The spokesman said a limited extension was desirable “in terms of availability of SIF reserves and predicting claims development”. He said the SRA may also need to consult on any future levy that may be required from the profession to pay for an extension.
Des Hudson, chief executive of the Law Society, said the issue is of “paramount importance” to retiring solicitors.
“Any solicitor retiring this year or in the future will have to foot the bill themselves should a claim emerge beyond 2017 after their six-year contractual cover expires,” he said.
“A three-year extension will give retiring solicitors some peace of mind in what are, for many, uncertain times.”
Hudson said solicitors considering an exit plan in the current climate would want to make an informed decision over potential costs emerging from the risk of future claims.
“The availability of the SIF run-off cover will be a key factor to consider in making that decision,” he said. “We urge the SRA to provide certainty to the profession about whether or not this cover will be continued.”