Firms will be asked to pay 7.5 per cent more to the Solicitors Indemnity Fund (SIF) this year than the original contribution asked for in August, following an embarrassing blunder by SIF staff.
SIF chair Andrew Kennedy has admitted that its calculations failed to take into account extra discounts for low-risk work. He said they would have resulted in the Law Society raising £13 million less than the £184.9 million target set by its council in June.
Kennedy told The Lawyer: “We have never made a mistake before, but on this occasion we have and it is very regrettable. All we can do is put our hands up in the air and apologise.”
He said the blunder had occurred because of extra pressure on SIF staff caused by internal reorganisation, but steps had been taken to ensure it would not happen again.
Kennedy, a partner in City firm Beachcroft Stanleys, said he hoped firms would not be inconvenienced. “The overwhelming majority of firms won't have to do anything as they have a direct debit system in place and their payments will simply be amended.”
But he admitted: “Firms which have been doing some forward casting will be annoyed. I would be annoyed, except that I am no longer senior partner.”
John Pike, chief executive at City firm Stephenson Harwood, confirmed: “There's no doubt it affects one's cash-flow projections, but on the other hand if it has to be paid, it has to be paid.”
Law Society president Tony Girling has ordered a full report to be sent to the policy committee and the council, which will be asked to approve the increase at its 17 October meeting.
Kennedy said: “I am not making any assumptions as to what the council will do, but effectively it has already given its authority for £184.9 million to be raised in June. I hope both the policy committee and the council will be understanding.”
Veteran council member John Franks, who tabled a motion in April calling for the SIF to be abolished, said: “I am not surprised. All these calculations are extremely complicated, and they're not made any easier by the fact that the Law Society's accounting year is different from the practising certificate year, which in turn is different from the tax year.”