In a desperate bid to limit the damage of a hole of almost £500m in the Solicitors Indemnity Fund (SIF), the Law Society is launching a task force to examine how it can ease the pain for law firms faced with massive hikes in contributions.
In a report that shocked the the Law Society's Council and solicitors last week, the SIF admitted a shortfall thought to be £248m in January actually stands at £454.5m.
But an SIF proposal to up contributions by 80 per cent was rejected by council members at last Thursday's meeting, who said it would drive some firms out of business.
Instead, the task force is to look for ways to limit the increase to around 50 per cent.
One council member, Laurence Bennett, said he had had two calls from constituents saying their firms would shut if contributions were raised by 80 per cent. Others pointed out that some sole practitioners would be paying a quarter of their fee income to the SIF.
A report on the shortfall, issued by SIF's non-executive directors, says former managing director John Speedman accepts his calculations may have been too optimistic.
It adds: “There was an unwillingness to accept that the claims development was as bad as it was.”
Martin Mears, who has just announced his candidacy for the Law Society presidency, in a contest against current vice-president Phillip Sycamore, said Speedman should not take all the blame and has called, in a statement, for SIF chair Sam Wilson to resign.
Debate over the causes of the SIF shortfall, and who is to blame for it, is sure to take centre stage in the forthcoming elections for the presidency.
Ballot papers for the election will be distributed on 18 June and the winner will be announced on 15 July.
Sycamore said he was disappointed that Mears had chosen to stand against him.
“At a time when the profession needs to present a united front, being seen to be obsessed with internal politics will not help us,” he said.
Robert Sayer, Sycamore's running mate in the election, but a former Mears ally, also attacked Mears, labelling him in a statement as a “vain and shallow man” who viewed Sayer's decision to stand with Sycamore as a betrayal.
But Mears replied that earlier this year Sayer had agreed to stand as president with Mears as his deputy.
“For him to say that, 'this is a just a man who wants to be president,' is just absurd,” he said. Mears is running with David Keating as vice-president and David Savage as deputy vice-president.